Congressional Record, Volume 150 Issue 109 (Tuesday, September 14, 2004)

[Congressional Record Volume 150, Number 109 (Tuesday, September 14, 2004)]
[House]
[Pages H7098-H7120]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

LAWSUIT ABUSE REDUCTION ACT OF 2004

Mr. SENSENBRENNER. Mr. Speaker, pursuant to House Resolution 766, I
call up the bill (H.R. 4571) to amend Rule 11 of the Federal Rules of
Civil Procedure to improve attorney accountability, and for other
purposes, and ask for its immediate consideration.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 766, the bill
is considered read for amendment.
The text of H.R. 4571 is as follows:

H.R. 4571

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Lawsuit Abuse Reduction Act
of 2004''.

SEC. 2. ATTORNEY ACCOUNTABILITY.

Rule 11 of the Federal Rules of Civil Procedure is
amended--
(1) in subdivision (c)--
(A) by amending the first sentence to read as follows: ``If
a pleading, motion, or other paper is signed in violation of
this rule, the court, upon motion or upon its own initiative,
shall impose upon the attorney, law firm, or parties that
have violated this subdivision or are responsible for the
violation, an appropriate sanction, which may include an
order to the other party or parties to pay for the reasonable
expenses incurred as a direct result of the filing of the
pleading, motion, or other paper, that is the subject of the
violation, including a reasonable attorney's fee.'';
(B) in paragraph (1)(A)--
(i) by striking ``Rule 5'' and all that follows through
``corrected.'' and inserting ``Rule 5.''; and
(ii) by striking ``the court may award'' and inserting
``the court shall award''; and
(C) in paragraph (2), by striking ``shall be limited to
what is sufficient'' and all that follows through the end of
the paragraph (including subparagraphs (A) and (B)) and
inserting ``shall be sufficient to deter repetition of such
conduct or comparable conduct by others similarly situated,
and to compensate the parties that were injured by such
conduct. The sanction may consist of an order to pay to the
party or parties the amount of the reasonable expenses
incurred as a direct result of the filing of the pleading,
motion, or other paper that is the subject of the violation,
including a reasonable attorney's fee.''; and
(2) by striking subdivision (d).

[[Page H7099]]

SEC. 3. APPLICABILITY OF RULE 11 TO STATE CASES AFFECTING
INTERSTATE COMMERCE.

In any civil action in State court, the court, upon motion,
shall determine within 30 days after the filing of such
motion whether the action affects interstate commerce. Such
court shall make such determination based on an assessment of
the costs to the interstate economy, including the loss of
jobs, were the relief requested granted. If the court
determines such action affects interstate commerce, the
provisions of Rule 11 of the Federal Rules of Civil Procedure
shall apply to such action.

SEC. 4. PREVENTION OF FORUM-SHOPPING.

(a) In General.--Subject to subsection (b), a personal
injury claim filed in State or Federal court may be filed
only in the State and, within that State, in the county (or
Federal district) in which--
(1) the person bringing the claim, including an estate in
the case of a decedent and a parent or guardian in the case
of a minor or incompetent--
(A) resides at the time of filing; or
(B) resided at the time of the alleged injury; or
(2) the alleged injury or circumstances giving rise to the
personal injury claim allegedly occurred; or
(3) the defendant's principal place of business is located.
(b) Determination of Most Appropriate Forum.--If a person
alleges that the injury or circumstances giving rise to the
personal injury claim occurred in more than one county (or
Federal district), the trial court shall determine which
State and county (or Federal district) is the most
appropriate forum for the claim. If the court determines that
another forum would be the most appropriate forum for a
claim, the court shall dismiss the claim. Any otherwise
applicable statute of limitations shall be tolled beginning
on the date the claim was filed and ending on the date the
claim is dismissed under this subsection.
(c) Definitions.--In this section:
(1) The term ``personal injury claim''--
(A) means a civil action brought under State law by any
person to recover for a person's personal injury, illness,
disease, death, mental or emotional injury, risk of disease,
or other injury, or the costs of medical monitoring or
surveillance (to the extent such claims are recognized under
State law), including any derivative action brought on behalf
of any person on whose injury or risk of injury the action is
based by any representative party, including a spouse,
parent, child, or other relative of such person, a guardian,
or an estate; and
(B) does not include a claim brought as a class action.
(2) The term ``person'' means any individual, corporation,
company, association, firm, partnership, society, joint stock
company, or any other entity, but not any governmental
entity.
(3) The term ``State'' includes the District of Columbia,
the Commonwealth of Puerto Rico, the United States Virgin
Islands, Guam, and any other territory or possession of the
United States.
(d) Applicability.--This section applies to any personal
injury claim filed in Federal or State court on or after the
date of the enactment of this Act.

SEC. 5. RULE OF CONSTRUCTION.

Nothing in section 3 or in the amendments made by section 2
shall be construed to bar or impede the assertion or
development of new claims or remedies under Federal, State,
or local civil rights law.
The SPEAKER pro tempore. The amendment printed in the bill is
adopted.
The text of the amendment in the nature of a substitute is as
follows:

H.R. 4571

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Lawsuit Abuse Reduction Act
of 2004''.

SEC. 2. ATTORNEY ACCOUNTABILITY.

SEC. 3. APPLICABILITY OF RULE 11 TO STATE CASES AFFECTING
INTERSTATE COMMERCE.

SEC. 4. PREVENTION OF FORUM-SHOPPING.

SEC. 5. RULE OF CONSTRUCTION.

Nothing in section 3 or in the amendments made by section 2
shall be construed to bar or impede the assertion or
development of new claims or remedies under Federal, State,
or local civil rights law.

SEC. 6. THREE-STRIKES RULE FOR SUSPENDING ATTORNEYS WHO
COMMIT MULTIPLE RULE 11 VIOLATIONS.

(a) Mandatory Suspension.--Whenever a Federal district
court determines that an attorney has violated Rule 11 of the
Federal Rules of Civil Procedure, the court shall determine
the number of times that the attorney has violated that rule
in that Federal district court during that attorney's career.
If the court determines that the number is 3 or more, the
Federal district court--
(1) shall suspend that attorney from the practice of law in
that Federal district court for 1 year; and
(2) may suspend that attorney from the practice of law in
that Federal district court for any additional period that
the court considers appropriate.
(b) Appeal; Stay.--An attorney has the right to appeal a
suspension under subsection (a). While such an appeal is
pending, the suspension shall be stayed.
(c) Reinstatement.--To be reinstated to the practice of law
in a Federal district court after completion of a suspension
under subsection (a), the attorney must first petition the
court for reinstatement under such procedures and conditions
as the court may prescribe.

SEC. 7. ENHANCED SANCTIONS FOR DOCUMENT DESTRUCTION.

(a) In General.--Whoever willfully and intentionally
influences, obstructs, or impedes, or attempts to influence,
obstruct, or impede, a pending court proceeding through the
willful and intentional destruction of documents sought in,
and highly relevant to, that proceeding shall be punished
with mandatory civil sanctions of a degree commensurate with
the civil sanctions available under Rule 37 of the Federal
Rules of Civil Procedure, in addition to any other civil
sanctions that otherwise apply.
(b) Applicability.--This section applies to any court
proceeding in any Federal or State court.

The SPEAKER pro tempore. After one hour of debate on the bill, as

[[Page H7100]]

amended, it shall be in order to consider the further amendment printed
in House Report 108-684, if offered by the gentleman from Texas (Mr.
Turner), or his designee, which shall be considered read, and shall be
debatable for 40 minutes, equally divided and controlled by the
proponent and an opponent.

{time} 1245

The gentleman from Wisconsin (Mr. Sensenbrenner) and the gentleman
from Virginia (Mr. Scott) each will control 30 minutes of debate on the
bill.
The Chair recognizes the gentleman from Wisconsin (Mr.
Sensenbrenner).
Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, recently President Bush said, ``We must protect small
business owners and workers from the explosion of frivolous lawsuits
that threaten jobs across America.'' Even Senator Kerry claims to
support national legislation in which ``lawyers who file frivolous
cases would face tough, mandatory sanctions, including a `three strikes
and you're out' provision that forbids lawyers who file three frivolous
cases from bringing another suit for the next 10 years.'' Well, help is
on the way.
H.R. 4571, the Lawsuit Abuse Reduction Act, would restore mandatory
sanctions and monetary penalties under Federal rule 11 of the Federal
Rules of Civil Procedure for filing frivolous lawsuits and abusing the
litigation process. It would also extend these same protections to
cover State cases that a State judge determines to have interstate
effects, and it would prevent forum shopping by requiring personal
injury cases to be brought only where the plaintiff lives or was
allegedly injured, or where the defendant's principal place of business
is located.
H.R. 4571 will also apply a ``three strikes and you're out'' rule to
attorneys who commit multiple rule 11 violations in Federal district
court and impose mandatory civil sanctions for willful and intentional
document destruction intended to obstruct the pending court proceeding.
The bill would apply to lawsuits brought by individuals as well as
businesses, and it expressly precludes the application of the bill to
civil rights cases if applying the bill to such cases would bar or
impede the assertion or development of new claims or remedies under
Federal, State, or local civil rights law.
Today, frivolous lawsuits are legalized extortion. Without the threat
of certain punishment for filing frivolous lawsuits, innocent people
and small businesses will continue to face the harsh economic reality
that simply paying off frivolous claims through monetary settlements is
always cheaper than litigating the case until no fault is found.
No part of American society rests easy in a legal culture of fear.
Churches are discouraging counseling by ministers. Children have
learned to threaten teachers with lawsuits. Youth sports are shutting
down in the face of lawsuits for injury or even hurt feelings. Monkey
bars and other once-common equipment are now endangered species at
playgrounds. As a result, children stay at home and get fat, and their
parents sue the restaurants that serve them. The Girl Scouts in metro
Detroit alone have to sell 36,000 boxes of cookies each year just to
pay for liability insurance, 36,000 boxes of cookies.
Good Samaritans are told to hit the road. When one man routinely
cleared a trail after snowstorms, the county had to ask him to stop.
The supervisor of district operations wrote, ``If a person falls, you
are more liable than if you had never plowed at all. Crazy world.
Unfortunately, the times we are in allow for a much more litigious
environment than common sense would dictate.''
Because existing rules against frivolous lawsuits are ineffective,
the right to sue has not only been exploited by lawyers; it has been
turned into one of the most destructive business models in the American
economy. Today, personal injury lawyers can gamble on taking cases on a
contingency-fee basis because they only need to win one in 10 to score
the big judgment that would make up for the losses in other cases. We
all live with the consequences, including higher taxes and insurance
rates; chaos in our schools; doctors going out of business, limiting
Americans' access to health care.
Small businesses and workers may suffer the most. The Nation's oldest
ladder manufacturer, the family-owned John S. Tilley Ladders Company
near Albany, New York, recently filed for bankruptcy protection and
sold off most of its assets due to litigation costs. Founded in 1855,
the Tilley firm could not handle the cost of liability insurance, which
had risen from 6 percent of sales a decade ago to 29 percent, even
though the company had never lost an actual court judgment.

Sadly, the Federal rule designed to deter frivolous lawsuits was
gutted over 10 years ago; and today, we live with the results.
Shockingly, rule 11 of the Federal Rules of Civil Procedure does not
require sanctions or even allow monetary penalties against parties who
bring frivolous lawsuits. Without certain punishment for those who
bring frivolous lawsuits, and the threat of monetary penalties to
compensate the victims of frivolous lawsuits, there is little incentive
for lawsuit victims to spend time and money seeking sanctions for
lawsuit abuse.
Rule 11 also does not allow sanctions for the abuses of the discovery
process. Rule 11 as currently written even allows lawyers to avoid
sanctions entirely from making frivolous claims by withdrawing them
within 3 weeks. Such a rule actually encourages frivolous lawsuits
because personal injury attorneys can file harassing pleadings, secure
in the knowledge that they have nothing to lose. If someone objects,
they can simply retreat without penalty. H.R. 4571 closes all of these
loopholes.
Forum shopping further encourages frivolous litigation. Lax rules
regarding where a lawsuit can be brought have turned certain parts of
the country into lawsuit factories, the only factories that lose jobs
rather than creating them. One of the Nation's wealthiest personal
injury attorneys described what he calls ``magic jurisdictions'' as
follows: ``What I call the `magic jurisdiction' is where the judiciary
is elected with verdict money. The trial lawyers have established
relationships with the judges that are elected. It's almost impossible
to get a fair trial if you're a defendant in some of these places. Any
lawyer fresh out of law school can walk in there and win the case, so
it doesn't matter what the evidence or law is.'' H.R. 4571 would
prevent the unfair practice of forum shopping that currently allows
personal injury lawyers to sue wherever the most favorable court is.
Congress cannot sit back and allow the personal injury lawyers to
bankrupt the very concept of personal responsibility that has made
America great. I urge my colleagues to support this bipartisan
legislation that will protect both America's values and its vital small
businesses.
Mr. Speaker, I reserve the balance of my time.
Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may
consume, and I rise to speak against the bill
Mr. Speaker, I do not support the legislation because it will have a
significant adverse effect on the ability of unpopular plaintiffs to
seek recourse in our courts, and it will operate to benefit foreign
corporate defendants at the expense of domestic counterparts and will
skew the playing field against injured victims.
Now, a lot of organizations oppose the bill, and I would like to read
from a letter from the Judicial Conference of the United States, the
Chief Justice of the United States presiding, in a letter to the
committee chairman.
It says that ``section 2 of the bill would reinstitute a rule
eliminated in 1993 upon the recommendation of the Judicial Conference,
approved by the Supreme Court, and after review by Congress, because of
the serious problems it engendered during a 10-year period of
operation. Section 2 also would amend rule 11 of the Federal Rules of
Civil Procedure in a manner consistent with the longstanding Judicial
Conference policy opposing direct amendment of the Federal rules by
legislation.''
The letter goes on to say that the bill ``would directly amend civil
rule 11 to remove a court's discretion to impose sanctions on a
frivolous filing and eliminate the rule's `safe-harbor' provisions. The
bill undoes amendments to rule 11 that took effect on December 1, 1993,
and would bring back the provisions that were first introduced in 1983

[[Page H7101]]

and removed from the rule in 1993, after a decade of signally bad
experiences with the operation and effects of the 1983 rule.''
The Judicial Conference of the United States goes on to state: ``Like
H.R. 4571, the 1983 version of rule 11 required sanctions for every
violation of the rule. It spawned thousands of court decisions and
generated widespread criticism. The rule was abused by resourceful
lawyers, and an entire `cottage industry' developed that churned
tremendously wasteful satellite litigation that had everything to do
with strategic gamesmanship and little to do with underlying claims.
Rule 11 motions came to be met with countermotions that sought rule 11
sanctions for making the original rule 11 motion.
``Some of the serious problems caused by the 1983 amendments to rule
11 included:
``Creating a significant incentive to file unmeritorious rule 11
motions by providing a possibility of monetary penalty.''
It goes on to cite other problems that occurred that were cured in
1993. The letter goes on: ``The 1993 amendments to rule 11 were
designed to strike a fair and equitable balance between competing
interests, remedy the major problems with the rule, and allow courts to
focus on the merits of the underlying cases rather than on rule 11
motions.''
It goes on to say that the ``experience with the amended rule since
1993 has demonstrated a marked decline in rule 11 satellite litigation
without any noticeable increase in the number of frivolous filings. In
June 1995, the Federal Judicial Center conducted a survey of 1,130
lawyers and 148 judges on the effects of the 1993 rule 11 amendments .
. . The Center found general satisfaction with the amended rule. It
also found that more than 75 percent of the judges and lawyers would
oppose a provision that would require a court to impose a sanction when
the rule is violated. A majority of the judges and lawyers, both
plaintiffs' and defendants' lawyers, believed that groundless
litigation was handled effectively by judges.
``Undoing the 1993 rule 11 amendments, even though no serious problem
has been brought to the Judicial Conference rules committee's
attention, would frustrate the purpose and intent of the Rules Enabling
Act.''
It goes on to criticize the provisions in section 3, the mandatory
application to State laws, and section 4, the provision on forum
shopping.
Mr. Speaker, in addition to the Judicial Conference, other
organizations oppose the legislation. The NAACP, the Public Citizen,
the Alliance for Justice, People for the American Way, the American
Association of People with Disabilities, the Lawyers' Committee for
Civil Rights Under Law, the American Bar Association, the National
Conference of State Legislatures, National Partnership for Women,
National Women's Law Center, the Center for Justice and Democracy,
Consumers Union, National Association of Consumer Advocates, USAction,
U.S. PIRG, and the NAACP Legal Defense Fund all oppose the legislation.
Mr. Speaker, one of the additional problems with the bill is the
chilling effect it may have on bringing important, legitimate,
unpopular actions. This is due to the fact that much of the impetus of
the 1993 changes stemmed from abuses by defendants in civil rights
cases, namely, that civil rights defendants were choosing to harass
civil rights plaintiffs by filing a series of rule 11 motions intended
to slow down and impede meritorious cases.
Although the bill states that the proposed rule 11 changes shall not
be construed to ``bar or impede the assertion of new claims or remedies
under Federal, State or local civil rights law,'' the language does not
clearly and simply exempt civil rights and discrimination cases under
current law, as should be the case. Determining what a new claim or
remedy might be would just add to the litigation.
Certainly, it does not cover the fact that this bill and rule 11 do
not offer an attorney the ability to appeal a rule 11 sanction. History
has demonstrated that civil rights lawsuits are often extremely
unpopular, particularly in certain parts of the country where some
judges almost automatically consider civil rights cases as frivolous.
In such courts, plaintiffs' attorneys could be unreasonably subject to
sanctions, even suspensions, without appeal contrary to the purpose of
rule 11.

{time} 1300

Mr. Speaker, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I yield 6 minutes to the gentleman
from Texas (Mr. Smith).
Mr. SMITH of Texas. Mr. Speaker, I thank the gentleman from Wisconsin
(Mr. Sensenbrenner), the chairman of the Committee on the Judiciary,
for yielding me this time.
Mr. Speaker, frivolous lawsuits bankrupt individuals, ruin
reputations, drive up insurance premiums, increase health care costs,
and put a drag on the economy. Frivolous lawsuits are brought, for
example, where there is no evidence that shows negligence on the part
of the defendant. These nuisance lawsuits make a mockery of our legal
system.
Of course, many Americans have legitimate legal grievances, from
someone wrongly disfigured during an operation to a company responsible
for contaminating a community's water supply. No one who deserves
justice should be denied justice. However, gaming of a system by a few
lawyers drives up the cost of doing business and drives down the
integrity of the judicial system.
Let me give some examples. The Chief Executive Officer of San
Antonio's Methodist Children's Hospital was sued after he stepped into
a patient's hospital room and asked how he was doing. Of course, a jury
cleared him of any wrongdoing.
A Pennsylvania man sued the Frito-Lay company, claiming that Doritos
chips were ``inherently dangerous'' after one stuck in his throat.
After 8 years of costly litigation, the Pennsylvania Supreme Court
threw out the case, writing that there is ``a common sense notion that
it is necessary to properly chew hard foodstuffs prior to swallowing.''
In a New Jersey Little League game, a player lost sight of a fly ball
because of the sun. He was injured when the ball struck him in the eye.
The coach was forced to hire a lawyer after the boy's parents sued. The
coach settled the case for $25,000.
Today, almost any party can bring any suit in almost any
jurisdiction. That is because plaintiffs and their attorneys simply
have nothing to lose. All they want is for the defendant to settle.
This is legalized extortion. It is lawsuit lottery.
Some lawyers file lawsuits for reasons that can only be described as
absurd. They sue a theme park because its haunted houses are too scary.
They sue the Weather Channel for an inaccurate forecast. And they sue
McDonald's, claiming a hot pickle dropped from a hamburger caused a
burn and mental jury.
Defendants, on the other hand, can unfairly lose their careers, their
businesses and their reputations. In short, they can lose everything.
This is not justice, and there is a remedy. The Lawsuit Abuse Reduction
Act.
Mr. Speaker, this applies to both plaintiffs who file frivolous
lawsuits merely to extort financial settlements and to defendants who
unnecessarily prolong the legal process. If the judge determines a
claim is frivolous, then they can order that person to pay the
attorney's fees of the party who is the victim of their frivolous
claim. This will make a lawyer think twice before he or she brings a
lawsuit.
In addition, this legislation prevents forum shopping. It requires
that personal injury claims be filed only where the plaintiff resides,
where the injury occurred, or where the defendant's principal place of
business is located. This provision addresses the growing problem of
attorneys who shop around the country for judges who routinely award
excessive amounts.
One of the Nation's wealthiest trial lawyers, Dickie Scruggs, has
told us exactly how this abuse occurs, and the chairman of the
Committee on the Judiciary used this example a while ago, but, quite
frankly, it is just too good not to repeat.
Here is what one of the king of torts says about forum shopping:
``What I call `the magic jurisdiction.' It's where the judiciary is
elected with verdict money, the trial lawyers have established
relationships with the judges that are elected; they've got large
populations of voters who are in on the

[[Page H7102]]

deal, they're getting their piece in many cases. It's almost impossible
to get a fair trial if you're a defendant in some of these places. Any
lawyer fresh out of law school can walk in there and win the case, so
it doesn't matter what the evidence or law is.''
Mr. Speaker, I do not know how anyone can justify the continuation of
this kind of abuse. One of these magic jurisdictions where trial
lawyers flock is in my home State of Texas in Jefferson County. The
Austin American Statesman noted that trial lawyers claim this is where
``juries pass down sizable judgments.'' Soaring medical liability
insurance rates have followed, which has caused doctors to flee the
area.
Mr. Speaker, forum shopping is a part of lawsuit abuses and we must
pass legislation to stop it from occurring. The following organizations
support H.R. 4571: American Tort Reform Association, National
Association of Home Builders, National Association of Manufacturers,
National Restaurant Association, National Federation of Independent
Business, American Insurance Association, and the U.S. Chamber of
Commerce.
Also, I might add, both Republican and Democratic presidential and
vice presidential candidates are on record as wanting to stop frivolous
lawsuits. So the Lawsuit Abuse Reduction Act is sensible reform that
will help restore confidence to America's justice system.
Mr. Speaker, I want to add one point and address a concern that was
raised by my friend from Virginia and that had to do with a letter he
raised from the Judicial Conference. Well, the Judicial Conference does
not exactly enhance their credibility when they take a position
contrary to the judges that they purport to represent. And, in fact, in
surveys taken by the Judicial Conference before the rule was changed in
1993, it found that 80 percent of the judges favored the rule that we
seek to go back to. After the rule was changed and weakened, which we
opposed, they took another survey and found a majority of judges, in
fact almost a majority of trial lawyers, liked the original rule that
we seek to go back to in this legislation.
So, Mr. Speaker, I urge my colleagues to support this bill.
Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may
consume to comment that the letter from the Judicial Conference of the
United States outlining the survey results, showed a majority of
judges, lawyers, both plaintiffs and defense lawyers, believed that
groundless litigation was handled effectively by the judges and
preferred the 1993 amendment.
Mr. Speaker, I submit herewith the letter from the Judicial
Conference for the Record.

Judicial Conference of

the United States,

Washington, DC, July 9, 2004.
Hon. F. James Sensenbrenner, Jr.,
Chairman, Committee on the Judiciary, House of
Representatives, 2138 Rayburn House Office Building,
Washington, DC.
Dear Mr. Chairman: On behalf of the Judicial Conference, I
write to urge you to reconsider your position on the
``Lawsuit Abuse Reduction Act of 2004'' (H.R. 4571). [Section
2 of the bill would reinstitute a rule eliminated in 1993
upon the recommendation of the Judicial Conference, approval
by the Supreme Court, and after review by Congress, because
of the serious problems it engendered during a ten-year
period of operation. Section 2 also would amend Rule 11 of
the Federal Rules of Civil Procedure in a manner inconsistent
with the longstanding Judicial Conference [policy opposing
direct amendment of the federal rules by legislation.]
Section 3 of H.R. 4571 would apply the revised federal Rule
11 to certain state court actions, while section 4 would
amend the venue standards governing the filing of tort
actions in both the federal and state courts: Sections 3 and
4 implicate federal-state comity interests and raise
important policy and practical concerns.

section 2

[Section 2 would directly amend Civil Rule 11 to remove a
court's discretion to impose sanctions on a frivolous filing
and eliminate the rule's ``safe-harbor'' provisions. The bill
undoes amendments to Rule 11 that took effect on December 1,
1993, and would bring back the provisions that were first
introduced in 1983 and removed from the rule in 1993, after a
decade of signally bad experiences with the operation and
effects of the 1983 rule.
Like H.R. 4571, the 1983 version of Rule 11 required
sanctions for every violation of the rule. It spawned
thousands of court decisions and generated widespread
criticism. The rule was abused by resourceful lawyers, and an
entire ``cottage industry'' developed that churned
tremendously wasteful satellite litigation that had
everything to do with strategic gamesmanship and little to do
with underlying claims. Rule 11 motions came to be met with
counter motions that sought Rule 11 sanctions for making the
original Rule 11 motion.
[Some of the other serious problems caused by the 1983
amendments to Rule 11 included:

(1) Creating a significant incentive to file unmeritorious
Rule 11 motions by providing a possibility of monetary
penalty;
(2) engendering potential conflict of interest between
clients and their lawyers, who advised withdrawal of
particular claims despite the clients' preference;
(3) exacerbating tensions between lawyers; and
(4) providing little incentive, and perhaps a distinctive
disincentive, to abandon or withdraw a pleading or claim--and
thereby admit error--that lacked merit after determining that
it no longer was supportable in law or fact.

The 1993 amendments to Rule 11 were designed to strike a
fair and equitable balance between competing interests,
remedy the major problems with the rule, and allow courts to
focus on the merits of the underlying cases rather than on
Rule 11 motions. The rule establishes a safe harbor,
providing a party 21 days within which to withdraw a
particular claim or defense before sanctions can be imposed.
If the party fails to withdraw an allegedly frivolous claim
or defense within the 21 days, a court may impose sanctions,
including assessing reasonable attorney fees.] The 1983 Rule
11 authorized a court to sanction discovery-related abuse
under Rule 11, Rule 26(g), or Rule 37, which created
confusion. Under the 1993 amendments to Rule 11, sanctioning
of discovery-related abuse was limited to Rules 26 and 37,
which provide for sanctions that include awards for
reasonable attorney fees.
The 1993 amendments to Rule 11 culminated a long, critical
examination of the rule begun four years earlier. The
Advisory Committee on Civil Rules (Advisory Committee)
reviewed a significant number of empirical examinations of
the 1983 Rule 11, including three separate studies conducted
by the Federal Judicial Center in 1985, 1988, and 1991, a
Third Circuit Task Force report on Rule 11 in 1989, and a New
York State Bar Committee report in 1987. The Advisory
Committee took note of several book-length analyses of Rule
11 case law.
The 1991 Federal Judicial Center survey noted that most
federal judges believed that the 1983 version of Rule 11 had
positive effects. But the study also noted that most judges
found several other methods more effective than Rule 11 in
handling such litigation and, most significantly, that about
one-half of the judges reported that Rule 11 exacerbates
behavior between counsel. After reviewing the literature and
empirical studies of problems caused by the 1983 amendments
to Rule 11, the Advisory Committee issued in 1990 a
preliminary call for general comment on the operation and
effect of the rule. The response was substantial, calling for
a change in the rule.
The Advisory Committee concluded that the cost-shifting in
Rule 11 created an incentive for too many unnecessary Rule 11
motions. Amendments to Rule 11 were drafted. The Supreme
Court promulgated and transmitted the amendments to Congress
in May 1993 after extensive scrutiny and debate by the bench,
bar, and public in accordance with the Rules Enabling Act
process (28 U.S.C. Sec. Sec. 2071-2077).
[Experience with the amended rule since 1993 has
demonstrated a marked decline in Rule 11 satellite litigation
without any noticeable increase in the number of frivolous
filings. In June 1995, the Federal Judicial Center conducted
a survey of 1,130 lawyers and 148 judges on the effects of
the 1993 Rule 11 amendments. About 580 attorneys and 120
judges responded to the survey. The Center found general
satisfaction with the amended rule. It also found that more
than 75 percent of the judges and lawyers would oppose a
provision that would require a court to impose a sanction
when the rule is violated. A majority of the judges and
lawyers, both plaintiffs' and defendants' lawyers, believed
that groundless litigation was handled effectively by judges.
Undoing the 1993 Rule 11 amendments, even though no serious
problem has been brought to the Judicial Conference rules
committees' attention, would frustrate the purpose and intent
of the Rules Enabling Act. Section 2 of H.R. 4571 would
effectively reinstate the 1983 version of Rule 11 that proved
so contentious and wasted so much time and energy of the bar
and bench. Section 2, indeed, in some ways seems to go beyond
the provisions that created serious problems with the 1983
rule. It may cause even greater mischief. Rule 11 in its
present form has proven effective and should not be revised.]

sections 3 and 4

[Section 3 would extend the new requirements of a mandatory
Rule 11 to all state court litigation that the state court
deems, on motion, to affect interstate commerce.] Two
features of this provision stand out. First, it would
directly regulate the practice and procedure of state courts,
mandating a federal standard for the imposition of sanctions
for the filing of frivolous or

[[Page H7103]]

ungrounded complaints and other papers in state court. At
present, states have been free to adopt their own rules of
practice, including a version of Rule 11, if a state so
chooses. Second, section 3 does not specify the actions to
which it would apply. Rather, it imposes on state judges a
broad generalized test to determine whether or not federal
Rule 11 would apply in a given case. If enacted, this section
could affect the cost and duration of a very large number of
civil actions in state courts.
[Section 4 seeks to prevent forum shopping by specifying
the places where a plaintiff may bring a ``personal injury''
claim by imposing a federal standard for determining the
venue of state law personal injury claims, in both state and
federal court. Such a federal standard would displace
existing state venue rules or statutes.] It would also
significantly alter the statutes in title 28, United States
Code, that now govern venue (section 1391) and transfer of
venue (section 1404) in the federal courts.
The Judicial Conference opposes the enactment of H.R. 4571
for the reasons stated above as to section 2. Sections 3 and
4 would make important changes in the administration of civil
justice in both federal and state courts. The Judicial
Conference has not had the opportunity to formally assess the
advisability or impact of these sections, but notes that they
may substantially affect federal-state comity interests and
raise important policy and practical concerns.
The Judicial Conference greatly appreciates your
consideration of its views: If you or your staff have any
questions, please contact Michael W. Blommer, Assistant
Director, Office of Legislative Affairs, Administrative
Office of the U.S. Courts, at (202) 502-1700.
Sincerely,
Leonidas Ralph Mecham,
Secretary.

Mr. SCOTT of Virginia. Mr. Speaker, I yield 4 minutes to the
gentleman from California (Mr. BERMAN).
(Mr. BERMAN asked and was given permission to revise and extend his
remarks.)
Mr. BERMAN. Mr. Speaker, I wonder if the majority ever steps back for
a second and looks at the situation that they are in. They run around
asking the Committee on the Judiciary in the House to pass legislation
stripping Federal courts of jurisdiction, including the U.S. Supreme
Court of jurisdiction, to decide fundamental constitutional questions
presented under the U.S. Constitution, and at the same time they run
around asking the Committee on the Judiciary of the House and the House
of Representatives to pass bills writing the venue laws for personal
injury actions brought in State court.
This is Federal intrusion in areas traditionally reserved for the
States and an effort to reverse everything that Marbury v. Madison and
all of its subsequent cases have said with respect to the Federal
Judiciary's role in dealing with questions arising under the
Constitution.
My friend, the very able chairman of the Committee on the Judiciary,
says on the question of frivolous lawsuits, help is on the way. But the
truth is, help is not on the way for those who are looking for it. The
germ of a good idea, mandatory sanctions for filing of frivolous
pleadings or frivolous motions, improved by an amendment by the
gentleman from Florida (Mr. Keller), to say that where an attorney is
responsible for three such frivolous filings he is subject to
suspension, that to be reviewed by an appellate court so that there are
real teeth and deterrence to the filing of frivolous lawsuits, is
combined with an overreaching, egregious effort to exchange the venue
laws of 50 State legislatures and the courts of those States with
respect to personal injury actions, any of which could be corrected by
those State legislatures on their own in matters having no serious
Federal interest.
Once again, the Republican majority, as it has done consistently for
the past 10 years in the area of tort reform, overreaches. It takes a
good idea, adds so many outrageous and overreaching provisions to that
good idea that the other House ignores it.
Let us go back and look at a little history. In 1994, the Republicans
came down with their Contract For America, and one of them was tort
reform. I will give a classic example. In the committee they eliminate
joint and several liability. There are arguments for it and there are
arguments against it. Either the plaintiff who is not able to recover
and made whole is hurt, or some defendant is potentially liable for the
entire judgment, even though he is only partially responsible.
In the Committee on Rules two amendments are offered; one to take
care of the minor tort feasers, the people who are involved in a
relatively small amount of the negligent conduct that produced the
injury; and the other one to wipe out that rule. The Republican
majority, fearful that the compromise proposal might pass the House,
does not allow the rule for that amendment to go through and, instead,
allows the one to simply reinstate the existing law.
In that bill, which of course never passed the Senate, in the medical
malpractice legislation, where they resisted any effort to make the
caps on pain and suffering relevant to today's costs and today's times
and the current situation, whether it is on class action lawsuits,
where they sought to suck up all State actions without any balance,
they have consistently overreached. And the result, as they are doing
with this bill, of overreaching is that we lose a chance to make some
improvement in the present system to deal effectively, in this case
with frivolous lawsuits, because they want everything or they want the
issue, and end up with nothing.
Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentleman
from Ohio (Mr. Chabot).
Mr. CHABOT. Mr. Speaker, I thank the gentleman for yielding me this
time.
Over the past decade, our Nation has witnessed an explosion of civil
lawsuits. Large jury awards and settlements have produced an ever-
growing number of actions in Federal and State courts, costing the
American people more than $200 billion each year and really drastically
reshaping our civil justice system.
Tort liability was developed to hold responsible those parties who
injure or harm others through actions determined to be negligent or
reckless or careless. However, civil actions are increasingly being
used to harass and threaten and manipulate innocent parties,
undermining the credibility and traditional notions of justice in this
country.
In 1993, Rule 11 of the Federal Rules of Civil Procedure, the Federal
safeguard against Federal lawsuits, was weakened, thereby making
frivolous claims easier to file. Those changes to Rule 11 provided
judges with more leeway to avoid sanctioning attorneys who filed
meritless claims.
For example, the rule changes allowed trial attorneys a 21-day
``safe-harbor period'' to correct or withdraw meritless claims without
fear of penalty, often at the expense of innocent defendants.
While a number of initiatives have been introduced in Congress to
reform specific aspects of the tort system, such as medical malpractice
reform, small business reform, and product liability reform, or the 18-
year Statute of Repose, the legislation that is being offered on the
floor today seeks to reduce frivolous lawsuits on a broader scale.
Restoring Rule 11, with its intended authority and expanding its
applicability, the Lawsuit Abuse Reduction Act will put teeth back into
the safeguard against frivolous claims. This legislation will remove
the safe-harbor provision I mentioned before, it would authorize judges
to impose sanctions, including monetary, against attorneys and parties
who file meritless claims, it would extend sanctions to discovery, and
it would extend Rule 11 claims that affect interstate commerce.
Mr. Speaker, I would strongly urge my colleagues to support this
legislation.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 4 minutes to the
gentleman from North Carolina (Mr. Watt).
Mr. WATT. Mr. Speaker, I thank the gentleman for yielding me this
time.
Let me first agree with my colleagues on both sides of the aisle that
I do not think anybody really likes frivolous litigation, and this bill
provides an opportunity for people to get up and say that. I think if
we were to ask either the Republican or the Democratic nominees for
President and Vice President that are out there running, all of them
will say, no, I do not like frivolous litigation.
The problem here is that my colleagues just do not want to be
confused by the facts, because this bill is going to do more to
encourage frivolous litigation, potentially, than it is going to do to
discourage frivolous litigation. The Judicial Conference of the United
States has made that clear in the letter that has been introduced into
the

[[Page H7104]]

Record in which they say that the provisions of this bill, which go
back to the rules that were in effect prior to 1983, those rules were
changed because they spawned a whole cottage industry of litigation
related to frivolous lawsuits.

{time} 1315

So even if this were going to discourage frivolous lawsuits, which
they say it would not, you are going to engender a whole new set of
problems because what they say happened was Rule 11 motions came to be
met with countermotions that sought Rule 11 sanctions for making the
original Rule 11 motion. What sense does that make that we would set up
a system to encourage people to file countermotions against each other
claiming that the other side was frivolous in what they were doing in
the lawsuit?
The Judicial Conference is clear that this bill would provide
incentives to encourage litigants to keep a frivolous claim in court
because if they ever withdrew the frivolous claim, it in effect would
be a concession that it was frivolous. So somebody files a lawsuit,
realizes they have a bad claim, then has no way of getting out of it
because they are afraid to withdraw the claim because somebody is going
to hit them with sanctions, and the fact that they withdrew the claim
is an admission that it was a frivolous claim. It is going to set up
situations where lawyers are put in conflicts of interest with their
clients because the client wants to pursue a claim that may be
frivolous, the lawyer does not want to pursue it, realizes that the
claim is frivolous and cannot back out of it without getting into a
conflict of interest with their client. All of that is outlined in the
letter from the Judicial Conference.
This is not really about doing something that is going to discourage
frivolous lawsuits, this bill is going to encourage frivolous lawsuits
and encourage pursuit of frivolous lawsuits in a way that the Judicial
Conference has outlined clearly.
There seems to be this mentality, I hate frivolous lawsuits and do
not confuse me with the facts because that is not what I am interested
in. We should vote this bill down and keep the rules in place that are
there that allow judges to make reasonable decisions in their courts.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself 1 minute.
Mr. Speaker, the Judicial Conference has amnesia and they did not
look back into the history of what happened between 1983 and 1993 when
the rules that this bill proposes were in place.
In 1991, the Judicial Conference Advisory Committee on Civil Rule did
a survey and reviewed Rule 11. At that time 751 Federal judges found
that an overwhelming majority of them, 95 percent, believed Rule 11 did
not impede development of the law; 72 percent believed that the
benefits of the rule outweighed any additional requirement of judicial
time; 81 percent believed that the 1983 version of Rule 11 had a
positive effect on litigation in the Federal courts; and 80 percent
believed that the rule should be retained in its then-current form.
That is what the judges who were on the bench at the time this rule was
in effect said.
The Judicial Conference ought to spend their time looking back at
their own records and their own surveys rather than sending these types
of letters advising us that what we are doing here is no good.
Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Florida
(Mr. Keller).
Mr. KELLER. Mr. Speaker, I rise today in strong support of the
Lawsuit Abuse Reduction Act of 2004. The overriding central purpose of
this legislation is to prevent frivolous lawsuits from being filed in
the first place. To achieve this, we provide for tough, mandatory
sanctions, including a three strikes and you are out penalty, which I
authored.
Now should Members vote for this legislation? To determine that
answer, may I suggest that Members consider three questions:
First, do Members believe frivolous lawsuits waste good people's time
and money?
Second, should lawyers who bring frivolous lawsuits face tough
mandatory sanctions?
Third, when a court has determined that an attorney has brought at
least three frivolous lawsuits under Rule 11, should there be a three
strikes and you are out penalty?
If the answers to those questions are yes, Members should vote in
favor of this legislation. In fact, I will take it a step further and
tell Members flat out that the answers to those questions are yes, at
least according to Senator John Edwards, a Democrat from North
Carolina, who was a plaintiff's personal injury attorney.
On December 15, 2003, Newsweek magazine published an article written
by Senator John Edwards where he said, ``Frivolous lawsuits waste good
people's time and hurt the real victims. Lawyers who bringing frivolous
cases should face tough, mandatory sanctions, with a `three strikes'
penalty.''
Mr. Speaker, I agree, and that is precisely what this legislation
does. Congress should act today in a bipartisan manner to prevent and
punish frivolous lawsuits. We should care about each more and sue each
other less. I urge my colleagues to vote yes on the Lawsuit Abuse
Reduction Act of 2004.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 4 minutes to the
gentlewoman from California (Ms. Waters).
Ms. WATERS. Mr. Speaker, I rise in strong opposition both to this
bill and to the process which produced it. H.R. 4571 would make
fundamental changes to the Rule 11 sanctions process without our even
receiving the benefit of input from either the Judicial Conference or
the Supreme Court.
Mr. Speaker, it is obvious that the proponents of this legislation do
not want to hear from our judges because they know that the vast
majority of our judges do not agree with this bill. As a matter of
fact, I think that this bill could appropriately be named big business
versus the people.
Mr. Speaker, big businesses pay expensive lawyers by the hour to
protect their interests. Trial lawyers handling many of these cases
that are being termed frivolous are paid only if they win.
I would like to quote John Q. Quinn, a veteran trial lawyer from
Houston, who sees this as a make-or-break election issue in an article
that appeared in the Los Angeles Times. ``Corporate America is in
charge these days. They control the White House, the Congress and the
Supreme Court. But so far they do not control the right to trial by
jury. That is the only place where ordinary citizens can go and have
their complaints heard,'' Quinn said. I further quote him when he said
``Ordinary people cannot hire lobbyists in Washington, but in the
courtroom they get an equal chance to stand up against a corporation.''
Now the Chamber of Commerce and big corporate America, spending
millions of dollars in public relations campaigns, would have Members
believe that the number of civil cases have risen and thus the number
of frivolous lawsuits, but that is simply not the case. I would like to
further quote this Los Angeles Times article which said, ``The Justice
Department's Bureau of Justice Statistics and the National Center for
State Courts track civil trials and verdicts in the Nation's 75 largest
counties. In April, the bureau reported in the last decade the number
of cases have gone down, not up.''
The number of general civil cases disposed of by trial in the
Nation's largest counties declined from 22,451 in 1992 to 11,908 in
2001. That is a 47 percent decline. The plaintiffs won about half the
time, and the overall median award was $37,000 in 2001, down from
$65,000 in 1992.
These cases included automobile accidents, medical malpractice and
product liability claims. About one-third of the cases involved
contract claims which typically involve one business against each
other. Mr. Speaker, we are talking about ordinary people. We are
talking about people who get up every day and go to work, common folk
who just earn sometimes entry-level wages. We are talking about people
who could be harmed in an automobile accident or on the job working at
a company that does not care about their safety, where they can lose a
limb, their eyes, they could be killed. They could lose their lives.
Are we going to prevent the ability of these people to be heard and
have their day in court? Big business may not want to accept liability,
but it must; and we cannot live in a country where we have big
business, because they

[[Page H7105]]

have money, come to the Congress of the United States and produce
legislation that would prevent the average, little person from having
their day in court and being heard by a jury.
Mr. SENSENBRENNER. Mr. Speaker, I yield 3 minutes to the gentlewoman
from Pennsylvania (Ms. Hart).
Ms. HART. Mr. Speaker, I thank the gentleman from Wisconsin (Chairman
Sensenbrenner) for bringing this bill up today, and I rise in support
of the legislation.
Interestingly enough, every Member who has spoken in support of the
legislation today is an attorney, me included. In my private practice,
I represented small businesses, businesses which employed four or five
people on the average.
I recall very clearly their concerns when they came to see me and my
colleagues. It was, unfortunately, the fear of lawsuits. Retail
businesses today are not opening at the rate they probably should be
because of fear of lawsuits. Our economic recovery has begun, but it
would be moving along much more quickly but for fear of lawsuits.
We have the opportunity today to prevent many of those lawsuits,
lawsuits that are frivolous. This bill will in no way effect anyone who
has a legitimate lawsuit. It will only affect those who do not; those
who waste money and resources, those who cause a lot of job loss. The
Lawsuit Abuse Reduction Act of 2004 will provide for appropriate
sanctions against frivolous lawsuits. That means it will provide for
fewer frivolous lawsuits.
This bill applies to cases brought by individuals as well as by
businesses both big and small, including business claims filed to
harass competitors and gain market share. The bill applies to both
plaintiffs and defendants if what they are filing is a frivolous
action. Polls show that Americans overwhelmingly support legislation
barring frivolous lawsuits.
A recent poll showed that 83 percent of likely voters believe there
are too many lawsuits in America; 76 percent believe lawsuit abuse
results in increased prices for goods and services; and 73 percent of
Americans support requiring sanctions against attorneys who file
frivolous lawsuits, and that is what this legislation does.
Frivolous lawsuits make businesses and workers suffer. This year the
Nation's older ladder manufacturer, a family-owned company in New York,
filed for bankruptcy protection and sold off most of its assets due to
litigation costs. The company was founded in 1855, but it could not
handle the cost of liability insurance which had risen from 6 percent
of their sales to nearly 30 percent today, even though the company
never actually lost a court judgment. The company owner said, ``We
could see the handwriting on the wall, and just want to end this whole
thing.''
Let us pass this legislation and make sure that our U.S.
manufacturing sector stays strong.

{time} 1330

It is our error if we fail to protect them today. Our manufacturing
sector, which has been the envy of the world, finds itself mired in a
slow recovery due to the cost of many lawsuits.
I encourage my colleagues to support this legislation. It has been
costly to our business sector and especially costly to jobs.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 4 minutes to the
gentlewoman from Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. I thank the distinguished gentleman for his
leadership on this issue and a number of Members who have come to the
floor to express their opposition to this legislation.
Mr. Speaker, the prime place for the answer to the question of
frivolous lawsuits has to be in our judicial system. I am not sure why
Congress considers it necessary to interfere on a regular basis with
the normal process of the court system. They have done that throughout
the years of the leadership of the Republican agenda, particularly as
relates to closing the door to the injured, to plaintiffs, with the
representation that there are too many frivolous lawsuits.
They did it in product liability, so a child injured on the Nation's
playground, their parents could not find their way into the courthouses
and have the judges or juries make the decisions that are necessary on
the facts that are presented.
In the bankruptcy setting, they attempted to alter the bankruptcy
code so that those in the middle class would never be able to go in and
file Chapter 11 as our large corporations have been able to do over the
years. Why do we feel the necessity to think that we are the arbiter on
frivolous lawsuits when we do not have the facts before us?
The legislation we have would reverse the changes to rule 11 of the
Federal Rules of Civil Procedure that were made by the Judicial
Conference in 1993 such that, one, 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; two, discovery-related activity
would be included within the scope of the rule; and, three, 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 on
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 rather than
having a must-apply rule implemented on them by eliminating from them
the ability to review the facts?
Part of the legal justice system is the eye on the facts, the
presence in the courtroom, the lawyers, plaintiffs, defendants,
prosecutors, defense lawyers, fact finders in the jury, the judge; not
an oversight body way up here in Washington that has no knowledge of
what is going on in individual courthouses.
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 have to
enhance 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. Mistakes do
happen.
Overall, this legislation will deter indigent plaintiffs from seeking
counsel to file meritorious claims given the potential of high legal
fees. This goes right in the face, if you will, of contingent fees that
have been so important to those that have been injured on their job,
injured in catastrophic disasters, such as issues dealing with
mobility. All of those questions, individuals will now be deterred
because lawyers will have this enhanced, if you will, burden that could
have been handled in the courthouse.
I have not seen a dearth of judges who have had the ability and the
responsibility to throw out frivolous lawsuits, fear doing so. Yet we
want to sit on the high and look down the mountain and interject into
the courts in Texas, Louisiana, New York, Wisconsin, Georgia and States
all around the Nation and legislate what judges already do--create a
fair justice system.
The ``Benedict Arnold corporation'' refers to a company that in bad
faith takes advantage of loopholes in our Tax Code to establish bank
accounts or to ship jobs abroad for the main purpose of tax avoidance,
I will support this provision in the motion to recommit.
Let me simply say, in closing, Mr. Speaker, this is a bad legislative
initiative. I would ask my colleagues to oppose it. Give all the
decisions back to the courthouse and let us have a fair judicial system
for all.
Mr. Speaker, I rise in opposition to the base bill before the
Committee of the Whole, H.R. 4571, the Lawsuit Abuse Reduction Act of
2004 and state my support for the substitute as offered by the
gentleman from Texas, Mr. Turner.
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.

[[Page H7106]]

In the case of H.R. 4571, the Lawsuit Abuse Reduction Act, this
legislation requires an overhaul in 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 needs
and desires. National uniformity is also an important consideration, in
federalism--Congress' 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 fund 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. Therefore, I planned to offer an amendment
that would preclude these entities from so benefiting.
The text of the amendment defined the term ``Benedict Arnold
Corporation'' and proposed to prevent such companies from benefiting
from the legal remedies that H.R. 4571 purports to offer.
The ``Benedict Arnold Corporation'' refers to a company that, in bad
faith, takes advantage loopholes in our tax code to establish bank
accounts or to ship jobs abroad for the main purpose of tax avoidance.
A tax-exempt group that monitors corporate influence called ``Citizen
Works'' has compiled a list of 25 Fortune 500 Corporations that have
the most offshore tax-haven subsidiaries. The percentage of increase in
the number of tax havens held by these corporations since 1997 ranges
between 85.7 percent and 9,650 percent.
This significant increase in the number of corporate tax havens is no
coincidence when we look at the benefits that can be found in doing
sham business transactions. Some of these corporations are ``Benedict
Arnolds'' because they have given up their American citizenship;
however, they still conduct a substantial amount of their business in
the United States and enjoy tax deductions of domestic corporations.
Such an amendment would preclude these corporations from enjoying the
benefit of mandatory attorney sanctions for a Rule 11 violation. By
forcing these corporate entities to fully litigate matters brought
helps to put their true corporate identity into light and discourages
them from performing as many domestic transactions that may be
actionable for a claimant.
In the context of the Judiciary's consideration of the Terrorist
Penalties Enhancement Act, H.R. 2934, my colleagues accepted an
amendment that I offered that ensured that corporate felons were
included in the list of individuals eligible for prosecution for
committing terrorist offenses. The amendment that I would have offered
for this bill has the same intent--to increase corporate accountability
and to encourage corporate activity with integrity.
I ask that my colleagues support the substitute offered by Mr. Turner
and defeat the base bill. We must carefully consider the long-term
implications that this bill, as drafted, will have on indigent
claimants, the trial attorney community, and facilitation or corporate
fraud.
Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentleman
from Georgia (Mr. Gingrey).
Mr. GINGREY. I thank the gentleman for yielding me this time.
Mr. Speaker, I rise in very strong support of LARA, the Lawsuit Abuse
Reduction Act of 2004.
Mr. Speaker, as many of my colleagues know, during this recent August
recess, I spent about 10 days in court defending myself against an
alleged medical malpractice suit. I am not sure whether this fits the
definition, this particular suit, of a frivolous lawsuit, but after the
plaintiff's attorneys presented their evidence, over 8 days, to the
jury, the trial judge ruled in favor of me and my two partners in my
OB/GYN group on a directed verdict. Her decision was based on the fact
that there was no evidence whatsoever presented of proximate causation.
I was willing to defend myself in that lawsuit, but a lot of
physicians are not. Many times they are faced with what truly are
frivolous lawsuits, and they are sometimes encouraged by their
malpractice carrier, if it is determined by the carrier that the cost
of defending a lawsuit even though it is frivolous is more than what
the settlement amount would be, then they are encouraged and oftentimes
do settle. It makes the problem that much worse.
Obviously, this problem and what this law addresses is not just
unique to the medical profession. There are 600,000 small business men
and women in this country who are literally being put out of business
because of frivolous lawsuits and, yes, further loss of jobs, which the
other side wants to talk about so often and we are concerned about as
well. It is time to end this nonsense of frivolous lawsuits.
As the gentlewoman from Pennsylvania said a few minutes ago, 80
percent of the American public agree with us on this issue. Let us get
together, both sides of the aisle, and pass this good, commonsense
legislation.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 4\1/2\ minutes to the
gentleman from Massachusetts (Mr. Markey).
Mr. MARKEY. I thank the gentleman for yielding me this time.
Mr. Speaker, just think for a second what is going on in the world
this week.
The assault weapons ban expired yesterday, freeing the way for an
assault weapons buying frenzy. The Republican Congress refuses to allow
a vote on extending the ban on the sale of assault weapons.
Companies all over America continue to offshore American jobs to
foreign countries with tax breaks as incentives that the Republicans
refuse to take off the books.
Oil prices remain sky high, with analysts expecting them to stay sky
high for the foreseeable future, but the Republicans have no plan to
protect American consumers from being tipped upside down as they pay
gasoline prices and home heating oil prices.
The 9/11 Commission has come back with recommendations that they
insist that Congress pass to make sure there is not a repetition of 9/
11. The Republican Party refuses to bring those bills out here on the
floor.
Osama bin Laden is still at large, and just last week, we had a
videotape from his top deputy threatening further attacks on the United
States.
We have 1,000 troops who have died in Iraq. We have suffered 5,000
wounded in Iraq, and no end in sight.
North Korea may have exploded a nuclear bomb this week. South Korea
is now enriching uranium and plutonium.
So what has the Republican United States Congress decided to do this
week? What important issue are we debating? Will it be Iraq? Will it be
terrorism? Will it be oil prices? Will it be a stagnant economy? No.
The Republicans have decided that this week, 3 weeks before we
adjourn, is lawsuit abuse week, so that we can deny families in our
country that have been injured by large corporations from being able to
sue those corporations for the damage they did to the children, to the
families. And the centerpiece is this Lawsuit Abuse Reduction Act that
really should be called the Legislative Abuse Expansion Act.

[[Page H7107]]

This bill contains unconstitutional provisions that would force every
State court to implement entirely new court rules and procedures. The
bill contains unfunded mandates that would force States to conduct an
inquiry about what the outcome of the case will be before discovery and
trial have even taken place. How is the court supposed to know that? If
a case is not lucky enough to be brought before Judge Carnac, the court
may have to subpoena witnesses, hold evidentiary hearings and ask the
individuals involved to the litigation proceeding to spend time and
money on the new ``pretrial trial'' mandated by this bill to block
individuals from suing corporations who have hurt American families.
The simple fact is that the amount of civil litigation in this
country is not expanding. The Justice Department's Bureau of Justice
Statistics and National Center for State Courts track civil cases and
verdicts in the Nation's 75 largest counties. They reported in April
that, in the last decade, the number of cases has gone down, not up.
The bureau reported that the number of general civil cases disposed of
by trial in the Nation's largest counties declined from 22,000 in 1992
to 11,000 in 2001, a 47 percent decline.
There is no urgency on this issue. There has been a 47 percent
decline in these kind of cases. The plaintiffs won about half the time.
And the overall median award was $37,000 in 2001, down from $65,000 in
1992.
Why are we taking these bills up when there is no litigation
explosion? Why are we running roughshod over the rights of the States
to set rules? Why are we restricting the flexibility of judges to
protect ordinary families in our country?
There is only one reason why, because the Republican Party wants to
shut down the access that every citizen currently has to our legal
system to seek justice and compensation when they have been harmed by
the actions of a wealthy corporation. That is what this is all about.
Vote ``no'' on this legislation.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself 2 minutes.
Mr. Speaker, I respect greatly the gentleman from Massachusetts (Mr.
Markey), but when he armed his cannon, he pointed it at the wrong
target. This bill has nothing to do with assault weapons or tax breaks
or oil prices or the 9/11 Commission or catching Osama bin Laden or
casualties in Iraq or whether the North Koreans have a nuclear weapon
or not; nor does it deal with legitimate meritorious lawsuits.
What it does deal with is frivolous lawsuits, frivolous lawsuits as
defined by the same Federal Rule of Civil Procedure that was on the
books for 10 years, between 1983 and 1993, that 80 percent of the
Federal judges when they were surveyed believed should be retained in
its then current form. This bill does not restrict the access to the
courts to anybody who has got a meritorious claim.
But what it does do is that it sanctions those lawyers who file
frivolous lawsuits and deter them from filing frivolous lawsuits again.
If we did not have sanctions against people, people would ignore the
law. If there were no sanctions for driving 50 miles an hour over the
speed limit or running a red light, I think it would be pretty
dangerous for all of us when we went home. Because the sanctions that
are currently in rule 11 have no deterrent effect against filing
frivolous lawsuits, there are too many of them. We have heard about
them in this debate.
What this bill does is simply go back to what happened prior to 1993,
prevents forum shopping and says that, if a lawyer files repeated
frivolous filings in the court three times, they are out. We have got
to do that if we want to have our courts be used for the administration
of justice rather than being a cover for those who wish to file
frivolous papers.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 2 minutes to the
gentleman from Washington (Mr. Inslee).
(Mr. INSLEE asked and was given permission to revise and extend his
remarks.)
Mr. INSLEE. Mr. Speaker, there is a fatal defect in this bill, and
that fatal defect is that it would essentially refuse to give American
citizens relief if they were injured by a foreign corporation's clear
and palpable negligence. The defect in this bill is that, if you live
in Seattle, you are hurt in Portland by a failure of a Tokyo
corporation, this bill says you cannot bring a claim anywhere in the
United States against a Japanese corporation that injured you unless
that corporation happens to have a retail outlet in the State where you
live or where the accident happened.

{time} 1345

And this is a very serious matter. If one lives in Seattle, if they
are injured in Portland, and the product that injures them is made in
Germany or Japan or England, they are out of luck. They are now
shielding out-of-U.S. corporations.
I understand the Republican Party's infatuation with outsourcing, but
I do not understand why they would expose Americans and say they cannot
bring a claim against somebody that makes a foreign car or foreign
construction equipment that injures them.
If my colleagues think I am just sort of blowing smoke here, I want
to read from the Congressional Research Service memo on this subject.
It says: ``However, if a defendant's principal place of business was
not in the United States, then this option,'' meaning suing here,
``could not be exercised in the United States court. Consequently, it
would appear that in certain circumstances, the United States citizen
or resident injured in this country would not have a judicial forum in
the United States in which to seek relief.''
What this bill is, is the Foreign Corporation Protection Act. And for
the life of me, I cannot figure out why they would want on the
Republican side of the aisle to deny American citizens an avenue in an
American court under the American judicial system some right of
protection when a foreign corporation hurts them. What is the possible
rationale for that?
We need to fix this or reject it.
Mr. SENSENBRENNER. Mr. Speaker, I yield 3 minutes to the gentleman
from Texas (Mr. Smith).
Mr. SMITH of Texas. Mr. Speaker, I thank the gentleman from Wisconsin
for yielding me this time.
Mr. Speaker, let me respond to some of the concerns voiced by some of
those who think they might oppose this bill. First of all, if a foreign
corporation is involved, that does not prevent someone from having
their day in court. The bill clearly says that it is where the
plaintiff lives, and if one is a U.S. citizen, most likely they are
going to live in the United States, or where the injury occurred, and
the injury would have occurred in this country. So that takes care of
their concerns there.
Another previous speaker from Massachusetts started off by talking
about the ban on assault weapons. This bill has nothing to do with
that, but we do attempt to ban frivolous lawsuits, and in that we are
successful. But the gentleman from Massachusetts did make a good point,
and I will embrace it entirely, and that is he acknowledged, which I
thought was quite an admission, that today there are, in fact, even by
his own standards, 11,000 frivolous lawsuits a year. He said they have
come down. That is because of the asbestos lawsuits working their way
through the various courts. Eleven thousand frivolous lawsuits filed
today. I guarantee my colleagues that 99 percent of the American people
think 11,000 frivolous lawsuits a year today is 11,000 frivolous
lawsuits too many.
Another point I want to respond to, Mr. Speaker, was made by a
gentleman who was concerned about the effect of this legislation on
civil rights cases that might be filed. I want to assure him and others
who might have that similar concern that if they look at section 5 of
this bill, it reads: ``Nothing in this bill shall be construed to bar
or impede the assertion or development of new claims or remedies under
Federal, State, or local civil rights law.'' The reason it says ``new
claims'' is because claims that already exist under current law
obviously are not frivolous. There is a basis in law for filing those
lawsuits. So we protect anybody who might file a civil rights lawsuit
in this legislation. Furthermore, if there was some concern about that,
one would think that it would have been raised in the full Committee on
the Judiciary consideration of this bill. It was not mentioned and no
amendments were offered on that point.
Lastly, Mr. Speaker, I also want to reassure not only my colleagues
but those who might be listening to this debate that this is not a bill
trying to

[[Page H7108]]

impugn the motives of all trial lawyers. In fact, the great majority of
trial lawyers serve their profession and serve Americans honorably. We
are talking about a very few attorneys who, quite frankly, abuse the
system, who engage in legalized extortion, who file lawsuits for no
other reason than they think someone can settle out of court and they
are trying to extract money from them. That is the type of abuse we
seek to stop in this bill, and that is the kind of abuse we intend to.
Finally, there are many pieces of legislation considered by this body
where we can see where half of the American people might benefit, half
might not benefit. But in this case we have at least 99 percent of the
American people on one side and just a few lawyers on the other side.
And it is very rare, I think, that we would have the vast majority of
the American people so clearly favoring one cause, and that is the
cause of trying to reduce frivolous lawsuits.
Mr. SCOTT of Virginia. Mr. Speaker, I yield myself the balance of my
time.
The SPEAKER pro tempore (Mr. LaHood). The gentleman from Virginia
(Mr. Scott) has 1 minute remaining.
Mr. SCOTT of Virginia. Mr. Speaker, as it has been indicated, there
is a serious question in some cases of whether or not the forum
shopping is limited, one, to a situation where they cannot file
anywhere. But I want to quote from a letter from several civil rights
organizations. It states: ``More than a decade ago civil rights
organizations, including several of the undersigned organizations,
worked to amend Rule 11 because the old rule unfairly discouraged
meritorious civil rights claims. Nationwide surveys about the former
rule found that motions for sanctions were most frequently sought and
granted in civil rights cases.'' This bill ``seeks to take us back to
the changes made in 1993 to Rule 11 and force litigants to operate
under the terms that we fear, like the former rule we worked so hard to
amend, will be used to punish and deter valid claims of discrimination.
But'' this bill ``goes even further. Not content with changing rules
for Federal courts, the bill extends its reach to State courts,'' where
the problem of biased judges would even be more acute.
I would point out again that there is no appeal to these cases and
this does not apply to cases under existing law that many judges feel
are frivolous.
Mr. Speaker, I yield back the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself the balance of my
time.
The SPEAKER pro tempore. The gentleman from Wisconsin (Mr.
Sensenbrenner) has 1 minute remaining.
Mr. SENSENBRENNER. Mr. Speaker, the gentleman from Texas (Mr. Smith)
clearly stated that there is an exemption in this bill on civil rights
law and this bill does not apply to the development of new civil rights
laws. Further, the survey of the judges that I have referred to in the
past, 95 percent of the 751 federal judges believe that the old Rule
11, which the gentleman from Virginia complains of, did not impede the
development of the law. That is, 19 judges out of 20 said that the
assertion that the gentleman from Virginia made was not correct in
their opinion. That is why this bill is a good one and it ought to be
passed.
Mr. WEXLER. Mr. Speaker, a vote for this bill is a vote for a rule--
rule 11--that it had become an impediment to practicing law, not an
impediment to frivolous suits as its proponents would have you think.
The bill before us today seeks to turn back the clock. Eleven years
ago, Congress rewrote rule 11 to get rid of mandatory sanctions for
frivolous filings because mandatory sanctions had not helped stop
frivolous filings and in some cases made them worse. Why then are we
going backward today? And if we are going to turn back the clock, why
can't we turn back the clock to the unprecedented economic prosperity
of the Clinton administration--where we had a balanced budget and a
budget surplus, where we had reduced welfare roles and respect on the
international stage, and where we had 100,000 new cops on the street
and the lowest crime rate in decades.
If we are dead-set on turning back the clock, why must we turn it
back to a system that was proven not to work? We tried mandatory
sanctions for 10 years. After 10 years with mandatory sanctions,
Federal courts recommended against them because they were widely abused
and actually added to the wasteful litigating they were intended to
prevent.
Our court system is not perfect by any stretch of the imagination. We
need to meaningfully address the burden that frivolous lawsuits are
placing on our courts and on our society. However, this bill does not
provide any new answers; instead it takes us backward to a solution we
know doesn't work.
Mr. BISHOP of Georgia. Mr. Speaker, I rise today in opposition to
H.R. 4571, the misnamed ``Frivolous Lawsuit Reduction Act,'' and in
support of the Turner substitute.
Mr. Speaker, the 11,000 frivolous lawsuits filed yearly are a burden
on our court system, which interfere with the administration of
justice, and cost U.S. taxpayers millions of dollars each year. I fully
support commonsense reform.
H.R. 4571 was drafted by and for large corporations and special
interests with unlimited legal resources. It denies justice to injured
Americans by limiting them from getting their day in court. That's
wrong, Mr. Speaker. It does nothing to help consumers, Mr. Speaker, and
targets innocent victims instead of holding responsible those who
recklessly or negligently harm others.
The bill also unfairly benefits foreign corporations because it only
permits a lawsuit to be filed where the corporation's principal place
of business is located, making it more difficult to pursue a personal
injury or product liability action against a foreign corporation in the
United States. That's also wrong, Mr. Speaker, and it's not the kind of
reform that America needs.
The Turner substitute is measured and tough on abuse of the system,
while also protecting the rights of injured victims to receive the
compensation they deserve. In fact, the substitute's ``three-strikes-
and-you're-out'' provisions forbid frivolous filing attorneys from
bringing another suit for 10 years. For a first violation the
substitute would hold the attorney in contempt. For the second
violation the substitute imposes a mandatory fine. And for a third and
final violation, a ``third strike,'' you're out. That's tough, Mr.
Speaker, and a commonsense approach to frivolous litigation that
everyone should support.
The substitute also contains a civil rights carve-out, so that
citizens who want to bring new civil rights cases can do so. It
contains expedited disposition provisions to weed out junk lawsuits,
enhances sanctions for document destruction, and protects injured
parties and consumers. Finally, it eliminates the provision in the
underlying bill that provides a windfall to foreign or ``Benedict
Arnold'' corporations to the disadvantage of their U.S. competitors.
The Turner substitute is tough, Mr. Speaker, it's fair, and it
provides real reform while preserving access to the courts for millions
of Americans. I urge my colleagues to support it.
Mr. PAYNE. Mr. Speaker, I am pleased to support the Lawsuit Abuse
Reduction Act, H.R. 4571, that addresses the problem of frivolous
lawsuits in a constitutional manner. As an OB-GYN, I am very aware of
the damage frivolous litigation is causing small businesses and medical
practitioners. Frivolous lawsuits filed by unscrupulous trial lawyers
can drive small businesses into bankruptcy and force doctors to abandon
their medical practice. These lawsuits inflict the greatest danger on
consumers who must pay more for goods and services and medical patients
who cannot find needed medical services in their communities.
H.R. 4571 reduces frivolous lawsuits by exercising Congress's
constitutional authority to establish rule of civil procedure for
federal courts. Specifically, H.R. 4571 restores mandatory sanctions
for attorneys who file frivolous lawsuits. Among other sanctions,
attorneys who file frivolous lawsuits may be required to pay the other
side's attorneys fees. The possibility of having to pay attorneys fees
is an important factor in discouraging ``nuisance'' suits--lawsuits
filed in the hopes of extorting cash settlements from defendants who
have decided it is better to settle quickly than face the possibility
of a lengthy and costly legal proceedings. This form of legal blackmail
is one of the most abhorrent practices plaguing our legal system today.
I am pleased to see Congress taking action to address it.
H.R. 4571 also ends the practice of forum shopping. Forum shopping is
an abuse of Federal ``diversity jurisdiction'' that allows a trial
attorney to pick a venue known for awarding large cash awards for
spurious claims. All too often, a plaintiff's attorney will choose a
forum that has a very tenuous or insignificant relation to the main
case, but has a reputation for awarding huge victories to the
plaintiff's bar. Forum shopping is especially a problem in class action
suits. H.R. 4571 addresses this problem by requiring cases be filed in
the Federal district or State where the plaintiff resides, the State or
Federal district where the plaintiff was injured or the State or
Federal district where the defendant's principal place of business is
located.
Mr. Speaker, frivolous lawsuits endanger small business across the
country. I am pleased to see Congress today addressing the

[[Page H7109]]

litigation crisis, not by attempting to nationalize tort law, but by
exercising our constitutional authority over the rules of Federal civil
procedure and diversity jurisdiction. I, therefore, urge all my
colleagues to support H.R. 4571, the Lawsuit Abuse Reduction Act.
Mr. STARK. Mr. Speaker, I rise in opposition to the so-called Lawsuit
Abuse Reduction Act, Nonprofit Athletic Organization Protection Act,
and Volunteer Pilot Organization Protection Act. The Republicans are
now so desperate to run against trial lawyers in this election that
they have turned against our judicial system, student athletes, and
countless other Americans.
Almost all volunteers, including coaches, are already protected from
frivolous lawsuits by the Volunteer Protection Act of 1997, but the
Republicans want to go beyond the better judgment and bipartisan
consensus of 1997 in order to create an election-year issue.
Under the athletic organization act, an organization like the NCAA
could violate title IX by failing to provide equal opportunities for
female athletes, or court violate civil rights, anti-trust, or labor
laws, and not be held accountable in court.
The 1997 Volunteer Protection Act rightly excluded volunteers who
operate ``a motor vehicle, vessel [or] aircraft'' from legal immunity
for negligence because volunteerism has to be encouraged without
sacrificing the rights of injured parties. The pilot organization
protection act destroys this balance by holding most pilots to one
standard but allowing volunteer pilots to escape liability for
negligence.
The Lawsuit Abuse Protection Act hurts all Americans by exposing them
and their attorneys to motions intended to harass them and slow down
the legal process, a tactic often used by wealthy defendants in civil
rights trials. This is one of many reasons why the U.S. Judicial
Conference, headed by Chief Justice William Rehnquist, opposes this
bill. H.R. 4571 is also unconstitutional, because it forces every state
court to implement new court rules and procedures, even though Congress
has no jurisdiction over state courts.
Mr. Speaker, I am happy to stand up for our Constitution, judicial
system, athletes, and all Americans by voting ``no'' on these three
bills. If that makes me a friend of the trial lawyers, then I proudly
stand with Thurgood Marshall, William Jennings Bryan, and Abraham
Lincoln over Tom DeLay and George W. Bush.
Mr. BLUMENAUER. Mr. Speaker, H.R. 4571 is a thinly veiled attack on
the trial lawyers at the expense of injured plaintiffs. By requiring
mandatory sanctions that would apply to civil rights cases, H.R. 4571
will prohibit many legitimate and important civil rights actions from
being filed.
No one wants frivolous abuses of our court system. There is no need
to sacrifice the rights of individuals to do so. I vote in support of a
substitute amendment offered by Congressman Turner that will protect
the civil rights of individuals and against H.R. 4571.
Mr. CONYERS. Mr. Speaker, I do not support this legislation because
it will have a significant, adverse impact on the ability of civil
rights plaintiffs to seek recourse in our courts, it will operate to
benefit foreign corporate defendants at the expense of their domestic
counterparts, and it will massively skew the playing field against
injured victims.
This bill must be bad given the number of organizations that are
opposed to it. This list includes the United States Judicial
Conference, the NAACP, Public Citizen, the Alliance for Justice, People
for the American Way, the American Association of People with
Disabilities, the Lawyers' Committee for Civil Rights Under Law, the
American Bar Association, the National Conference on State
Legislatures, National Partnership for Women, National Women's Law
Center, the Center for Justice & Democracy, Consumers Union, National
Association of Consumer Advocates, USAction, U.S. PIRG, and the NAACP
Legal Defense Fund.
By requiring a mandatory sanctions regime that would apply to civil
rights cases, H.R. 4571 will chill many legitimate and important civil
rights actions. This is due to the fact that much if not most of the
impetus for the 1993 changes stemmed from abuses by defendants in civil
rights cases--namely that civil rights defendants were choosing to
harass civil rights plaintiffs by filing a series of rule 11 motions
intended to slow down and impede meritorious cases.
Although the bill states that the proposed rule 11 changes shall not
be construed to ``bar or impede the assertion or development of new
claims or remedies under Federal, State, or local civil rights law,''
the language does not clearly and simply exempt civil rights and
discrimination cases, as should be the case. Determining what a ``new
claim or remedy'' is will be a daunting and complex issue for most
courts and clearly does not cover all civil rights cases in any event.
Section 4, the ``forum shopping'' provision, would operate to provide
a litigation and financial windfall to foreign corporations at the
expense of their domestic competitors. This is because, instead of
permitting claims to be filed wherever a corporation does business or
has minimum contacts, as most state long-arm statutes provide, the bill
only permits the suit to be brought where the defendant's principal
place of business is located--in the case of a foreign corporation,
that does not exist in the United States.
If a U.S. citizen is harmed by a product produced or manufactured by
a foreign competitor, under H.R. 4571 the harmed U.S. citizen could
have no recourse against a foreign corporation, whereas he or she would
have recourse against a comparable U.S. corporation. This is unfair to
both the U.S. citizen and all U.S. companies that compete against the
foreign firm.
I urge you to vote ``no'' to this poorly drafted and unfair piece of
legislation.

September 13, 2004.
Dear Representative: We, the undersigned civil rights
groups, urge you to vote against H.R. 4571 and H.R. 3369. If
enacted, these bills will embolden some to unlawfully
discriminate without fear of being held accountable. This
legislation will turn back the progress civil rights
organizations have made to achieve equal rights under the law
these past decades.
Currently, Rule 11 of the Federal Rules of Civil Procedure
gives judges discretion to determine whether a claim or
defense is frivolous and if so, the appropriate sanctions for
such a filing. H.R. 4571 would take away the judge's
discretion to impose sanctions and changes Rule 11 of the
Federal Rules of Civil Procedure in significant ways that
will harm victims of discrimination. By removing the ``safe
harbor'' provision that allows a party to withdraw or amend
the claim or defense that an opponent argues violates Rule 11
and making sanctions more severe and mandatory, the bill will
trigger additional, contentious judicial proceedings that
have little to do with the merits of the claims. Thus even
civil rights plaintiffs who pursue their legitimate claims
with the heightened risk of severe sanctions, may give up at
the hands of litigious defendants who employ a rope-a-dope
technique to simply wear out their opponents.
Our concerns about the threat to civil rights cases posted
by H.R. 4571 are well founded and based on real life
experience. More than a decade ago, civil rights
organizations--including several of the undersigned
organizations--worked to amend Rule 11 because the old rule
unfairly discouraged meritorious civil rights claims.
Nationwide surveys about the former rule found that motions
for sanctions were most frequently sought and granted in
civil rights cases. Expressing his concern about the former
Rule 11, the Honorable Robert L. Carter, United States
District Court Judge for the Southern District of New York,
noted, ``I have no doubt that the Supreme Court's opportunity
to pronounce separate schools inherently unequal [in Brown v.
Board of Education] would have been delayed for a decade had
my colleagues and I been required, upon pain of potential
sanctions to plead our legal theory explicitly from the
start.''
H.R. 4571 seeks to take back the changes made in 1993 to
Rule 11 and force litigants to operate under the terms that
we fear, like the former rule we worked so hard to amend,
will be used to punish and deter valid claims of
discrimination. But H.R. 4571 goes even further. Not content
with changing the rules for federal courts, the bill extends
its reach to State court cases. Upon motion, the court is
required to assess the costs of the action ``to the
interstate economy.'' If the court determines that the state
court action ``affects interstate commerce,'' Rule 11 of the
Federal Rules of Civil Procedure ``shall apply to such
action.'' Imagining the proceedings necessary to determine
whether a particular state court action ``affects interstate
commerce'' is mind-boggling. Moreover, the total disregard
for federalism is astounding.
We also oppose H.R. 3369, the ``Nonprofit Athletic
Organization Protection Act.'' This bill gives immunity to
nonprofit athletic organizations. The scope of the
legislation could protect an organization that violates
federal or state law by discriminating against an athlete on
the basis of race, gender, disability or other protections
given under federal or state law. No evidence has been
presented that nonprofit athletic organizations need such
protection. Coaches and other volunteers are already
protected from liability under the 1997 Volunteer Protection
Act.
We understand that members of Congress who oppose H.R. 3369
risk being accused of siding with ``trial lawyers'' over
``Little Leagues,'' particularly this election season. But it
is not the ``trial lawyers'' that need your protection; it is
the players themselves and others who may be discriminated
against and may have no recourse under this bill who need
your protection. Therefore, we respectfully ask you to oppose
the bill.
If you have any questions or need more information, please
contact Hilary O. Shelton, Director, NAACP Washington Bureau,
202.463.2940 or Sandy Brantley, Legislative Counsel, Alliance
for Justice, 202.822.6070.
Sincerely,
Alliance for Justice, American Association of People with
Disabilities (AAPD), Lawyers' Committee for Civil
Rights Under Law, National Association for the
Advancement of Colored People (NAACP), National
Partnership for Women, National Women's Law

[[Page H7110]]

Center, People For the American Way, USAction, U.S.
Public Interest Research Group (U.S. PIRG).
____

Judicial Conference

of the United States,

Washington, DC, July 9, 2004.
Hon. F. James Sensenbrenner, Jr.,
Chairman, Committee on the Judiciary, House of
Representatives, Rayburn House Office Building,
Washington, DC.
Dear Mr. Chairman: On behalf of the Judicial Conference, I
write to urge you to reconsider your position on the
``Lawsuit Abuse Reduction Act of 2004'' (H.R. 4571). Section
2 of the bill would reinstitute a rule eliminated in 1993
upon the recommendation of the Judicial Conference, approval
by the Supreme Court, and after review by Congress, because
of the serious problems it engendered during a ten-year
period of operation. Section 2 also would amend Rule 11 of
the Federal Rules of Civil Procedure in a manner inconsistent
with the longstanding Judicial Conference policy opposing
direct amendment of the federal rules by legislation. Section
3 of H.R 4571 would apply the revised federal Rule 11 to
certain state court actions, while section 4 would amend the
venue standards governing the filing of tort actions in both
the federal and state courts: Sections 3 and 4 implicate
federal-state comity interests and raise important policy and
practical concerns.

section 2

Section 2 would directly amend Civil Rule 11 to remove a
court's discretion to impose sanctions on a frivolous filing
and eliminate the rule's ``safe-harbor'' provisions. The bill
undoes amendments to Rule 11 that took effect on December 1,
1993, and would bring back the provisions that were first
introduced in 1983 and removed from the rule in 1993, after a
decade of signally bad experiences with the operation and
effects of the 1983 rule.
Like H.R. 4571, the 1983 version of Rule 11 required
sanctions for every violation of the rule. It spawned
thousands of court decisions and generated widespread
criticism. The rule was abused by resourceful lawyers, and an
entire ``cottage industry'' developed that churned
tremendously wasteful satellite litigation that had
everything to do with strategic gamesmanship and little to do
with underlying claims. Rule 11 motions came to be met
with counter motions that sought Rule 11 sanctions for
making the original Rule 11 motion.
Some of the other serious problems caused by the 1983
amendments to Rule 11 included:
(1) creating a significant incentive to file unmeritorious
Rule 11 motions by providing a possibility of monetary
penalty;
(2) engendering potential conflict of interest between
clients and their lawyers, who advised withdrawal of
particular claims despite the clients' preference;
(3) exacerbating tensions between lawyers; and
(4) providing little incentive, and perhaps a distinct
disincentive, to abandon or withdraw a pleading or claim--and
thereby admit error--that lacked merit after determining that
it no longer was supportable in law or fact.
The 1993 amendments to Rule 11 were designed to strike a
fair and equitable balance between competing interests,
remedy the major problems with the rule, and allow courts to
focus on the merits of the underlying cases rather than on
Rule 11 motions. The rule establishes a safe harbor,
providing a party 21 days within which to withdraw a
particular claim or defense before sanctions can be imposed.
If the party fails to withdraw an allegedly frivolous claim
or defense within the 21 days, a court may impose sanctions,
including assessing reasonable attorney fees. The 1983 Rule
11 authorized a court to sanction discovery-related abuse
under Rule 11, Rule 26(g), or Rule 37, which created
confusion. Under the 1993 amendments to Rule 11, sanctioning
of discovery-related abuse was limited to Rules 26 and 37,
which provide for sanctions that include awards of reasonable
attorney fees.
The 1993 amendments to Rule 11 culminated a long, critical
examination of the rule begun four years earlier. The
Advisory Committee on Civil Rules (Advisory Committee)
reviewed a significant number of empirical examinations of
the 1983 Rule 11, including three separate studies conducted
by the Federal Judicial Center in 1985, 1988, and 1991, a
Third Circuit Task Force report on Rule 11 in 1989, and a New
York State Bar Committee report in 1987. The Advisory
Committee took note of several book-length analyses of Rule
11 case law.
The 1991 Federal Judicial Center survey noted that most
federal judges believed that the 1983 version of Rule 11 had
positive effects. But the study also noted that most judges
found several other methods more effective than Rule 11 in
handling such litigation and, most significantly, that about
one-half of the judges reported that Rule 11 exacerbates
behavior between counsel. After reviewing the literature and
empirical studies of problems caused by the 1983 amendments
to Rule 11, the Advisory Committee issued in 1990 a
preliminary call for general comment on the operation and
effect of the rule. The response was substantial, calling for
a change in the rule.
The Advisory Committee concluded that the cost-shifting in
Rule 11 created an incentive for too many unnecessary Rule 11
motions. Amendments to Rule 11 were drafted. The Supreme
Court promulgated and transmitted the amendments to Congress
in May 1993 after extensive scrutiny and debate by the bench,
bar, and public in accordance with the Rules Enabling Act
process (28 U.S.C. Sec. Sec. 2071-2077).
Experience with the amended rule since 1993 has
demonstrated a marked decline in Rule 11 satellite litigation
without any noticeable increase in the number of frivolous
filings. In June 1995, the Federal Judicial Center conducted
a survey of 1,130 lawyers and 148 judges on the effects of
the 1993 Rule 11 amendments. About 580 attorneys and 120
judges responded to the survey. The Center found general
satisfaction with the amended rule. It also found that more
than 75% of the judges and lawyers would oppose a provision
that would require a court to impose a sanction when the rule
is violated. A majority of the judges and lawyers, both
plaintiffs' and defendants' lawyers, believed that groundless
litigation was handled effectively by judges.
Undoing the 1993 Rule 11 amendments, even though no serious
problem has been brought to the Judicial Conference rules
committees' attention, would frustrate the purpose and intent
of the Rules Enabling Act. Section 2 of H.R. 4571 would
effectively reinstate the 1983 version of Rule 11 that proved
so contentious and wasted so much time and energy of the bar
and bench. Section 2, indeed, in some ways seems to go beyond
the provisions that created serious problems with the 1983
rule. It may cause even greater mischief. Rule 11 in its
present form has proven effective and should not be revised.

Sections 3 and 4

Section 3 would extend the new requirements of a mandatory
Rule 11 to all state court litigation that the state court
deems, on motion, to affect interstate commerce. Two features
of this provision stand out. First, it would directly
regulate the practice and procedure of state courts,
mandating a federal standard for the imposition of sanctions
for the filing of frivolous or ungrounded complaints and
other papers in state court. At present, states have been
free to adopt their own rules of practice, including a
version of Rule 11, if a state so chooses. Second, section 3
does not specify the actions to which it would apply. Rather,
it imposes on state judges a broad generalized test to
determine whether or not federal Rule 11 would apply in a
given case. If enacted, this section could affect the cost
and duration of a very large number of civil actions in state
courts.
Section 4 seeks to prevent forum shopping by specifying the
places where a plaintiff may bring a ``personal injury''
claim by imposing a federal standard for determining the
venue of state law personal injury claims, in both state and
federal court. Such a federal standard would displace
existing state venue rules or statutes. It would also
significantly alter the statutes in title 28, United States
Code, that now govern venue (section 1391) and transfer of
venue (section 1404) in the federal courts.
The Judicial Conference opposes the enactment of H.R. 4571
for the reasons stated above as to section 2. Sections 3 and
4 would make important changes in the administration of civil
justice in both federal and state courts. The Judicial
Conference has not had the opportunity to formally assess the
advisability or impact of these sections, but notes that they
may substantially affect federal-state comity interests and
raise important policy and practical concerns.
The Judicial Conference greatly appreciates your
consideration of its views. If you or your staff have any
questions, please contact Michael W. Blommer, Assistant
Director, Office of Legislative Affairs, Administrative
Office of the U.S. Courts, at (202) 502-1700.
Sincerely,
Leonidas Ralph Mecham,
Secretary.
____

National Association for the

Advancement of Colored People,

Washington, DC, September 14, 2004.

Re NAACP opposition to H.R. 4571, the so-called ``Frivolous
Lawsuit Reduction Act''.

Members,
House of Representatives,
Washington, DC.
Dear Member of Congress: On behalf of the National
Association for the Advancement of Colored People (NAACP),
our nation's oldest, largest and most widely-recognized grass
roots civil rights organization, I am writing to urge you, in
the strongest terms possible, to oppose H.R. 4571, the so-
called ``Frivolous Lawsuit Reduction Act.'' Specifically, the
NAACP is convinced that should this misguided legislation
become law, it will have a serious and adverse impact on the
ability to bring civil rights cases.
While the NAACP is actively opposed to strategic lawsuits
against public participation (SLAPP suits), a careful review
of H.R. 4571 shows clearly that this particular legislation
does not address our concerns. In fact, if enacted, H.R. 4571
would embolden some to unlawfully discriminate without fear
of being held accountable. H.R. 4571 would dramatically alter
the operation of Rule 11 of the Federal Rules of Civil
Procedure and apply the new rule to state as well as federal
courts. Rule 11 prohibits attorneys from engaging in
litigation tactics that harass or cause unnecessary delay or
cost, or from making frivolous legal arguments or unwanted
factual assertions. The current Rule

[[Page H7111]]

11 was adopted in 1993 in an effort to correct numerous
problems resulting from amendments that had been made in
1983. Rather than curbing the problem of frivolous lawsuits,
as it was intended to do, the 1983 revisions spawned
thousands of court decisions and generated widespread
criticism. It was abused by resourceful attorneys and
resulted in wasteful satellite litigation and rising
incivility of the bar.
Furthermore, much of the impetus for the 1993 changes
stemmed from abuses by defendants in civil rights cases;
civil rights defendants were choosing to harass civil rights
plaintiffs by filing a series of Rule 11 motions intended to
slow down or impeded meritorious cases or intimidate the
defendants or their attorneys. In fact, several studies
determined that prior to the 1993 changes Rule 11 motions
were used more frequently in civil rights cases than any
other types of lawsuits.
While language nominally intended to mitigate the damage
that this bill will cause to civil rights cases has been
added, it is vague and simply insufficient in addressing our
concerns. Even with this weak and ineffective provision, H.R.
4571 would be extremely detrimental to those of us who are
forced to seek legal recourse to address discrimination in
our country. Thus, I urge you again, in the strongest terms
possible, to oppose H.R. 4571 and to see that it is defeated.
Should you have any questions about this legislation or the
NAACP opposition to it, please feel free to contact either me
or Carol Kaplan on my staff at (202) 463-2940. Thank you in
advance for your consideration of the NAACP position.
Sincerely,
Hilary O. Shelton,
Director.
____

American Bar Association,

Governmental Affairs Office,

Washington, DC, June 29, 2004.

Hon. F. James Sensenbrenner, Jr.,
Chairman, Committee on the Judiciary, House of
Representatives, Washington, DC.
Dear Mr. Chairman: I am writing to you regarding the
hearing your Committee held June 22, 2004 on H.R. 4571,
legislation to make changes in Rule 11 of the Federal Rules
of Civil Procedure; make an amended Rule 11 of the Federal
Rules of Civil Procedure applicable to cases filed in state
courts if such cases affect interstate commerce; and make
changes relating to jurisdiction and venue for personal
injury cases filed in state and federal courts.
The ABA opposes the provisions in the legislation that
would change the Federal Rules of Civil Procedure without
going through the process set forth in the Rules Enabling
Act. The ABA fully supports the Rules Enabling Act process,
which is based on three fundamental concepts: (1) the central
role of the judiciary in initiating judicial rulemaking, (2)
procedures that permit full public participation, including
by the members of the legal profession, and (3) recognition
of a congressional review period. We view the proposed rules
changes to the Federal Rules in H.R. 4571 as a retreat from
the Rules Enabling Act.
In 28 U.S.C. Sec. Sec. 2072-74, Congress prescribed the
appropriate procedure for the formulation and adoption of
rules of evidence, practice and procedure for the federal
courts. This well-settled, Congressionally-specified
procedure contemplates that evidentiary and procedural rules
will in the first instance be considered and drafted by
committees of the United States Judicial Conference, will
thereafter be subject to thorough public comment and
reconsideration, will then be submitted to the United States
Supreme Court for consideration and promulgation, and will
finally be transmitted to Congress, which retains the
ultimate power to veto any rule before it takes effect.
This time-proven process proceeds from separation-of-powers
concerns and is driven by the practical recognition that,
among other things:
(1) Rules of evidence and procedure are inherently a matter
of intimate concern to the judiciary, which must apply them
on a daily basis;
(2) Each rule forms just one part of a complicated,
interlocking whole, rendering due deliberation and public
comment essential to avoid unintended consequences; and
(3) The Judicial Conference is in a unique position to
draft rules with care in a setting isolated from pressures
that may interfere with painstaking consideration and due
deliberation.
We do not question congressional power to regulate the
practice and procedure of federal courts. Congress exercised
this power by delegating its rulemaking authority to the
judiciary through the enactment of the Rules Enabling Act,
while retaining the authority to review and amend rules prior
to their taking effect. We do, however, question the wisdom
of circumventing the Rules Enabling Act, as H.R. 4571 would.
We also have serious concerns about the provisions in H.R.
4571 that would impose the Federal Rules on the state courts
and would impose the changes relating to jurisdiction and
venue for personal injury cases filed in state and federal
courts. We hope your Committee will not move on legislation
containing such departures from current law until we and
others have sufficient time to analyze the impact they would
have on the state courts and so we will be able to present
our views to you on these very important matters.
We respectfully request that this letter be made part of
the permanent hearing record of June 22, 2004.
Sincerely,
Robert D. Evans.

Mr. GOODLATTE. Mr. Speaker, I rise today in support of H.R. 4571, the
Lawsuit Abuse Reduction Act.
Last year, I introduced legislation to address the escalating
problems that accompany frivolous lawsuits, the Class Action Fairness
Act. This legislation would reform the Federal rules that govern class
actions so that truly interstate lawsuits would be heard in Federal
courts, like the Framers envisioned. The current class action rules
provide an opportunity for opportunistic lawyers to game the system and
extort money from legitimate businesses.
The abuse of the class action process is just one example of how the
current litigious atmosphere in our country threatens to undermine the
growth and innovation that has characterized our great Nation since its
founding. Frivolous lawsuits force businesses to waste time and
resources that could otherwise be spent on new products, new services,
or innovative procedures that could reduce the costs of goods and
services for consumers.
Small businesses rank the cost and availability of liability
insurance second only to the costs of health care as their top
priority. Not coincidentally, both of these problems are fueled by
frivolous lawsuits.
H.R. 4571 is another commonsense approach to combat frivolous
lawsuits. It would restore mandatory sanctions for filing frivolous
lawsuits and allow monetary sanctions, including attorney's fees and
compensatory costs, against any party making a frivolous claim. H.R.
4571 would also allow sanctions for abuse of the discovery process, and
would abolish the current ``free pass'' provision that allows lawyers
to avoid sanctions if they withdraw the frivolous claim within 21 days
after a motion for sanctions has been filed.
By restoring strong penalties against those that file frivolous
claims, the Lawsuit Abuse Reduction Act will give businesses the
freedom to devote their resources to doing business, rather than
wasting their resources defending frivolous litigation.
I urge my colleagues to support this important legislation.
Mr. SENSENBRENNER. Mr. Speaker, I yield back the balance of my time.

Amendment In The Nature Of A Substitute Offered By Mr. Turner of Texas

Mr. TURNER of Texas. Mr. Speaker, I offer an amendment in the nature
of a substitute.
The SPEAKER pro tempore. The Clerk will designate the amendment in
the nature of a substitute.
The text of the amendment in the nature of a substitute is as
follows:

Amendment in the nature of a substitute offered by Mr.
Turner of Texas:
Strike all after the enacting clause and insert the
following:

SEC. 1. ``THREE STRIKES AND YOU'RE OUT'' FOR FRIVOLOUS
PLEADINGS.

(a) Signature Required.--Every pleading, written motion,
and other paper in any action shall be signed by at least 1
attorney of record in the attorney's individual name, or, if
the party is not represented by an attorney, shall be signed
by the party. Each paper shall state the signer's address and
telephone number, if any. An unsigned paper shall be stricken
unless omission of the signature is corrected promptly after
being called to the attention of the attorney or party.
(b) Certificate of Merit.--By presenting to the court
(whether by signing, filing, submitting, or later advocating)
a pleading, written motion, or other paper, an attorney or
unrepresented party is certifying that to the best of the
person's knowledge, information and belief, formed after an
inquiry reasonable under the circumstances--
(1) it is not being presented for any improper purpose,
such as to harass or to cause unnecessary delay or needless
increase in the cost of litigation;
(2) the claims, defenses, and other legal contentions
therein are warranted by existing law or by a non frivolous
argument for the extension, modification, or reversal of
existing law or the establishment of new law; and
(3) the allegations and other factual contentions have
evidentiary support or, if specifically so identified, are
reasonable based on a lack of information or belief.
(c) Mandatory Sanctions.--
(1) First violation.--If, after notice and a reasonable
opportunity to respond, a court, upon motion or upon its own
initiative, determines that subsection (b) has been violated,
the court shall find each attorney or party in violation in
contempt of court and shall require the payment of costs and
attorneys fees. The court may also impose additional
appropriate sanctions, such as striking the pleadings,
dismissing the suit, and sanctions plus interest, upon the
person in violation, or upon both such person and such
person's attorney or client (as the case may be).
(2) Second violation.--If, after notice and a reasonable
opportunity to respond, a court, upon motion or upon its own
initiative, determines that subsection (b) has been violated
and that the attorney or party with respect to which the
determination was made

[[Page H7112]]

has committed one previous violation of subsection (b) before
this or any other court, the court shall find each such
attorney or party in contempt of court and shall require the
payment of costs and attorneys fees, and require such person
in violation (or both such person and such person's attorney
or client (as the case may be)) to pay a monetary fine. The
court may also impose additional appropriate sanctions, such
as striking the pleadings, dismissing the suit and sanctions
plus interest, upon such person in violation, or upon both
such person and such person's attorney or client (as the case
may be).
(3) Third and subsequent violations.--If, after notice and
a reasonable opportunity to respond, a court, upon motion or
upon its own initiative, determines that subsection (b) has
been violated and that the attorney or party with respect to
which the determination was made has committed more than one
previous violation of subsection (b) before this or any other
court, the court shall find each such attorney or party in
contempt of court, refer each such attorney to one or more
appropriate State bar associations for disciplinary
proceedings, require the payment of costs and attorneys fees,
and require such person in violation (or both such person and
such person's attorney, or client (as the case may be)) to
pay a monetary fine. The court may also impose additional
appropriate sanctions, such as striking the pleadings,
dismissing the suit, and sanctions plus interest, upon such
person in violation, or upon both such person and such
person's attorney or client (as the case may be).
(4) Appeal; stay.--An attorney has the right to appeal a
sanction under this subsection. While such an appeal is
pending, the sanction shall be stayed.
(5) Not applicable to civil rights claims.--Notwithstanding
subsection (d), this subsection does not apply to an action
or claim arising out of Federal, State, or local civil rights
law or any other Federal, State, or local law providing
protection from discrimination.
(d) Applicability.--Except as provided in subsection
(c)(5), this section applies to any paper filed on or after
the date of the enactment of this Act in--
(1) any action in Federal court; and
(2) any action in State court, if the court, upon motion or
upon its own initiative, determines that the action affects
interstate commerce.

SEC. 2. ``THREE STRIKES AND YOU'RE OUT'' FOR FRIVOLOUS
CONDUCT DURING DISCOVERY.

(a) Signatures Required on Disclosures.--Every disclosure
made pursuant to subdivision (a)(1) or subdivision (a)(3) of
Rule 26 of the Federal Rules of Civil Procedure or any
comparable State rule shall be signed by at least one
attorney of record in the attorney's individual name, whose
address shall be stated. An unrepresented party shall sign
the disclosure and state the party's address. The signature
of the attorney or party constitutes a certification that to
the best of the signer's knowledge, information, and belief,
formed after a reasonable inquiry, the disclosure is complete
and correct as of the time it is made.
(b) Signatures Required on Discovery.--
(1) In general.--Every discovery request, response, or
objection made by a party represented by an attorney shall be
signed by at least one attorney of record in the attorney's
individual name, whose address shall be stated. An
unrepresented party shall sign the request, response, or
objection and state the party's address. The signature of the
attorney or party constitutes a certification that to the
best of the signer's knowledge, information, and belief,
formed after a reasonable inquiry, the request, response, or
objection is:
(A) consistent with the applicable rules of civil procedure
and warranted by existing law or a good faith argument for
the extension, modification, or reversal of existing law;
(B) not interposed for any improper purpose, such as to
harass or to cause unnecessary delay or needless increase in
the cost of litigation; and
(C) not unreasonable or unduly burdensome or expensive,
given the needs of the case, the discovery already had in the
case, the amount in controversy, and the importance of the
issues at stake in the litigation.
(2) Stricken.--If a request, response, or objection is not
signed, it shall be stricken unless it is signed promptly
after the omission is called to the attention of the party
making the request, response, or objection, and a party shall
not be obligated to take any action with respect to it until
it is signed.
(c) Mandatory Sanctions.--
(1) First violation.--If without substantial justification
a certification is made in violation of this section, the
court, upon motion or upon its own initiative, shall find
each attorney or party in contempt of court and shall require
the payment of costs and attorneys fees. The court may also
impose additional sanctions, such as imposing sanctions plus
interest or imposing a fine upon the person in violation, or
upon such person and such person's attorney or client (as the
case may be).
(2) Second violation.--If without substantial justification
a certification is made in violation of this section and that
the attorney or party with respect to which the determination
is made has committed one previous violation of this section
before this or any other court, the court, upon motion or
upon its own initiative, shall find each attorney or party in
contempt of court and shall require the payment of costs and
attorneys fees, and require such person in violation (or both
such person and such person's attorney or client (as the case
may be)) to pay a monetary fine. The court may also impose
additional sanctions upon such person in violation, or upon
both such person and such person's attorney or client (as the
case may be).
(3) Third and subsequent violations.--If without
substantial justification a certification is made in
violation of this section and that the attorney or party with
respect to which the determination is made has committed more
than one previous violation of this section before this or
any other court, the court, upon motion or upon its own
initiative, shall find each attorney or party in contempt of
court, shall require the payment of costs and attorneys fees,
require such person in violation (or both such person and
such person's attorney or client (as the case may be)) to pay
a monetary fine, and refer such attorney to one or more
appropriate State bar associations for disciplinary
proceedings. The court may also impose additional sanctions
upon such person in violation, or upon both such person and
such person's attorney or client (as the case may be).
(4) Appeal; stay.--An attorney has the right to appeal a
sanction under this subsection. While such an appeal is
pending, the sanction shall be stayed.
(d) Applicability.--This section applies to any paper filed
on or after the date of the enactment of this Act in--
(1) any action in Federal court; and
(2) any action in State court, if the court, upon motion or
upon its own initiative, determines that the action affects
interstate commerce.

SEC. 3. BAN ON CONCEALMENT OF UNLAWFUL CONDUCT.

(a) In General.--A court may not order that a court record
be sealed or subjected to a protective order, or that access
to that record be otherwise restricted, unless the court
makes a finding of fact in writing that identifies the
interest that justifies the order and that determines that
the order is no broader than necessary to protect that
interest.
(b) Applicability.--This section applies to any court
record, including a record obtained through discovery,
whether or not formally filed with the court.

SEC. 4. ENHANCED SANCTIONS FOR DOCUMENT DESTRUCTION.

(a) In General.--Whoever influences, obstructs, or impedes,
or endeavors to influence, obstruct, or impede, a pending
court proceeding through the intentional destruction of
documents sought in, and highly relevant to, that
proceeding--
(1) shall be punished with mandatory civil sanctions of a
degree commensurate with the civil sanctions available under
Rule 37 of the Federal Rules of Civil Procedure, in addition
to any other civil sanctions that otherwise apply; and
(2) shall be held in contempt of court and, if an attorney,
referred to one or more appropriate State bar associations
for disciplinary proceedings.
(b) Applicability.--This section applies to any court
proceeding in any Federal or State court.

SEC. 5. EXPEDITED DISPOSITION OF FRIVOLOUS AND OTHER
LAWSUITS.

(a) In General.--For each State, each judicial district in
the State shall, within 2 years of the date of the enactment
of this Act, develop and implement a civil justice expense
and delay reduction plan and submit it to the appropriate
governing body of the State. The governing body shall make
the plan available to the public.
(b) Principles.--Each plan required by subsection (a) shall
apply to actions in State court that affect interstate
commerce and any other actions that the governing body
considers appropriate. The plan shall be developed and
implemented with regard to the following principles:
(1) Systematic, differential treatment of civil cases that
tailors the level of individualized and case specific
management to such criteria as case complexity, the amount of
time reasonably needed to prepare the case for trial, and the
judicial and other resources required and available for the
preparation and disposition of the case.
(2) Early and ongoing control of the pretrial process
through involvement of a judicial officer in--
(A) assessing and planning the progress of a case;
(B) setting early, firm trial dates, such that the trial is
scheduled to occur within eighteen months after the filing of
the complaint, unless a judicial officer certifies that--
(i) the demands of the case and its complexity make such a
trial date incompatible with serving the ends of justice; or
(ii) the trial cannot reasonably be held within such time
because of the complexity of the case or the number or
complexity of pending criminal cases;
(C) controlling the extent of discovery and the time for
completion of discovery, and ensuring compliance with
appropriate requested discovery in a timely fashion; and
(D) setting, at the earliest practicable time, deadlines
for filing motions and a time framework for their
disposition.
(3) For all cases that the court or an individual judicial
officer determines are complex and any other appropriate
cases, careful

[[Page H7113]]

and deliberate monitoring through a discovery-case management
conference or a series of such conferences at which the
presiding judicial officer--
(A) explores the parties' receptivity to, and the propriety
of, settlement or proceeding with the litigation;
(B) identifies or formulates the principal issues in
contention and, in appropriate cases, provides for the staged
resolution or bifurcation of issues for trial consistent with
Rule 42(b) of the Federal Rules of Civil Procedure;
(C) prepares a discovery schedule and plan consistent with
any presumptive time limits that a district court may set for
the completion of discovery and with any procedures a
district court may develop to--
(i) identify and limit the volume of discovery available to
avoid unnecessary or unduly burdensome or expensive
discovery; and
(ii) phase discovery into two or more stages; and
(D) sets, at the earliest practicable time, deadlines for
filing motions and a time framework for their disposition.
(4) Encouragement of cost-effective discovery through
voluntary exchange of information among litigants and their
attorneys and through the use of cooperative discovery
devices.
(5) Conservation of judicial resources by prohibiting the
consideration of discovery motions unless accompanied by a
certification that the moving party has made a reasonable and
good faith effort to reach agreement with opposing counsel on
the matters set forth in the motion.
(6) Authorization to refer appropriate cases to alternative
dispute resolution programs that--
(A) have been designated for use in a district court; or
(B) the court may make available, including mediation,
minitrial, and summary jury trial.
(c) Techniques.--In developing the plan required by
subsection (a), a judicial district shall consider and may
include the following techniques:
(1) A requirement that counsel for each party to a case
jointly present a discovery-case management plan for the case
at the initial pretrial conference, or explain the reasons
for their failure to do so.
(2) A requirement that each party be represented at each
pretrial conference by an attorney who has the authority to
bind that party regarding all matters previously identified
by the court for discussion at the conference and all
reasonably related matters.
(3) A requirement that all requests for extensions of
deadlines for completion of discovery or for postponement of
the trial be signed by the attorney and the party making the
request.
(4) A neutral evaluation program for the presentation of
the legal and factual basis of a case to a neutral court
representative selected by the court at a nonbinding
conference conducted early in the litigation.
(5) A requirement that, upon notice by the court,
representatives of the parties with authority to bind them in
settlement discussions be present or available by telephone
during any settlement conference.
(6) Such other features as the judicial district considers
appropriate.

The SPEAKER pro tempore. Pursuant to House Resolution 766, the
gentleman from Texas (Mr. Turner) and the gentleman from Wisconsin (Mr.
Sensenbrenner) each will control 20 minutes.
Mr. TURNER of Texas. Mr. Speaker, I yield myself such time as I may
consume.
I offered a substitute, which I believe is much stronger in
preventing frivolous lawsuits than the bill offered to the House. In
addition, it preserves the right that was mentioned earlier to sue a
foreign corporation, which is jeopardized in the bill offered before
us.
The Republican bill also weakens our civil rights laws by having a
chilling effect upon suits relating to civil rights, and our substitute
carves out an exception for civil rights litigation. But, most
importantly, it does not eliminate the possibility that one may be
unable to sue a foreign corporation in the United States.
First of all, our bill strengthens the provisions against frivolous
lawsuits. Members on both sides of the aisle uniformly, unanimously
agree that our laws and our rules of procedure must prohibit frivolous
lawsuits. Our bill imposes a mandatory ``three strikes and you're out''
provision on frivolous pleadings and discovery violations. Thus, it is
far more stringent than the Republican bill, which merely subjects
these violations to mandatory payment of cost and fees. More
importantly, our bill includes clear and specific civil rights carve
outs so there will not be a chilling effect on these actions. We also
amend the United States Code so that the change is not subject to
future changes and modifications by the courts as the Republican bill
would be.
Second, our bill limits the ability of corporate wrongdoers to
conceal any conduct harmful to the public welfare by requiring that
court records may not be sealed unless the court first enters a finding
that such sealing is justified. This provision will help ensure that
information on dangerous products and actions is made available to the
public. A nearly identical provision passed by voice vote in the 107th
Congress with the support of the gentleman from Wisconsin (Chairman
Sensenbrenner). The Republican bill does not contain this very
important protection.
Third, we provide that parties which destroy documents in connections
with civil proceedings shall be punished with mandatory civil
sanctions, held in contempt of court, and referred to the State bar for
disciplinary proceedings. Again, this is far tougher than the
Republican bill, which does not provide for contempt of court and
disciplinary proceedings.
And, fourth, we specify that the Civil Justice Reform Act, which has
been so successful in the Federal courts, be applied to all courts in
order to speed up the pretrial process and to weed out junk lawsuits.
And, finally, unlike the Republican bill, our substitute does not
have this new rule of jurisdiction that operates to make it impossible
to sue a foreign corporation in this country and, further, by the
absence of such provision, promotes corporations in our own country
continuing this despicable process of relocating their headquarters
overseas in order to avoid U.S. taxes, and now they will do so to avoid
being sued. There is no reason to give these companies a windfall
profit, windfall gain, at the expense of corporations who do the right
thing and stay here at home.
This is a common sense substitute. It cracks down on frivolous
lawsuits even more forcefully than the Republican bill. It preserves
our antitrust laws and our ability to obtain justice against foreign
corporations. It is a better bill, a stronger bill, and one that we
would urge this House to substitute for the bill offered by our
Republican colleagues.
Mr. Speaker, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in strong opposition to this substitute amendment
which guts the bill.
Where to begin? I will begin with the title of the first section of
the substitute. It is entitled ``Three Strikes and You're Out.'' But it
is not true when we read the substitute. In fact, the substitute
provides that following three violations of this provision, the court
``shall refer each such attorney to one or more appropriate State bar
associations for disciplinary proceedings.'' Three strikes and you are
still in.
The Democratic substitute does not say that the attorney shall be
suspended from the practice of law. That is what the base bill says.
The bill says that after three strikes ``The Federal District court
shall suspend that attorney from the practice of law in that Federal
District Court.''
The base bill follows through on its ``three strikes and you're out''
promise. The Democratic substitute says ``three strikes and you have a
foul ball.''
But it gets worse. Not only are the filers of frivolous lawsuits not
out after three strikes under the Democratic substitute, but the
Democratic substitute even changes what a strike is under existing law.
Currently Rule 11 contains four criteria that can lead to a Rule 11
violation. The Democratic substitute references only three, kind of
like shrinking the strike zone.
Currently, Rule 11 allows sanctions against frivolous filers whose
denials of factual contentions are not ``warranted on the evidence'' or
are not ``reasonably based on the lack of information and belief.'' The
Democratic substitute removes this protection from the victims of
frivolous lawsuits under existing law. The Democratic substitute for
the first time without penalty allows defendants to file papers with
the court that include factual denials of allegations against them that
are not warranted by the evidence and not reasonably based. In other
words, misleading and unfactual filings end up getting a get-out-of-
jail-free card under the Democratic substitute.

[[Page H7114]]

{time} 1400

Instead, the substitute provides additional protection for defendants
filing frivolous defenses that are not warranted by the evidence and
not reasonably based. This is a step backward for victims of frivolous
lawsuits under both State and Federal law.
Further, the base bill provides that those who file frivolous
lawsuits can be made to pay all of the costs and attorneys' fees that
are ``incurred as a direct result of filing of the pleading, motion, or
other paper, that is the subject of the violation.'' The Democratic
substitute does not include that critical language, which is necessary
to make clear that those filing frivolous lawsuits must be made to pay
the full costs imposed on their victim by the frivolous lawsuit.
The Democrat substitute also imposes complicated mandates on each
State's judicial districts, requiring them to ``develop and implement a
civil justice expense and delay reduction plan.'' The Democratic
substitute requires States to implement these mandates under
exceedingly complex requirements that span all the way from pages 10 to
page 15 of the Democratic substitute and requires things like
``systematic, differential treatment of civil cases that tailors the
level of individualized and case specific management,'' whatever that
means. At a minimum, this is overly burdensome, and may be
unconstitutional.
The Democratic substitute requires that States ``develop and
implement'' these plans when the Supreme Court has held that ``Congress
may not simply commandeer the States by directly compelling them to
enact and enforce a Federal regulatory program.'' That is in New York
v. The United States 1992. That is exactly what the Democratic
substitute does without any justification under the Commerce Clause of
the Constitution.
The Democratic substitute also completely overrides State laws
regarding the sealing of records in all cases, including proceedings in
which State laws protect the privacy of sexual abuse victims, including
children. And let me repeat this: if the Democratic substitute passes
and becomes law, State laws relative to the sealing of court records on
sexual abuse cases, including those against minors, can be open to
public scrutiny. Shame on you. This blunderbuss provision in the
Democratic substitute covers State divorce proceedings, and even all
criminal cases, without a showing of why State procedures are
inadequate.
The Democratic substitute also retains rule 11's current ``free
pass'' provision, which allows lawyers to avoid sanctions for making
frivolous claims simply by withdrawing those claims within 21 days
after a motion for sanctions has been filed.
Now, let us look at that. A frivolous claim or frivolous filing has
been made. You have 21 days after you make it to withdraw it. But
meantime, the opposite party has got to go to the legal expense to make
the motion to the court to show that the claim is frivolous. And who
ends up paying the bill on that? Not the lawyer who filed the frivolous
claim, but the defendant and the defendant's lawyers; and that
provision actually encourages frivolous lawsuits by allowing unlimited
numbers of frivolous pleadings to be filed without penalty. Talk about
a loophole big enough to drive the Queen Mary through, that is it.
The Democratic substitute also does not include the bill's essential
provisions to prevent the unfair practice of forum shopping.
In short, the Democratic substitute does not provide for three
strikes and you are out. It provides for three strikes and you get
referred to the State Bar Association that can continue to let the
offending attorney practice law. The Democratic substitute even weakens
existing law that protects plaintiffs from defendants that file
frivolous denials that are not warranted by the evidence and are not
reasonably based. The substitute also fails to provide that attorneys'
fees be awarded to cover the full costs of responding to a frivolous
lawsuit, and the substitute also burdens the States by directly
compelling them to enact and enforce a Federal regulatory program. It
overrides State procedures governing the confidentiality of documents
in the course of legal proceedings. That is more than three strikes
against the Democratic substitute, and it should be soundly defeated.
Mr. Speaker, I reserve the balance of my time.
Mr. TURNER of Texas. Mr. Speaker, I yield myself such time as I may
consume.
I would remind the distinguished chairman that careful reading of our
bill would reveal to him there is no safe harbor allowing any period of
days, 21 or otherwise, to withdraw pleadings that may be frivolous.
What we have done in our bill is we have amended the statute. We have
provided a new statute against frivolous lawsuits; we do not disturb
rule 11. We urge him to take a closer look at the bill and what we
propose.
I would also suggest to the distinguished chairman that the provision
in our bill to protect the public against automatic sealing of certain
court records which may be important and contain important information
that should be available to the public to protect the public against
things like defective products and other things, the decision to seal
is one that is in the hands of the court and the sealing must be
justified clearly. In the cases of sexual abuse, that sealing is
justified. I do not know any judge in the land that would not
understand that. And, certainly, I do not see any judge taking the
language that we have offered and overturning any State law or issuing
any ruling contrary to State law that would not result in the sealing
of sexual abuse cases.
The major principal defect in the Republican bill relates to the fact
that you are unable to sue a foreign corporation because they attempt
to change the law as it presently exists and to make the provision
require that you file against a corporation where their principal place
of business is. There are many foreign corporations that may be in the
United States that do not have their principal place of business here;
it is overseas. So the language that has been offered has the effect of
denying a plaintiff with a genuine injury, not a frivolous lawsuit, but
a genuine, valid lawsuit from being able to sue a foreign corporation.
That provision, perhaps the Republican drafters of their bill did not
understand what they were doing with the language they offered, but
that is the effect of it; and I think anyone who votes for the
Republican bill and says that we are denying an American citizen the
opportunity with a legitimate claim to file a suit in the United States
against a foreign corporation is casting a vote they will regret.
I also think it is important to point out that the sanctions that are
provided in the Democratic substitute are stronger than the provisions
in the Republican bill. It is also, I think, important to point out
that our sanctions apply to State courts where interstate commerce is
involved. Your ``three strikes and you are out'' provision does not
apply in State courts, perhaps, again, by drafting error; but it does
not apply.
So we think it is very critical that this bill be the one the House
adopts.
Mr. Speaker, I yield 5 minutes to the distinguished gentleman from
New York (Mr. Weiner).
Mr. WEINER. Mr. Speaker, I thank the gentleman for yielding me this
time. It frequently falls upon me as a nonlawyer on the Committee on
the Judiciary to try to sort through the facts of these things and try
to reduce them into small words that those of us who are nonlawyers can
understand. But I was taken by one fact that was articulated by one of
my colleagues on the other side that according to a recent survey, 80
percent of the American people are against frivolous lawsuits. I would
love to know who the 20 percent are that like frivolous lawsuits so
that we can have a focus group with them. They are probably lawyers of
some sort, I would imagine.
First, let me just say we rarely have an opportunity to take a look
at a proposal before us today and look at almost an identical proposal
that was the law of the land between 1983 and 1993. Then, too, there
was an effort to unclog the courts of frivolous lawsuits; then, too,
the Judicial Conference, not this body, the Judicial Conference said we
have to try to come up with some rules.
What was the effect? The effect was not reducing the amount of
frivolous lawsuits; it was adding a whole new level of litigation
around frivolous lawsuits. Rather than simply having a

[[Page H7115]]

judge say, that is frivolous, it is out of here, let us move on with
the case, you then had suits and countersuits over whether or not
something was frivolous, because it was elevated with the changes that
were made in that decade.
We also found that an unintended consequence, and I think even my
colleagues acknowledge that it was unintended by their effort, albeit
insubstantial, to carve out civil rights suits, we found that when you
were bringing a novel, new kind of suit, you found yourself being
charged with making a frivolous lawsuit. Civil rights cases is just one
of them. We also saw the same thing could have or did happen when you
sued tobacco companies to recover for States.
And today, I would dare say that someone who brought a case that is
being brought in New York today, suing the country of Saudi Arabia for
their culpability in the September 11 attacks, someone could come
before a judge and say this is a frivolous lawsuit because it
represents no precedent, it has never been tried before and, therefore,
should be dismissed.
Obviously, it did not have that effect in that 10 years of clearing
out the docket of frivolous lawsuits. If anything, it increased them.
Secondly, we have heard frequently the matrix drawn between frivolous
lawsuits, increase of litigation, and insurance rates. I looked at the
bill fairly carefully. Nowhere does it require that insurance rates go
down, so I will have to assume the same thing will happen upon passage
of this bill, although the passage will not happen, because the other
body will never take up such a bill, that you will put in the
restrictions of average Americans getting into court and then, lo and
behold, insurance rates keep going up and up and up, because that is
what happened in California, and that is what happened in Florida. So
if my colleagues think that by voting for this bill they will be
reducing insurance rates, nothing could be further from the truth.
There has been some back-and-forth about this notion of venue
shopping: you can only bring an action in the defendant's, not the
person who is bringing the case, the defendant's principal place of
business. Well, again, I have very talented lawyers on both sides of
this, but the Congressional Research Service, the American Law
Division, hardly a pantheon of partisanship, hardly the place to go to
get the talking points for Fox News or for whoever guys think lies,
they write, ``If a defendant's principal place of business was not the
United States, then this option could not be exercised in a United
States court. Consequently, it would appear that in certain
circumstances, a United States citizen or resident injured in this
country would not have a judicial forum in the United States in which
to seek relief.''
That is what a relatively unbiased analysis of this thing looks like;
but even if it is not, what problem are you trying to solve? You should
allow Americans to take their cases where they are most appropriate,
not where you believe it should be.
Now, let me conclude with this thought. I heard a couple of times on
the campaign trail President Bush talked about not having a Washington-
based, one-size-fits-all solution for our Nation's problems. There is
another way to do this. There is another way. There is a way to look at
cases that have individual facts, have individual people, take them
before an individual, say a judge; or take those cases before a group
of individuals, say six or nine or 12 individual Americans from their
community, and allow them to vet the different sides of the argument
and allow that to be the decision-making process. It is called the
American justice system, and as contemptuous as my colleagues on the
other side of the aisle are that you could actually have a judge that
has the common sense to make a decision or a jury that has the common
sense to make a decision, or whether you can possibly have two lawyers
in the adversarial proceeding get the truth out, we here in Washington
have to say, this one size fits all.
Well, fortunately, this one size will only be in this one House and
will never be the law of this one land.
Mr. SENSENBRENNER. Mr. Speaker, I yield 3 minutes to the gentleman
from Texas (Mr. Smith).
Mr. SMITH of Texas. Mr. Speaker, I thank the chairman for yielding me
this time.
Mr. Speaker, anyone who is worried about what frivolous lawsuits will
do to them, their family, their friends, or their businesses ought to
rush to oppose this Democratic substitute amendment. That is because it
is an amendment that will do very little to prevent frivolous lawsuits.
The underlying bill makes several key changes that will deter lawyers
from filing frivolous lawsuits. The substitute amendment before us
strips all these away.
First, this legislation, the underlying legislation, allows the court
to require an individual who files a frivolous lawsuit to pay
attorneys' fees incurred as a result of the frivolous lawsuit. This
provision obviously makes attorneys think twice before they file such a
frivolous lawsuit. However, the Democratic substitute amendment does
not include this key provision. In other words, there is no
disincentive to file a frivolous lawsuit.
This also means that under the Democratic substitute, small business
owners would still suffer from the cost of frivolous lawsuits.
Individuals would still suffer because they would see their insurance
premiums go up. They would see their health care costs rise. They would
still see their reputations damaged, all because of wrongfully filed,
frivolous lawsuits.
In other words, Mr. Speaker, this substitute amendment does not
provide any relief to those who would get unfairly slapped with a
frivolous lawsuit. Those victims would still have to pay their own
legal fees.
Next, this substitute claims to have a ``three strikes and you are
out'' provision. But if you look at it closely, as the chairman
mentioned a while ago, there are no real consequences for the attorney
who repeatedly files frivolous lawsuits.

{time} 1415

Instead, the substitute merely requires a court to refer the
offending attorney to his State bar association; and you can imagine
that means that nothing is going to happen.
By contrast, the base bill requires that attorneys who fill frivolous
claims face real consequence. Those attorneys can be barred from
practicing in that Federal court for a year. That is a real
disincentive to file frivolous lawsuits.
Also, the Democratic substitute we are considering now places heavy
mandates on States. It requires a new regulatory scheme to deal with
``civil justice expense and delay'' issues. Mr. Speaker, I think that
is a very nice but meaningless euphemism for frivolous lawsuits. The
requirements would create a new bureaucratic nightmare instead of
dealing with the real problem, which is of course frivolous lawsuits.
Finally, Mr. Speaker, the substitute amendment does nothing to
address the problem of forum shopping and that is at least half the
problem. We simply cannot continue to allow trial attorneys to flock to
counties that will award unreasonably high verdicts to any plaintiff
who walks in the door. This does too much damage to many Americans and
it is, quite frankly, time to put a stop to this type of abuse.
Mr. Speaker, I urge my colleagues to oppose to substitute amendment
and vote yes on the underlying bill which would deter lawsuit abuse.
Mr. TURNER of Texas. Mr. Speaker, I yield 2 minutes to the gentleman
from Virginia (Mr. Scott).
Mr. SCOTT of Virginia. Mr. Speaker, I thank the gentleman for
yielding me time.
Mr. Speaker, there is a significant difference in the civil rights
exemption in the underlying bill and this amendment. This amendment is
vastly superior because it exempts all civil rights cases, not just
those cases that are based on new or evolving law. Many of the cases
brought under present laws are treated with hostility. Civil rights
cases are often unpopular and some judges do not like to see them.
In fact, the Alliance For Justice had a report on Judge Pickering's
hearing and said, ``At his hearing, Judge Pickering was asked about his
record of strongly favoring defendants in employment cases. Incredibly,
Judge Pickering defended his record by opining that almost no
employment discrimination cases that come before the Federal courts
have merit.''

[[Page H7116]]

Obviously, the problem is made worse when you expand the possibility
to State courts, where local judges in some areas may have a civil
bias. That is why the civil rights lawyers oppose the underlying bill
because they do not want those kind of judges empowered to essentially
allow mandatory sanctions to prevent those kind of cases from being
brought in the first place.
I would hope that we would adopt the language in the substitute, but
we should defeat the bill.
Mr. SENSENBRENNER. Mr. Speaker, I yield 3 minutes to the gentleman
from Florida (Mr. Keller).
Mr. KELLER. Mr. Speaker, I thank the gentleman from Wisconsin (Mr.
Sensenbrenner) for yielding me time.
I rise today in opposition to the Democratic substitute and I will
address the three or four strikes and you are out provision of the
Democratic substitute. I would like to begin by pointing out what the
Democratic White House hopefuls have said about this issue.
Senator John Edwards published an article in Newsweek Magazine on
December 15, 2003, where he says, ``Frivolous lawsuits waste good
people's time and hurt the real victims. Lawyers who bring frivolous
cases should face tough mandatory sanctions with a three strikes
penalty.''
He also told the Washington Post on May 20, 2003, ``We need to
prevent and punish frivolous lawsuits. Lawyers who file frivolous
lawsuits should face tough mandatory sanctions. Lawyers who file three
frivolous cases should be forbidden to bring another suit for the next
10 years. In other words, three strikes and you are out.''
That is not what the Democratic substitute says. The Democratic
substitute only provides that on three strikes the offending attorney
will be referred to a bar association and no action need be taken by
the bar to discipline the attorney under the substitute. That is not
what Senator Edwards said. Senator Edwards did not say, three strikes
and we are going to put a letter in your personnel file. He did not
say, three strikes and we will send a diplomat from the U.N. to talk to
you. He did not say, three strikes and we will refer this matter to a
State bar association where they will not be required to take any
disciplinary action.
Could it be that when it comes to cracking down on frivolous lawsuits
with a tough three strikes and you are out penalty that the White House
presidential candidate were for it before they were against it? Could
this be an example of flip-flopping? Do we really have, in fact, two
Americas, one America where we see very tough campaign rhetoric about
cracking down with mandatory sanctions and a three strikes and you are
out penalty and another America where we see watered-down liberal
legislation on the floor of Congress?
I think there should be one America, one America where we prevent and
punish frivolous lawsuits, not just with words but with actions. I urge
my colleagues to vote no on this Democrat substitute.
Mr. TURNER of Texas. Mr. Speaker, how much time remains on each side?
The SPEAKER pro tempore (Mr. LaHood). The gentleman from Texas (Mr.
Turner) has 6 minutes remaining. The gentleman from Wisconsin (Mr.
Sensenbrenner) has 7\1/2\ minutes remaining.
Mr. TURNER of Texas. Mr. Speaker, I yield 3 minutes to the gentleman
from Washington (Mr. Inslee).
(Mr. INSLEE asked and was given permission to revise and extend his
remarks.)
Mr. INSLEE. Mr. Speaker, we do have an honest debate and an honest
difference of opinion between the two parties here and it is rather
stark.
Democrats believe that if a Japanese car manufactured in Japan, the
brakes fail and injured you or your family and it is through negligence
of the manufacturer, you ought to be able to have redress in an
American court.
The Republicans want to outsource that to the Japanese courts and
make you fly to Tokyo to file your lawsuit.
If a German car blows up and burns you and your family to a crisp,
Democrats believe you ought to be able to go to the American judicial
system and have relief. Republicans believe you should outsource your
claims to the German courts. But it gets worse than that.
If a French car fails and injures your family, Democrats believe you
should go to an American court and get American justice. Republicans
believe you can outsource that even to the French. We do not even have
french fries in our cafeteria any more, but you would be happy to send
Americans to the French judicial system.
Now, the gentleman from Texas (Mr. Smith) took issue with what I was
saying about this claim, and I want to explain to you why this is.
First, I want to tell you that the Congressional Research Service,
the bipartisan, nonpartisan referee of these matters, agrees with
exactly what I have said when they said, ``Consequently it would appear
that in certain circumstances a United States citizen or resident
injured in this country would not have a judicial forum in the United
States in which to seek relief.''
The jury is closed and out. The verdict is in. Your policies have
outsourced a lot of jobs, but we do not understand why you want to
outsource judicial activity for American citizens. Now, why is that?
It is because there is an error apparently in drafting. I do not know
if you really intended this but this is what you accomplished, and the
reason is even though the statute, and excuse me if I am technical for
a moment but this is an important issue. It is Americans' judicial
rights. Even where the statute suggests on its face that it would allow
an American to sue in any one of three places, where you live or where
you are hurt or where the principal place of the business is that hurt
you, there is a constitutional principle that says if that corporation
does not have a minimal contact where you live or where the injury
occurs you cannot sue under the United States Constitution in either
one of those circumstances.
That is why the Congressional Research Service, the bipartisan or
nonpartisan Congressional Research Service, has concluded that the
Republican bill wants to outsource our judicial system to the German,
French and Japanese judicial systems. That makes no sense whatsoever,
and, frankly, I would invite a response to this as to why you would
want to do that.
The Japanese, they build some okay cars, not as good as American cars
of course, but their judicial system is not one that we should have to
be exposed to in America. Americans should have access to the American
judicial system. We should pass this substitute.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself 2 minutes.
Mr. Speaker, we have debated this issue extensively and the venue for
these types of personal injury cases are, one, the district where the
plaintiff resides; two, the district where the injury occurred; or
three, where the principal place of business of the defendant is
located. Any one of these three criteria would trigger the venue.
Now, it is elemental under the corporation law of all 50 States that
if a corporation that is incorporated elsewhere and that includes in
any one of the other 49 States or in a foreign country, wants to do
business in a State, it has to get a certificate of authority and
appoint an agent for the service of process. And that is what is done
with practically every multinational corporation or interstate
corporation that does bills in the United States.
If they do not do that, then they do not have limited liability
protection of the corporation law that applies. So the entire argument
that is made by the gentleman from Washington (Mr. Inslee) and the
gentleman from Texas (Mr. Turner) is a complete red herring.
Now, the two gentlemen have quoted extensively from a Congressional
Research Service memorandum that was dated today. And it begins, ``This
rushed memorandum discusses this issue.'' Well, the CRS is wrong upon
occasion. And in yesterday's extension of remarks in the Congressional
Record, I inserted into the Record correspondence that indicated that a
similar rushed memorandum of the Congressional Research Service on the
Marriage Protection Act was erroneous in nature. Wrong once, maybe
wrong again.
Mr. Speaker, I reserve the balance of my time.
Mr. TURNER of Texas. Mr. Speaker, I yield 30 seconds to the gentleman
from Washington (Mr. Inslee).
Mr. INSLEE. Mr. Speaker, I have tremendous respect for the chairman
but

[[Page H7117]]

in this case the Congressional Research Service is right. Here is where
they are right. It is a constitutional principle that a court in
Washington, for instance, does not have jurisdiction over a Japanese
corporation if they do not have minimal contact with Washington; for
instance, if they do not have a retail outlet in Washington. So if a
Washington resident is injured by a Japanese car, and they have got an
enormous retail outlet down in California but their principal place of
business, which is the language you chose in this statute, is in Tokyo,
you are out of luck as an American. And I am betting on CRS on this
one.
Mr. TURNER of Texas. Mr. Speaker, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I am prepared to close if the
gentleman from Texas will yield back.
Mr. TURNER of Texas. Mr. Speaker, do I close or does the chairman
close?
The SPEAKER pro tempore. The gentleman from Wisconsin (Mr.
Sensenbrenner) has the right to close.
Mr. TURNER of Texas. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, let me say the language regarding the establishment of
the forum is very clear in the Republican bill as the gentleman from
Washington (Mr. Inslee) pointed out. It says the suit should be filed
where the defendant has its principal place of business.
Now, the distinguished chairman says, well, the law has established
that you can sue where somebody is registered to do business and all
these foreign corporations have to register to do business.
That is not what the language offered in the Republican bill says. It
does not say you can sue a foreign corporation in States where it is
registered to do business. It says where its principal place of
business is located, and many foreign corporations have no principal
place.
I would suggest to the gentleman who offered up the quote of Senator
Edwards, we agree with Senator Edwards. We should ban frivolous
lawsuits, and the bill that we have offered does it more forcefully and
effectively than the Republican bill does. At the end of the third
strike under the Republican bill you can be barred in practicing law in
that court. You are suspended. Under our bill, the third strike, you
are referred to your State bar association for disciplinary
proceedings, to include possible disbarment.
Now, under your bill a lawyer from New York can come down to east
Texas and file a lawsuit and if it is frivolous then he gets barred
from ever practicing law in the Eastern District of Texas again.
What good is that going to do for a New York lawyer who may never
come back to east Texas anyway? What good will it do to say you cannot
come to east Texas? Even if he has to come back he can send a law
partner and let him file the frivolous lawsuit again.
If you want to get a lawyer's attention, you refer them to the State
disciplinary board that governs their right to practice law in that
State.

{time} 1430

I practiced law for many years, and anytime a lawyer gets referred to
the State bar association for disciplinary action, it is a serious
thing. If a lawyer continues to file frivolous lawsuits, they should be
disbarred; and then we would not have to worry about them running to
another court to file another frivolous lawsuit where they had not
already filed one before. They would not be practicing law.
So I would suggest, if my colleagues really want to get tough on
frivolous lawsuits, they will support the Democratic substitute, and if
they want to be sure that an American citizen who is injured in America
has the right to sue a foreign corporation that was the perpetrator of
a tortious act, they better vote against the Republican bill and vote
for the substitute.
I know the gentleman from Wisconsin (Mr. Sensenbrenner) did not
intend for that to be the effect, but that is the effect of the
language that he has offered up today; and I would suggest that any
Member on either side of the aisle would be well advised to vote
against his bill to ensure that that does not occur to an American
citizen who would be denied the right to file a lawsuit against a
foreign corporation.
Mr. Speaker, I yield back the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself the balance of the
time.
Mr. Speaker, the John Kerry for President campaign has endorsed
national legislation in which ``lawyers who file frivolous cases would
face tough, mandatory sanctions, including a `three strikes and you're
out' provision that forbids lawyers who file three frivolous cases from
bringing another suit for the next 10 years.''
Unfortunately, the Democratic substitute did not listen to what the
Kerry campaign said and does not forbid lawyers who file three or more
frivolous lawsuits from bringing future lawsuits. The substitute only
provides that on three strikes the offending attorney will be referred
to a bar association, and no action need be taken by the bar to
discipline the lawyer.
The base bill, H.R. 4571, on the other hand, currently provides that
an attorney who files frivolous lawsuits will be suspended for at least
a year and perhaps much longer if the court deems it appropriate.
I would ask all Members to reject the Democratic substitute. This
quote that I have given from the Kerry for President campaign and those
that the gentleman from Florida (Mr. Keller) has quoted of Senator
Edwards in Newsweek magazine of last December, the Republican bill has
got the type of bipartisan support that is needed to deal with this
problem.
I would urge a ``no'' vote on the substitute and passage of the base
bill.
Mr. DELAHUNT. Mr. Speaker, I am profoundly concerned about the
erosion of the independence and statehood role in our judicial system.
This bill is just another attack on access to the courts, and the
latest attempt to override existing State laws. At this rate, we will
have a justice system available only to corporate America. Litigation
costs already make the courts unavailable for the average person and
small business. This bill takes our country further in the wrong
direction.
This bill will not ``take back the courts'' for plaintiffs. To the
contrary, Congress continues to block access to justice. Imagine a
system that leaves the tobacco industry unchecked. Imagine the number
of unnecessary deaths if the trial bar could not keep unsafe tires off
our cars. Or a justice system that fails to uncover contamination of
public water supplies. We need the private sector. The trial bar plays
an important role in the protection of American consumers. Yet, I dare
say, we are going in the wrong direction.
In another all-too-familiar pattern for this Congress, this bill is
another court-stripping measure limiting judicial discretion. From
civil rights claims to constitutional challenges, this Congress strips
courts of their ability to hear cases. Congress--not a judge sitting in
a courtroom--wants to decide if a case is meritorious. Congress--not a
judge--will establish inflexible guidelines and impose mandatory
sanctions for lawyers. Congress is trying to micromanage the judicial
system as well as state judiciaries.
We talk a lot in this Chamber about respecting States' rights. Yet,
this bill represents an unprecedented invasion into the traditional
jurisdiction of State courts. This unwarranted intrusion into States'
rights is wrong. States should be able to set their own rules for the
game, including those governing the professional conduct of lawyers.
Let's not waste any more time undermining the principles of federalism
on a piecemeal basis. Why not simply abolish the 10th Amendment? The
bill's sponsors claim an agenda of reform--this is not reform. This is
about reeling in the wrong direction.
For all these reasons, I urge my colleagues to reject H.R. 4571 and
support the Democratic substitute offered by my colleague from Texas.
The SPEAKER pro tempore (Mr. LaHood). All time for debate has
expired.
Pursuant to House Resolution 766, the previous question is ordered on
the bill, as amended, and on the further amendment by the gentleman
from Texas (Mr. Turner).
The question is on the amendment in the nature of a substitute
offered by the gentleman from Texas (Mr. Turner).
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. TURNER of Texas. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The vote was taken by electronic device, and there were--yeas 177,
nays 226, not voting 30, as follows:

[[Page H7118]]

[Roll No. 448]

YEAS--177

Abercrombie
Baca
Baird
Baldwin
Becerra
Bell
Berkley
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Boyd
Brady (PA)
Brown (OH)
Brown, Corrine
Butterfield
Capps
Capuano
Cardin
Cardoza
Carson (IN)
Carson (OK)
Case
Chandler
Clay
Clyburn
Cooper
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Dooley (CA)
Doyle
Duncan
Edwards
Emanuel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Frost
Gonzalez
Gordon
Green (TX)
Grijalva
Gutierrez
Harman
Herseth
Hill
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson (IL)
Jones (OH)
Kanjorski
Kaptur
Kildee
Kilpatrick
Kind
Kucinich
Lampson
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lowey
Lynch
Majette
Maloney
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Schakowsky
Schiff
Scott (GA)
Scott (VA)
Sherman
Skelton
Smith (WA)
Solis
Spratt
Stark
Strickland
Stupak
Tanner
Tauscher
Thompson (CA)
Thompson (MS)
Tierney
Turner (TX)
Udall (CO)
Udall (NM)
Van Hollen
Visclosky
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn

NAYS--226

Aderholt
Akin
Alexander
Allen
Andrews
Bachus
Baker
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Berman
Biggert
Bilirakis
Bishop (UT)
Blunt
Boehner
Bonilla
Bono
Boozman
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cantor
Capito
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Costello
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis (TN)
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
DeMint
Diaz-Balart, L.
Diaz-Balart, M.
Doggett
Doolittle
Dreier
Dunn
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Granger
Graves
Green (WI)
Gutknecht
Hall
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Jenkins
Johnson (CT)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lofgren
Lucas (KY)
Lucas (OK)
Manzullo
Markey
Matheson
McCotter
McCrery
McHugh
McKeon
Mica
Miller (MI)
Miller, Gary
Mollohan
Moran (KS)
Murphy
Musgrave
Myrick
Nethercutt
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Snyder
Souder
Stearns
Stenholm
Sullivan
Sweeney
Tancredo
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)

NOT VOTING--30

Ackerman
Ballenger
Blackburn
Boehlert
Bonner
Cannon
Conyers
Crowley
Engel
Gephardt
Goss
Greenwood
Hastings (FL)
Istook
Johnson, E. B.
Kennedy (RI)
Kleczka
Langevin
Marshall
McInnis
Miller (FL)
Owens
Radanovich
Schrock
Serrano
Slaughter
Tauzin
Towns
Velazquez
Whitfield

{time} 1457

Mrs. KELLY, Mr. GINGREY and Mr. GARRETT of New Jersey changed their
vote from ``yea'' to ``nay.''
Messrs. CARDOZA, DINGELL and CUMMINGS changed their vote from ``nay''
to ``yea.''
So the amendment in the nature of a substitute was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. LaHood). The question is on the
engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.

Motion to Recommit Offered by Ms. DeLauro

Ms. DeLAURO. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. Is the gentlewoman opposed to the bill?
Ms. DeLAURO. I am opposed to the bill in its current form, Mr.
Speaker.
The SPEAKER pro tempore. The Clerk will report the motion.
The Clerk read as follows:

Ms. DeLauro moves to recommit the bill H.R. 4571 to the
Committee on the Judiciary with instructions to report the
same back to the House forth with with the following
amendment:
Section 4, insert at the end the following new subsection:
(e) Not Applicable to Benedict Arnold Corporations.--
(1) In general.--To the extent the defendant is a Benedict
Arnold corporation, this section does not apply,
notwithstanding subsection (d).
(2) Definitions.--For purposes of this subsection:
(A) The term ``Benedict Arnold corporation'' means a
foreign corporation that acquires a domestic corporation in a
corporate repatriation transaction.
(B) The term ``corporate repatriation transaction'' means
any transaction in which--
(i) a foreign corporation acquires substantially all of the
properties held by a domestic corporation;
(ii) 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
(iii) 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.

Ms. DeLAURO (during the reading). Mr. Speaker, I ask unanimous
consent that the motion to recommit be considered as read and printed
in the Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Connecticut?
There was no objection.
The SPEAKER pro tempore. The gentlewoman from Connecticut (Ms.
DeLauro) is recognized for 5 minutes in support of her motion to
recommit.
Ms. DeLAURO. Mr. Speaker, this motion to recommit is designed to help
address the problem of domestic corporations reincorporating abroad for
the express purpose of avoiding new U.S. taxes and now new legal
liability.
As we fight terrorism at home and abroad, when we have hundreds of
thousands of troops in harm's way and are trying to find the resources
to equip our first responders and ensure the safety of our ports and
air transit, the last thing we should be doing is passing legislation
that helps what are essentially corporate tax dodgers.
With increasing frequency, companies are setting up shell
corporations in places like Bermuda while continuing to be owned by
U.S. shareholders and doing business in the United States. The only
difference is that this new so-called foreign company escapes
substantial tax liability. What these companies have done is a slap in
the face of every company which has chosen to stay in America and of
every citizen who faithfully pays their taxes.
In my State of Connecticut, Stanley Works once considered
incorporating in Bermuda to keep up with their competitors who had
already moved overseas. But they changed their mind. They did the right
thing.
But the bill before us provides a litigation and financial windfall
to corporate expatriates at the expense of companies like Stanley
Works. Instead of permitting claims to be filed wherever a corporation
does business, or has

[[Page H7119]]

minimum contacts, this bill requires the suit to be brought where the
defendant's principal place of business is located. Perhaps that makes
some sort of sense in the abstract, but in the case of a corporate
expatriate what that means is that in most cases claims could only be
filed in places like Bermuda under their liability laws.
It is bad enough that these companies are essentially cheating on
their taxes by arguing, rather unconvincingly, that they are not
American companies. But for them to use this rationale to escape
liability is outrageous. This is unfair to the victims, and unfair to
the domestic company who would be forced to compete against these
companies.

{time} 1500

The Congressional Research Service has analyzed this bill and wrote:
``In certain circumstances a United States citizen injured in this
country would not have the judicial forum in the United States in which
to seek relief.'' In other words, in certain cases, American citizens
would have no judicial recourse whatsoever.
These are American companies flouting American tax law. They do
business here in the United States, and they should be subject to our
laws, period. So my motion to recommit amends the underlying bill to
say the new limitations on jurisdiction and venue do not apply to a
corporate expatriate company. This is a modest, commonsense change to
address the irresponsible actions of a handful of companies. It is time
for these companies to live up to their obligations as American
corporate citizens. I urge my colleagues to vote ``yes'' on this motion
to recommit.
Mr. Speaker, I yield 1 minute to the gentleman from Washington (Mr.
Inslee).
(Mr. INSLEE asked and was given permission to revise and extend his
remarks.)
Mr. INSLEE. Mr. Speaker, we have a delicious debate before us because
we Democrats believe if Stanley Tool tries to avoid taxes by moving to
Bermuda and their tool blows up and puts out your eye, an American
ought to have access to the American judicial system in front of an
American jury.
The Republicans want to outsource the job to Bermuda. If a
corporation goes to France and a product blows up and hurts you, we
Democrats believe Americans ought to have access to the Americans
judicial system. The Republicans want to outsource the jury system to
Paris. We do not even have French fries in our cafeteria anymore, and
the other side is outsourcing our jobs to France. The same applies to
Germany and every other country. The other side has outsourced enough
jobs; we are not going to allow the outsourcing of our jury system,
too. Support this motion.
Ms. DeLAURO. Mr. Speaker, I urge my colleagues to support this motion
to recommit, and I want to thank the gentlewoman from Texas (Ms.
Jackson-Lee), who is a member of the Committee on the Judiciary who was
going to offer this motion in committee.
Mr. SENSENBRENNER. Mr. Speaker, I rise in opposition to the motion to
recommit.
The SPEAKER pro tempore (Mr. LaHood). The gentleman from Wisconsin
(Mr. Sensenbrenner) is recognized for 5 minutes.

General Leave

Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks and include extraneous material on H.R. 4571.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. SENSENBRENNER. Mr. Speaker, the real outsourcing motion is the
one which has been made by the gentlewoman from Connecticut (Ms.
DeLauro). If this motion is adopted and this bill is enacted into law,
it will cost American jobs. Anytime the cost of doing business in the
United States goes up, the number of Americans with jobs will go down.
This motion to recommit would increase the cost of doing business in
this country and in the process lose American jobs.
I do not want to hear anybody who has argued in favor of this motion
ever to come back and complain about the outsourcing of American jobs
to foreign countries if this motion passes because this is the type of
thing that will absolutely do that.
The motion to recommit defines the covered entities as those that
have substantial business activities in this country, and hurting
substantial business in American substantially hurts American workers.
Stand up for American workers; vote down this motion to recommit. Stop
the outsourcing of jobs by last-minute motions made on the floor with
red herring arguments. Vote ``no'' on the motion to recommit.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.

Recorded Vote

Ms. DeLAURO. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair
will reduce to 5 minutes the minimum period of time for any electronic
vote on the question of passage of the bill.
The vote was taken by electronic device, and there were--ayes 196,
noes 211, not voting 26, as follows:

[Roll No. 449]

AYES--196

Abercrombie
Allen
Andrews
Baca
Baird
Baldwin
Becerra
Bell
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Boyd
Brady (PA)
Brown (OH)
Brown, Corrine
Butterfield
Capps
Capuano
Cardin
Cardoza
Carson (IN)
Carson (OK)
Case
Chandler
Clay
Clyburn
Cooper
Costello
Cramer
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley (CA)
Doyle
Duncan
Edwards
Emanuel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Frost
Gonzalez
Goode
Gordon
Green (TX)
Grijalva
Gutierrez
Harman
Herseth
Hill
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson (IL)
Jones (OH)
Kanjorski
Kaptur
Kildee
Kilpatrick
Kind
Kucinich
Lampson
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lucas (KY)
Lynch
Majette
Maloney
Markey
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Northup
Oberstar
Obey
Olver
Ortiz
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Schakowsky
Schiff
Scott (GA)
Scott (VA)
Sherman
Skelton
Smith (WA)
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Taylor (NC)
Thompson (CA)
Thompson (MS)
Tierney
Turner (TX)
Udall (CO)
Udall (NM)
Van Hollen
Visclosky
Waters
Watson
Watt
Waxman
Weiner
Wexler
Wilson (NM)
Woolsey
Wu
Wynn

NOES--211

Aderholt
Akin
Alexander
Bachus
Baker
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Biggert
Bilirakis
Bishop (UT)
Blunt
Boehner
Bonilla
Bono
Boozman
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cantor
Capito
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
DeMint
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Dreier
Dunn
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goodlatte
Goss
Granger
Graves
Green (WI)
Greenwood
Gutknecht

[[Page H7120]]

Hall
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
Johnson (CT)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
McCotter
McCrery
McHugh
McKeon
Mica
Miller (MI)
Miller, Gary
Moran (KS)
Murphy
Musgrave
Myrick
Nethercutt
Neugebauer
Ney
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Sullivan
Sweeney
Tancredo
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Wicker
Wilson (SC)
Wolf
Young (AK)
Young (FL)

NOT VOTING--26

Ackerman
Ballenger
Blackburn
Boehlert
Bonner
Cannon
Conyers
Crowley
Engel
Gephardt
Hastings (FL)
Johnson, E. B.
Kennedy (RI)
Kleczka
Langevin
Marshall
McInnis
Miller (FL)
Owens
Schrock
Serrano
Slaughter
Tauzin
Towns
Velazquez
Whitfield

Announcement by the Speaker Pro Tempore

The SPEAKER pro tempore (Mr. LaHood) (during the vote). Members are
advised that 2 minutes remain to vote.

{time} 1525

Mr. SMITH of New Jersey changed his vote from ``aye'' to ``no.''
Mr. CARSON of Oklahoma, Mr. TAYLOR of North Carolina and Mrs. NORTHUP
changed their vote from ``no'' to ``aye.''
So the motion was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. SENSENBRENNER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--yeas 229,
nays 174, not voting 30, as follows:

[Roll No. 450]

YEAS--229

Aderholt
Akin
Alexander
Bachus
Baker
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Biggert
Bilirakis
Bishop (UT)
Blunt
Boehner
Bonilla
Bono
Boozman
Boyd
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cantor
Capito
Cardoza
Carson (OK)
Carter
Case
Castle
Chabot
Chocola
Coble
Cole
Collins
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis (TN)
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
DeMint
Diaz-Balart, M.
Dreier
Duncan
Dunn
Edwards
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Foley
Forbes
Fossella
Franks (AZ)
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Goss
Granger
Graves
Green (WI)
Greenwood
Gutknecht
Hall
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Holden
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
Matheson
McCotter
McCrery
McHugh
McKeon
Mica
Miller (MI)
Miller, Gary
Moran (KS)
Moran (VA)
Murphy
Musgrave
Myrick
Nethercutt
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Scott (GA)
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stenholm
Sullivan
Sweeney
Tancredo
Tanner
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)

NAYS--174

Abercrombie
Allen
Andrews
Baca
Baird
Baldwin
Becerra
Bell
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Brady (PA)
Brown (OH)
Brown, Corrine
Butterfield
Capps
Capuano
Cardin
Carson (IN)
Chandler
Clay
Clyburn
Cooper
Costello
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Diaz-Balart, L.
Dicks
Dingell
Doggett
Dooley (CA)
Doolittle
Doyle
Emanuel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Frost
Gonzalez
Green (TX)
Grijalva
Gutierrez
Harman
Herseth
Hill
Hinchey
Hinojosa
Hoeffel
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Jones (OH)
Kanjorski
Kaptur
Kildee
Kilpatrick
Kind
King (NY)
Kucinich
Lampson
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lynch
Majette
Maloney
Markey
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Pallone
Pascrell
Pastor
Payne
Pelosi
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sandlin
Schakowsky
Schiff
Scott (VA)
Sherman
Skelton
Smith (WA)
Snyder
Solis
Spratt
Stark
Strickland
Stupak
Tauscher
Thompson (CA)
Thompson (MS)
Tierney
Turner (TX)
Udall (CO)
Udall (NM)
Van Hollen
Visclosky
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn

NOT VOTING--30

Ackerman
Ballenger
Blackburn
Boehlert
Bonner
Cannon
Conyers
Crowley
Engel
Frelinghuysen
Gephardt
Gordon
Hastings (FL)
John
Johnson, E. B.
Kennedy (RI)
Kleczka
Langevin
Marshall
McInnis
Miller (FL)
Owens
Sanders
Schrock
Serrano
Slaughter
Tauzin
Towns
Velazquez
Whitfield

Announcement by the Speaker Pro Tempore

The SPEAKER pro tempore (during the vote). Members are advised that 2
minutes remain to vote.

{time} 1535

Mr. SANDLIN and Mr. BISHOP of New York changed their vote from
``yea'' to ``nay.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.

____________________