[Congressional Record (Bound Edition), Volume 146 (2000), Part 1]
[House]
[Pages 1287-1310]
[From the U.S. Government Publishing Office, www.gpo.gov]



              SMALL BUSINESS LIABILITY REFORM ACT OF 2000

  The SPEAKER pro tempore. Pursuant to House Resolution 423 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the State of the Union for the consideration of the bill, H.R. 2366.

                              {time}  1131


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the consideration of the bill 
(H.R. 2366) to provide small businesses certain protections from 
litigation excesses and to limit the product liability of 
nonmanufacturer product sellers, with Mr. Thornberry in the Chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from California (Mr. Rogan) and the 
gentleman from Michigan (Mr. Conyers) each will control 30 minutes.
  The Chair recognizes the gentleman from California (Mr. Rogan).
  Mr. ROGAN. Mr. Chairman, I yield myself such time as I may consume.

[[Page 1288]]

  Mr. Chairman, I introduced the Small Business Liability Reform Act 
last summer, along with the gentleman from Pennsylvania (Mr. Holden), 
the gentleman from Virginia (Mr. Moran), and the gentleman from North 
Carolina (Mr. Burr) with the express intent of advancing the cause of 
small business owners across the Nation. Its provisions are designed to 
improve the fairness of the civil justice system, to enhance its 
predictability, and to eliminate the wasteful and excessive costs of 
the legal system by reducing unnecessary litigation.
  In H.R. 2366, my colleagues and I have attempted to approach this 
goal in an incremental and pragmatic way by focusing on a few narrowly 
crafted reforms that have won the bipartisan support of Members in this 
Chamber in recent years.
  This bill was crafted with an eye toward helping America's small 
businesses become more competitive, more profitable, and better able to 
resist the single greatest threat to their existence, a frivolous 
lawsuit that can ruin a small business overnight and crush the American 
dream for those men and women who are driving our Nation's economic 
expansion.
  For the smallest of America's businesses, those with fewer than 25 
full-time employees, this bill limits punitive damages that may be 
awarded against a small business to the lesser of three times the 
claimant's compensatory damages, or $250,000. Punitive damages would be 
allowed in cases where the plaintiff shows by clear and convincing 
evidence that the defendant engaged in particularly egregious 
misconduct.
  It is important to note that this cap on punitive damages does not 
cap or diminish a claimant's right to sue for both economic and 
noneconomic losses, such as lost wages, medical bills and pain and 
suffering.
  Similarly, the bill provides that a small business shall be liable 
for noneconomic damages in proportion to their responsibility for 
causing a claimant's harm. As such, our bill borrows from the 
California model enacted overwhelmingly by referendum in 1986, which 
abolished joint liability for these kind of damages.
  Title II of the bill provides that product sellers other than 
manufacturers will be liable in product liability cases when they are 
responsible for the claimant's harm. Innocent sellers finally will find 
protection from frivolous lawsuits.
  The bill would not change the current liability rules if the 
manufacturer is not subject to judicial process or is judgment-proof. 
In either of those cases, the seller would still be liable for the 
harm. This provision will protect innocent claimants from being left 
with no redress in the courts if they are harmed. It simply focuses 
liability on the party where it is most appropriately targeted.
  Furthermore, it shields renters and lessors from being held liable 
for someone else's wrongful conduct simply due to product ownership.
  An amendment that my good friend, the gentleman from Arkansas (Mr. 
Hutchinson), will offer later is the result of continuing discussions 
that began during our committee deliberations as to whether there 
should be some exception to the punitive damage cap when a small 
business defendant has acted with the intent to commit a specific harm. 
In that case, an exception is appropriate.
  These issues are familiar to many of our colleagues. In the 104th 
Congress, this House passed legislation, including similar, more 
broadly applied punitive damage and joint liability reforms, as well as 
the product seller liability standard. More recently, provisions 
similar to the latter two were included in product liability litigation 
that was debated in the Senate during the 105th Congress, which the 
President then indicated he would sign if given the opportunity.
  Further, Title II's joint liability reforms borrow from those enacted 
by the Congress in 1997 as part of the Volunteer Protection Act.
  Mr. Chairman, this bill presented before our colleagues today is 
supported by the United States Chamber of Commerce, National Federation 
of Independent Businesses, the National Association of Manufacturers, 
the Association of Builders and Contractors, the National Association 
of Wholesale Distributors, the National Restaurant Association, and 
millions of small business-owning men and women around our country who 
are looking to Congress for fairness in the court system.
  Mr. Chairman, the purpose of this legislation is to reduce needless 
litigation that unfairly burdens and easily can cripple small 
businesses with wasteful legal costs. I look forward to the support of 
our colleagues on this vital measure to protect every American, small 
business owner, from the threat of back-breaking litigation.
  Mr. Chairman, I reserve the balance of my time.
  Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, we are now confronted with a measure that ought to 
begin with the observation of the necessity for truth in labeling. The 
sponsors of this bill have had the courage to put small business 
liability, to put ``small'' in the title. They have been bold enough to 
include this phrase in the title.
  The problem, of course, is on any reading of this, this measure is in 
no way limited to small business. Title II, which limits the liability 
of product sellers, contains no size limitation whatsoever. The fact 
that we talk about 25 employees or less ignores the simple fact that 
there is no constraint on the amount the business is doing in terms of 
revenues.
  Hundreds of millions, if not billions of dollars, could be included, 
as we know, in financial organizations that frequently have far less 
than 25 employees. So this is not a small business bill.
  Of course, to fundamentally limit victims' rights when it comes to 
dangerous products, negligence and other misconduct is, to me, going in 
the wrong direction, because it follows the form of other liability 
legislation we passed that is already going in the wrong direction.
  This bill has to stand next to the class action bill that federalized 
most class actions; the statute of repose bill that created an 18-year 
limit on durable goods and machinery and equipment. And now we come up 
with a bill misnamed a small business bill, which puts a cap on 
punitive damages, limits joint and several liability and exempts a 
number of corporations from the doctrines of strict liability, failure 
to warn, and breach of an implied contract.
  This is a serious move in the wrong direction. It is not just an 
unnecessary bill; it is moving way, way in a direction that I do not 
think most of the Members here, once they recognize what is in this 
bill, will support.
  First, the bill imposes severe evidentiary restrictions and an 
overall cap of $250,000 in punitive damages in every civil case against 
businesses with fewer than 25 employees. Collectively, these 
restrictions are likely to eliminate not only the incentive for seeking 
punitive damages but it also eliminates any realistic possibility of 
obtaining them. It sends exactly the wrong message to people with 
deliberate intent to do wrong, people who are not concerned with the 
considerations of safety in the workplace. They are being told it does 
not matter how harmful or malicious their action or behavior is, they 
will never be realistically subject to significant punitive damages, 
which erodes the whole concept of punitive damages.
  When we eliminate joint and several liability for noneconomic 
damages, we are eliminating in those few cases the right to pain and 
suffering recovery and loss of life and limb that so frequently is 
important in the cases where those theories would apply.
  This has the effect of making innocent victims bear the risk of loss 
when a co-defendant is judgment-proof and would severely discriminate 
against seniors and women who bear the greatest portion of noneconomic 
damages in our society.
  To take one class of defendants and relieve them of responsibility 
from the doctrines of strict liability, the failure to warn or breach 
of implied warranty,

[[Page 1289]]

is unbelievable, leaving only a plaintiff with negligence as a cause of 
action.
  So, in my view, the legislation is not just unnecessary, it is 
misleading and it is reckless and it should be turned aside.
  Mr. Chairman, I reserve the balance of my time.
  Mr. ROGAN. Mr. Chairman, I yield 3 minutes to the gentlewoman from 
New York (Mrs. Kelly).
  Mrs. KELLY. Mr. Chairman, I rise today in support of this legislation 
which seeks to enact reasonable reforms to liability laws affecting 
America's small businesses. Through passage of this legislation today, 
this body makes clear its dedication to promoting sensible policies 
which acknowledge the importance of our small businesses.
  As vice chairman of the Committee on Small Business, I can attest 
that it is the work and energy of small business enterprises that 
comprise a driving force behind our Nation's economy. It is essential 
that we continually work to ensure that they are able to operate in a 
free and fair marketplace.
  In supporting this bill, we also make clear today our reproach for 
those who seek to exploit shortcomings in current liability statutes.
  Approval of this measure will mark an important stride in removing 
the onerous and unreasonable threat of litigation which serves to 
stifle the growth and entrepreneurial spirit of small businesses.
  Current liability law encourages many of these businesses to impose 
limitations on their own promise, to bypass opportunities to improve 
and expand. This not only conflicts fundamentally with our American 
character, but it is an unnecessary restraint on the livelihood of the 
millions of Americans who work for these businesses. This simply is not 
right, and this Congress ought to do what it can to change it.
  I ask my colleagues to join me in doing so today, by voting in favor 
of this sensible reform measure.
  Mr. CONYERS. Mr. Chairman, I yield 4 minutes to the gentleman from 
Virginia (Mr. Scott).
  Mr. SCOTT. Mr. Chairman, I thank the gentleman from Michigan (Mr. 
Conyers) for yielding me this time.
  Mr. Chairman, I rise to speak in strong opposition to the Small 
Business Liability Reform Act and speak in support of the Conyers-Scott 
amendment when I speak later on.

                              {time}  1145

  Mr. Chairman, there are numerous problems with the bill. The 
gentleman from Michigan (Mr. Conyers), the ranking member and chairman 
to be, will be introducing that amendment later. But there are some 
false inferences represented in the bill's title.
  The title is Small Business Liability Reform Act. While the bill 
purports to protect small businesses which presumably do not possess 
the resources to defend themselves against supposedly frivolous and 
costly lawsuits, the truth about the Small Business Liability Reform 
Act is that it rewards all businesses, big and small, with broad and 
sweeping legal protections when they cause personal and financial 
injury due to defective products.
  With those parts of the bill which actually pertain to small 
business, the small business in this bill contains no qualifier that 
limits their revenues. So even billion-dollar corporations can still 
qualify for small business protection.
  While the bill purports to constitute liability reform, the language 
is overbroad and covers contract law, antitrust law, trademark 
protection, and other areas not properly considered by the committee.
  Although the Conyers/Scott amendment seeks to inject some truth in 
advertising into the legislation, there are other problematic 
provisions. For example, the bill will raise the bar for awarding 
punitive damages, capping the damages at a maximum of $250,000 and 
making it more difficult to get punitive damages. While the proponents 
of caps on punitive damages claim that those caps would discourage 
frivolous lawsuits, those Draconian caps and arbitrary caps would 
actually apply to least frivolous lawsuits, those which in fact can get 
the larger damages.
  In fact, punitive damages are rare and available only when a 
defendant is engaged in the worst misconduct. This bill would 
effectively give businesses licenses to engage in reckless behavior as 
long as they are willing to pay the $250,000 price tag. Because the 
bill does not define a small business in terms of revenue, this may be 
a small price to pay for those companies who have revenues in the 
millions and even billions of dollars.
  The bill eliminates joint and several liability for non-economic 
damages, thus preventing many injured persons from full compensation 
for their injury. This bill would preempt laws in most States where 
injured persons are permitted to collect damages from any of the people 
that are found responsible.
  The rationale is that injured parties should not suffer because one 
or more of the wrongful actors cannot compensate them for a number of 
reasons. For example, that party might not even be a party to the 
lawsuit, they may be a foreign company, they may have gone bankrupt. 
And the non-economic damages, including the loss of a spouse or child, 
the loss of fertility, the loss of a limb, disfigurement, or chronic 
pain, those losses go uncompensated when defendants cannot be held 
jointly responsible for non-economic damages.
  Unfortunately, the burden of uncompensated non-economic loss is most 
likely to fall on those least likely to protect themselves: the poor, 
the elderly, the disabled. And because these persons make limited 
incomes and do not work, they are least likely to collect large sums in 
economic damages and, therefore, must depend on awards of non-economic 
loss if they are to recover any significant compensation at all.
  Again, there are numerous reasons to oppose the bill, but in its 
entirety, the bill sets a dangerous precedent in law. It encourages 
corporate misconduct, endangers health and safety, and leaves injured 
people with little compensation for their pain and suffering.
  So I ask my colleagues to vote no on this anti-consumer legislation.
  Mr. ROGAN. Mr. Chairman, I yield 3 minutes to our friend and 
colleague, the gentleman from Pennsylvania (Mr. Holden).
  Mr. HOLDEN. Mr. Chairman, I am pleased to join my colleague from 
California in cosponsoring H.R. 2366, the Small Business Liability 
Reform Act of 1999.
  Like the other pieces of civil justice reform legislation that have 
recently been enacted into Federal law, this bill departs from the 
comprehensive approach that advocates of broad product liability and 
tort reform have taken in the past.
  Instead, this bill focuses on a few key specific liability issues: 
the exposure of small business with fewer than 25 full-time employees 
to joint liability for non-economic damages and punitive damages, and 
the exposures of retailers, wholesalers, distributors, and other non-
manufacturing product sellers to product liability lawsuits for harms 
they did not cause.
  Mr. Chairman, I have many small businesses in my Congressional 
district that stand to benefit greatly from this legislation. Many of 
these businesses have been family run for several generations, and this 
bill will protect them from the type of frivolous litigation that 
threatens their existence.
  Let me emphasize that the bill we are considering here today is 
careful not to overreach. As I previously indicated, this is a narrowly 
crafted, tightly focused bill. The provisions restraining joint 
liability and punitive damages do not apply to civil cases that may 
arise from certain violations of criminal law or gross misconduct. Nor 
do they apply in States that elect to opt out with respect to cases 
brought in State court in which parties are citizens of that State.
  The product seller liability provisions are strictly confined to 
product liability actions and protect the ability of innocent victims 
of defective products to fully recover damage awards which they are 
entitled.
  Mr. Chairman, some of my colleagues who oppose this legislation might 
say the bill is unnecessary. They may say

[[Page 1290]]

this last year there were only 14 cases where punitive damages were 
awarded in the entire United States.
  That may be true, Mr. Chairman, but it is irrelevant. It is 
irrelevant because it does not take into account the countless 
incidences where cases were filed that seek such extraordinarily high 
punitive damages that defendants are frightened into settlement rather 
than risking what might happen in a court of law. This bill tries to 
put an end to this abuse.
  Lastly, Mr. Chairman, the provisions of this legislation have 
previously won bipartisan support in this chamber as well as the other 
body. Although limited in scope, their enactment into law will reduce 
unnecessary litigation and wasteful legal costs and improve the 
administration of civil justice across this country.
  I urge my colleagues on both sides of the aisle to vote yes and pass 
this limited but meaningful civil justice reform bill.
  Mr. CONYERS. Mr. Chairman, I am pleased to yield 4\1/2\ minutes to 
the gentleman from Massachusetts (Mr. Delahunt), a member of the 
committee.
  Mr. DELAHUNT. Mr. Chairman, well, here we go again. We have a bill 
before us now that would sweep aside generations of State laws that 
protect consumers so that corporations can evade their responsibilities 
for wrongs that they commit.
  Forget about States' rights. Federalism as a core Democratic 
principle is withering away in this institution, and this proposal is 
an example of that.
  Earlier today, the Committee on the Judiciary was to consider a 
proposal which would shift to the Federal courts local zoning issues. 
And those that speak and preach States' rights and de-evolution I 
suggest should revisit their words.
  Let me join with others who have stressed that we are not talking 
about small businesses here. I mean, if we read the bill, that simply 
is inaccurate. It is absurd in fact. There are no revenue caps in this 
legislation. The bill would permit large, prosperous businesses making 
enormous profits to escape liability so long as they maintain a small 
employee base.
  A corporation could have millions of dollars of revenue, tens of 
millions of dollars in revenue, hundreds of millions of dollars in 
revenue, and they could evade their responsibility under the parameters 
of this bill.
  But, of course, while the bill does not put caps on revenues of 
profits, it does cap punitive damages, punitive damages that would 
apply to conduct that is so egregious it would border on the criminal.
  Now, the proponents of the bill claim that a cap is necessary to 
prevent juries, juries made up of American citizens, people in the 
community, from awarding appropriate punitive damages. Of course, there 
is no evidence that there is a problem. In fact, it was the previous 
speaker who spoke in support of the bill that, last year, in the entire 
United States, there were 14 cases where juries awarded punitive 
damages. But the proponents would suggest there is a problem. There is 
no evidence and there is no data to that effect.
  The real problem is that this negates the entire purpose of punitive 
damages. And the purpose of punitive damages is to deter misconduct, 
wanton and willful and egregious misconduct. The rationale for punitive 
damages is to induce companies to spend the money to safeguard workers 
and protect consumers rather than take the risk of being hit with 
substantial damages down the road.
  This bill will fail to deter misconduct. It will fail and will allow 
for injuries that were fully foreseeable and preventable from 
happening.
  This bill is nothing more than a warrant for corporate recklessness. 
And, of course, the bill overreaches in this and many other ways. It 
eviscerates the traditional product liability law in this country. It 
exempts all product sellers, renters, and lessors regardless of their 
size.
  Again, no, it is not about small business. This bill should be 
defeated.
  Mr. ROGAN. Mr. Chairman, I reserve the balance of my time.
  Mr. CONYERS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Ohio (Mr. Kucinich).
  Mr. KUCINICH. Mr. Chairman, I thank the gentleman for yielding me the 
time. I also want to thank the gentleman and the gentlewoman for their 
indulgence.
  Mr. Chairman, I rise today in opposition to H.R. 2366. This bill 
would strip society of the important tools it uses to deter bad 
behavior by corporations. At stake is a wall of legal safeguards that 
protect people from malicious conduct by businesses.
  Title I of this bill encourages a company to act egregiously and to 
act with flagrant disregard to the rights and safety of American 
consumers. Additionally, despite the title's deceptive suggestion, 
Title II unfairly exempts from liability both small and large business 
retailers for the sale of defective products.
  Title I of H.R. 2366 takes the bite out of monetary damages imposed 
for malicious corporate conduct. The punitive damages are designed to 
punish corporations for willful misconduct and it deters future 
reckless behavior. This bill caps punitive damages to the arbitrary 
amount of a quarter of a million dollars.
  H.R. 2366 takes away the deterring effect of punitive damages and 
sets a price at which companies can figure in the expense of conducting 
business maliciously. This bill deprives the jury from the ability to 
hold a company morally responsible for their willful misconduct.
  Title II of H.R. 2366 unfairly protects all business retailers in 
their ability to profit from dangerous products. Under current law, a 
seller warrants that the product it sells is safe. The consumer then 
has the confidence of being able to use the product without risking 
injury. H.R. 2366 takes away the only legal reason a consumer would 
have confidence. It changes the law and allows the retailer to sell and 
make money from a defective product that the retailer knows or should 
have known is dangerous. If the seller gets a benefit, they should also 
pay when consumers are hurt.
  In conclusion, H.R. 2366 takes away corporate incentives to produce 
and sell safe products. This bill puts profit before product safety.
  Mr. Chairman, I strongly urge my colleagues to vote no on H.R. 2366.
  Mr. ROGAN. Mr. Chairman, I yield 3 minutes to my patient friend and 
colleague, the gentlewoman from Illinois (Mrs. Biggert).
  Mrs. BIGGERT. Mr. Chairman, I rise today in support of H.R. 2366, and 
I commend my colleague, the gentleman from California (Mr. Rogan), for 
his sponsorship of this legislation.
  The Small Business Liability Reform Act will help alleviate the 
abusive and frivolous lawsuits filed against the smallest of America's 
smallest businesses.

                              {time}  1200

  I have long been a supporter, a strong supporter, of tort reform. As 
a State representative, I sponsored legal reforms to ensure that 
businesses in Illinois could operate and compete on a fair, flexible, 
and equal opportunity in the marketplace. I am proud to continue these 
efforts here in Congress. Small businesses create the bulk of our 
Nation's jobs. Yet a recent survey of more than 1200 small businesses 
found that one in three have been sued, and more than half have been 
threatened with a lawsuit in the last 5 years. Our small businesses are 
being victimized by the litigiousness of our society and they 
desperately need relief.
  Small business owners face rising costs for liability insurance, not 
to mention the crippling cost of defending themselves should they be 
named in a lawsuit. Innocent or not, defending oneself is costly. The 
estimated cost of a business owner's defense in the average lawsuit is 
$100,000. Considering that the actual salary of a typical small 
business owner is between $40,000 and $50,000, it is easy to see that 
just one frivolous lawsuit can easily put a small firm out of business.
  H.R. 2366 provides crucial limits on the lawsuits by capping punitive 
damages at $250,000, or three times noneconomic damages, for businesses 
only

[[Page 1291]]

with fewer than 25 employees. I would like to see how many small mom 
and pop stores would ever dream of having revenues of $100,000, 
$200,000, $300,000 and the riches that the Members across the aisle 
seem to imply.
  It also abolishes joint liability for noneconomic damages, ensuring 
that small business owners are only liable for damages in proportion to 
their fault. H.R. 2366 embodies key legal reforms that this House has 
overwhelmingly supported in the past. This bill is good business and 
good law. I urge my colleagues to support H.R. 2366 to enact small 
business legal reform that is long overdue.
  Mr. CONYERS. Mr. Chairman, I yield 5 minutes to the gentlewoman from 
California (Ms. Lofgren), a distinguished member of the Committee on 
the Judiciary who has worked very hard on the measure.
  Ms. LOFGREN. Mr. Chairman, I oppose the bill before us today, and I 
think it is worth pointing out that I am joined in this opposition by 
the Violence Policy Center, the National Conference of State 
Legislatures, Handgun Control, as well as the attorney general of the 
State of California.
  This so-called small business liability reform bill offered by the 
gentleman from California (Mr. Rogan) is not really about small 
businesses at all. In fact, the businesses may be quite big, making 
millions and millions of dollars and still be protected by this bill. 
It is only judged small by the number of employees.
  Interestingly enough, it turns out that the manufacturers of most of 
the guns that have caught our attention in the tragedies that have 
beset this Nation, for example, the horrible shootings in Columbine, 
were in fact manufactured by gun companies that fall below the 25-
employee limit, who would be, if this bill were to pass, immune from 
liability.
  That liability is now being pursued by a number of local governments. 
For example, back home, the county of San Mateo and the city of Los 
Angeles are pursuing lawsuits against gun manufacturers and dealers to 
try and assess the responsibility for wrong behavior. Unfortunately, 
this bill would put those lawsuits out of court. I do not think that is 
the right thing to do. I do not think that is the right thing for this 
Congress to do.
  Now, it may be true that the causes of action being pursued by these 
local governments to hold these gun manufacturers responsible for 
misbehavior, it may be that these causes of action will not be 
sustained. But I do not believe it is proper for Congress to intervene 
in that judicial process. I do not think we should be giving a court 
holiday to the manufacturer of the Tec DC-9 that tried to evade the 
rules and the laws that Congress adopted against assault weapons. We 
know the result of that evasion was that young people in Columbine High 
School lost their lives.
  I am a member of the Juvenile Justice Conference Committee. I am 
mindful that we have met only once. We met on August 3 of last year. 
There was a lot of talk at that time that we would come together and 
address the gun safety issues that the Senate had passed, that we would 
do that in time for the beginning of this school year. Time is a-
wasting. My daughter is now preparing for her high school graduation, 
not the onset of high school, and yet we have done nothing, to do 
nothing except propose to take away the only tool that exists for local 
government to try and get control of this out-of-control gun violence 
issue. I think what we are doing is shameful.
  I would hope that we would listen to the Council of State Governments 
and butt out of this litigation issue, that we would not create a web 
of safety for gun manufacturers who have acted improperly. I would add 
that we offered an amendment at the Committee on Rules, myself and the 
gentlewoman from New York (Mrs. McCarthy) and the gentlewoman from 
Colorado (Ms. DeGette) and the gentlewoman from Connecticut (Ms. 
DeLauro) and some others. That amendment was not put in order. I think 
that was a real shame, that we would not have an opportunity to exempt 
gun dealers and manufacturers from the protections that this bill would 
provide.
  Because of that and many other reasons, I would hope that people who 
want to do something about gun violence, people who feel that we owe 
something to the mothers and fathers of this country to make their 
children a little bit safer in school from gun violence, that we will 
vote against this measure. That is all that we can do in decency.
  Mr. Chairman, I oppose the bill before us today. I think it is worth 
pointing out that I am joined in this opposition by the Violence Policy 
Center, the National Conference of State Legislatures, Handgun Control, 
as well as the Attorney General of the State of California.
  This so-called small business liability reform bill, offered by the 
gentleman from California (Mr. Rogan), is not really about small 
businesses at all. In fact, the businesses may be quite big, making 
millions and millions of dollars and still be protected by this bill 
for small businesses. It is only judged small by the number of 
employees.
  Interestingly enough, it turns out that the manufacturers of most of 
the guns that have caught our attention in the tragedies that have 
beset this Nation, including the horrible shootings in Columbine, were 
gun manufacturers that fall below the 25-employee limit and who would 
be, if this bill were to pass, immune from liability for the damage 
they've done.
  Liability for wrong doing by these manufacturers is now being pursued 
by a number of local governments. For example, back home in California, 
the county of San Mateo and the city of Los Angeles are suing gun 
manufacturers and dealers for wrong behavior, to try and assess their 
irresponsibility. Unfortunately, this bill would put such lawsuits out 
of court and on the street. I do not think that is the right thing for 
this Congress to do.
  Now, of course, it may be true that the causes of action being 
pursued in court by these local governments, seeking to hold these gun 
manufacturers responsible for misbehavior, may not be upheld. But I do 
not believe it is proper for Congress to intervene in such judicial 
processes and determine the issue this way. I do not think we should be 
giving a court holiday to the manufacturer of the Tec DC-9. That gun 
manufacturer tried to evade the rules and the laws that Congress 
adopted against assault weapons by slight modifications to their 
weapons to evade our proscriptions. We know the result of that evasion 
was that their weapon was available and young people in Columbine High 
School lost their lives.
  I am a member of the Juvenile Justice Conference Committee. I am 
mindful that we have met only once and that was on August 3rd of last 
year. There was a lot of talk at that time by the majority about how we 
would come together and address the gun safety issues that the Senate 
had passed, that we would do that in time for the beginning of the 
school year, that is, the school year that began last September. Well, 
time is a-wasting. My daughter is now preparing not for the beginning 
of the year but for her high school graduation. Yet we have done 
nothing--nothing except propose to take away the only tool that exists 
for local government to try to get control of this out-of-control gun 
violence issue. I think what we are doing is shameful.
  I would hope that we would listen to the Council of State Governments 
who believe this is their business, not ours, and butt out of this 
litigation issue. I would hope that we would not create a safety shield 
that protects gun manufacturers who have acted improperly. It is not 
like we haven't tried to avoid this miscarriage. I argued against this 
in an amendment offered in the Judiciary Committee. We offered the same 
amendment before the Committee on Rules, myself, the gentlewoman from 
New York (Mrs. McCarthy), the gentlewoman from Colorado (Ms. DeGette), 
and the gentlewoman from Connecticut (Ms. DeLauro). That amendment was 
ruled out of order even though it was germane and voted upon in the 
Judiciary Committee. It was ruled out of order for a vote by the full 
House. I think that was a real shame, that we would not have an 
opportunity for the members of this House to exempt gun dealers and 
manufacturers from the protections that this bill would provide.
  For this and many other reasons, I would hope that people who want to 
do something about gun violence, people who feel that they owe 
something to the mothers and fathers of this country to make their 
children a little bit safer in school from gun violence, that they will 
vote against this measure. That is all that they can do in decency and 
justice.
  Mr. ROGAN. Mr. Chairman, I yield myself such time as I may consume. 
Just briefly in response to the comments of my friend and colleague 
from California, I think it is wholly unfortunate that she wishes to 
hold up this

[[Page 1292]]

bill, which is so necessary for small businesses, in the mistaken 
attempt of turning this into somehow some gun control bill. The fact 
is, Mr. Chairman, her claim that some of these lawsuits or all of these 
lawsuits would be thrown out of court simply misses the mark.
  As I indicated in my opening statement, this bill would do nothing to 
preclude a claimant from obtaining economic damages which include 
wages, medical expenses, and business loss. It would do nothing to 
preclude a claimant from receiving noneconomic damages, such as pain 
and suffering, disfigurement, loss of enjoyment or companionship and 
other recognized damages. Finally, Mr. Chairman, this bill again would 
do nothing under the amendment that I contemplate will be accepted if 
in fact there was an intentional wrong done by a small businessperson 
who happened to be a gun manufacturer.
  I hate to see this bill held up by those attempting to pursue a gun 
control agenda. This is not about gun control. This is about small 
businesspeople being given the protection of law that they so 
desperately need to keep their small businesses afloat.
  Mr. Chairman, I yield such time as he may consume to my good friend, 
the gentleman from Virginia (Mr. Goodlatte).
  Mr. GOODLATTE. Mr. Chairman, I thank the gentleman for yielding me 
this time, and I congratulate him for his outstanding work on this 
issue which is so important to small businesspeople across this country 
but to others as well. Small businesses create more new jobs in this 
country than all of the large corporations in America combined. Small 
business, the millions of small businesses we have, are the engine that 
drives our economy. They are so often the ones that create the new 
jobs, new enterprises that grow later into larger businesses that 
provide more jobs. But for a company that provides 10, 15, 20 jobs, it 
is the employees of those businesses as well as the businessmen and 
women who own them that will find this legislation important, and also 
consumers will benefit from this legislation as well because it will 
help to hold down the cost of goods and services provided by those 
small businesses.
  Many small businesses are in some of the most competitive industries 
that there are. When they are faced with unfair legal costs, it often 
either puts them out of business or forces them to raise their prices 
and make themselves uncompetitive or to pass those charges on to the 
consumers that do business with them. Putting a cap on punitive damages 
for small businesses, this is something that I think we should provide 
in every lawsuit, no matter what the size of the corporation or 
business or individual who is in business; but we certainly should do 
it for small businesses, for companies with fewer than 25 employees.
  To face a fine of more than $250,000 could easily put 10, 15, or 20 
people out of work when a small company or an individual employing them 
cannot meet that kind of punitive damage liability, and joint 
liability. Again, so many instances where lawsuits are filed against a 
whole host of people. The small businessperson who might be the 
distributor, the manufacturer's representative, might be engaged in a 
part of a transaction but have only a small amount of the 
responsibility for the damages that are caused; and if the manufacturer 
has gone out of business or somebody who misused the product in 
installing it or some other involvement in it goes out of business, 
that small businessperson can be left with an enormous amount of 
liability and should not face that if they only cause a small portion 
of the damages involved.
  And then finally, we know about all of these lawsuits that are filed 
where a shotgun approach is used where a whole host of defendants are 
made a party to the suit and somebody is brought in as a defendant in a 
suit and they really have a very limited liability for it; but there is 
not a clear definition of what that liability might be.
  And so when we have the provision in title II that establishes a 
uniform liability standard that would be applied to nonmanufacturers or 
product sellers in product liability cases, a standard that would allow 
the product sellers to be liable only for the harms caused by their own 
negligence, intentional misconduct or when the manufacturing supplier 
is culpable but judgment-proof, it seems to me that setting a definite 
national standard when so many of these transactions involve interstate 
commerce is entirely appropriate for the Congress to do.
  I commend the gentleman for his support for this legislation. I 
commend him for garnering the kind of bipartisan support that he has 
and support from a whole host of organizations concerned about small 
businesses like the National Federation of Independent Businesses. This 
is truly good legislation. I would call upon my colleagues on the other 
side of the aisle to join with us in giving some relief to the people 
who do the most for job creation in this country.
  Mr. CONYERS. Mr. Chairman, I yield myself 1 minute, because the 
author of this bill, the gentleman from California (Mr. Rogan), knows 
what I know, namely, that the 70,000 gun dealers in this country are 
happy to assume that they would enjoy the protection of H.R. 2366's 
restriction on the liability of product sellers.
  We had this amendment debated in Judiciary. The bill attempts to 
exempt some legal theories that apply to the negligent sale of 
firearms, such as negligent entrustment and negligence per se. But 
there are many numerous other theories that have been successfully used 
against firearm retailers and proprietors of gun clubs or target ranges 
to recover damages caused by the sale or rental of a firearm. This is a 
cover for gun dealers against lawsuits that are coming up that are 
using theories such as public nuisance, negligent marketing, and unfair 
and fraudulent business practices. We cannot give the gun dealers a 
free ride in this bill.
  Mr. ROGAN. Mr. Chairman, I am pleased to yield 3 minutes to my good 
friend, the gentleman from Ohio (Mr. Chabot).

                              {time}  1215

  Mr. CHABOT. Mr. Chairman, I rise today as both a Member of the 
Committee on the Judiciary and Committee on Small Business to urge my 
colleagues to support H.R. 2366, the Small Business Liability Reform 
Act of 1999, and I would like to commend my colleague from the 
Committee on the Judiciary, the gentleman from California (Mr. Rogan), 
for his leadership in this area.
  Small businesses with 25 or fewer full-time workers employ nearly 60 
percent of the American workforce. Their continued vitality is 
essential to our strong economy. However, just one lawsuit, frivolous 
or not, can easily destroy a small business.
  Today, small businesses operate in constant fear that they will be 
named as a defendant in a lawsuit, be found minimally responsible for 
the claimant's harm, and be financially crushed under the weight of 
damages and attorneys' fees and the rest.
  According to a recent Gallop survey, one out of every five small 
businesses decides not to hire more employees, not to expand its 
business, not to introduce a new product or not to improve an existing 
product out of fear of litigation.
  Mr. Chairman, H.R. 2366 would help alleviate the tremendous burden 
and fear of unlimited liability on businesses that employ less than 25 
people by making two modest changes to existing tort law, while still 
steadfastly protecting injured plaintiffs' rights to sue.
  First, H.R. 2366 would raise the burden of proof to a clear and 
convincing evidence standard for a plaintiff suing for punitive damages 
and place reasonable caps on these damages, up to three times the total 
amount awarded for economic and non-economic loss or $250,000. This 
provision is vitally important, because businesses cannot be insured to 
cover these types of judgments.
  H.R. 2366 would also eliminate joint and several liability for non-
economic damages for small businesses. In the States that have joint 
and several liability in place, a defendant who is

[[Page 1293]]

found only 1 percent responsible for an injury can be stuck paying 100 
percent of the damages. Such a judgment could easily bankrupt a small 
business that is only minimally responsible for a non-economic harm. If 
that happens, workers lose their jobs.
  I want to emphasize that real economic damages, including medical 
costs, are not limited by this bill, and plaintiffs remain free to sue 
more responsible parties.
  Mr. Chairman, more than 60 percent of small business owners make no 
more than $50,000 a year. Litigation costs and excessive judgments can 
put them out of business in a heartbeat, causing employees, again, to 
lose their jobs and impacting the community that has come to rely upon 
the services of that particular business.
  This is a commonsense tort reform bill, and I encourage Members to 
vote yes on H.R. 2366.
  I again commend the gentleman from California (Mr. Rogan) for showing 
his leadership in proposing this important legislation.
  Mr. CONYERS. Mr. Chairman, I am happy to yield 4 minutes to the 
gentlewoman from Texas (Ms. Jackson-Lee), a distinguished member of the 
Committee on the Judiciary.
  Ms. JACKSON-LEE of Texas. Mr. Chairman, I thank the ranking member 
for his leadership on this issue.
  I appreciate the desire of the gentleman from California (Mr. Rogan) 
to be helpful in the enhancement of small businesses in the United 
States of America. I think, unfortunately, I need to disabuse those who 
have debated this bill of any suggestion that they are supporting a 
small business protection bill. This is not.
  This is, again, a back-door attempt to do tort reform when the 
members of the other party fully recognize that we have been 
unsuccessful in doing such and there have been no calls for these kinds 
of major changes in tort reform or product liability.
  In particular, I will be supporting the Conyers amendment, that 
really speaks to small businesses, and that is to narrow the protection 
of this bill to businesses earning $5 million or less. That is a small 
business. The only thing we have in this bill is to suggest that if you 
have 25 employees. But we well know that in the trucking industry, 
where, unfortunately, we have suffered over 440,000 large trucks 
involved in accidents, including 4,871 fatal crashes, we realize that 
those can be considered small businesses.
  So this is a farce. This is a farce as it relates to the very 
important issue that we have discussed about the enormous gun violence 
that is going on in America, and, I might add, the very important 
litigation that has been going on.
  This bill fails to exempt several well-known causes of action: Public 
nuisance, negligent marketing and unfair and fraudulent business 
practices, the cornerstone of many cases dealing with gun violence.
  I cannot say to the gentleman from California (Mr. Rogan) that every 
mayor of every city is wrong about their attempt to protect their 
cities from gun violence by the lawsuits that they have filed. Their 
communities want them to file them; their communities want gun violence 
to stop; their communities want the proliferation of guns to stop; and 
we want our children to stop dying. This bill is a farce as it relates 
to providing the protection of that these litigants need to address 
their grievances.
  The other point is why is this bill protecting the actor of the act, 
meaning the one who has negligently acted, and has no concern about the 
victim, by capping punitive damages? The gentleman from California (Mr. 
Rogan) fully knows that the courts rarely give punitive damages, and it 
is only in egregious circumstances that such is given. Now he is 
suggesting he is going to fall on the side of the negligent actor, as 
opposed to the victim.
  Secondly, in the Committee on Rules they refused to listen when we 
offered a hate crimes amendment, because the hate crimes provision in 
this bill is benign, at best. We wanted to put language in that 
reflects an intentional act, when some business, a KKK-run business 
would intentionally burn a synagogue or, if you will, to refuse service 
or to do something violent to an individual, and it is a business, an 
intentional act, we could not get the committee on rules to accept that 
or even in the committee.
  I ask where the seriousness behind this legislation is, if we are not 
willing to protect people from hateful, intentional acts?
  In addition, this bill does not protect children whose parents may 
not file an action before they reach the age of majority. It is well 
known that many times children are in fact the victims of a negligent 
act. At Lincoln Park Daycare, Danny Kasar died in a collapsed crib in a 
daycare center. That crib may have been sold by a small business, and 
the idea is if there is an egregious act through the manufacturer and 
the seller, then this legislation keeps poor Danny, if, for example, in 
this instance, he died, it keeps any case that may happen if the child 
had not died to be able to be reached in majority.
  Let me conclude, Mr. Chairman, by saying this is a bad bill, it is 
not a small business bill, and I wish the gentleman from California 
(Mr. Rogan) would take it back so we can work in a bipartisan manner, 
and I ask my colleagues to defeat it.
  Mr. Chairman, I rise in strong opposition to H.R. 2366, the Small 
Business Liability Reform Act of 1999. This bill is not a small 
business bill--it is a measure to insulate potentially large 
corporations from the most egregious misconduct.
  This bill seeks to limit injured parties' punitive damages to 
$250,000 or 3 times compensatory damages, whichever is less for any 
business with 25 or fewer employees regardless of the company's actual 
financial earnings. In today's Internet economy it is likely that a 
company with 25 or fewer employees is flush with income--why should 
this Congress limit their punitive damages to such a low level?
  Punitive damages are often awarded to deter those companies who 
engage in behavior that is deemed grossly negligent. The fear of a jury 
awarding punitive damages is our legal system's way of saying to 
Corporate America that we will not tolerate willful and wanton conduct 
that may injure our citizens.
  For example, a little girl whose hand was caught in an exposed 
rotating chain saw and lost three fingers was awarded $420,100 in 
damages. If this bill becomes law the manufacturer of this chainsaw 
with 25 or fewer employees would cap this girl's compensation to 
$250,000 for a product that endangered this child's life. Our children 
and our loved ones will be adversely affected by this bill. Why should 
the Nation's most egregious corporate wrongdoers be protected at the 
expense of innocent victims.
  As you may be aware, tort law has evolved over the centuries to 
reflect societal values and needs. Because it is common law--or judge-
made law--State tort law has developed from generation to generation in 
the form of reported cases: ``In theory, the judges [draw] their 
decision from existing principles of law; ultimately, these principles 
[reflect] the living values, attitudes and ethical ideas of the 
people.''
  The tort system provides a number of benefits to society: it (1) 
compensates injured victims; (2) deters misconduct that may cause 
perceived injury and punishes wrongdoers who inflict injury; (3) 
prevents injury by removing dangerous products and practices from the 
marketplace; (4) forces public disclosure of information on dangerous 
products and practices otherwise kept secret; and (5) expands public 
health and safety rights in a world of increasingly complex technology. 
The tort system is intended to effect behavior through the forces of 
the private market. The ``invisible hand'' of the tort system alters 
behavior so as to prevent dangerous and reckless conduct, which is 
often not prohibited by any governmental regulation.
  Product liability law, in particular, typically refers to the 
liability of a manufacturer, seller or other supplier of products to a 
person who suffers physical harm caused by the product. The legal 
liability of the defendant may rest on five theories: (1) intent; (2) 
negligence; (3) strict liability; (4) implied warranties of 
merchantability and fitness for a particular purpose; and (5) 
representation theories (express warranty and misrepresentation).
  Historically, if the courts upset the liability rules that balance 
the interests of injured citizens and wrongdoers, the State 
legislatures are able to respond by either strengthening or weakening 
the laws. For example, during the 1980's, a majority of States adopted 
a number

[[Page 1294]]

of product liability reforms involving such areas as punitive damages, 
joint and several liability and strict liability in reaction to a 
perceived ``insurance crisis.'' Each State has developed its own tort 
system and considered and adopted reforms based on the needs of its 
citizens and its desires to attract commerce. Restatements of law, 
written by legal scholars, can indicate areas suitable for nationwide 
uniformity if the states consider it to be in their own best interests.
  Congress has been considering product liability legislation since as 
early as 1979 when Representative Dingell introduced legislation which 
would have federalized a number of areas of State liability law. 
Proponents of such reforms have argued, inter alia, that State laws 
have led to excessive product liability damage awards and that the 
unpredictable and ``patchwork'' nature of the State product liability 
system harms the competitiveness of domestic manufacturing firms. After 
being unable to bring a product liability reform bill to either the 
House or Senate floor for a number of years, during the 104th Congress 
the House and Senate agreed to product liability legislation which 
would have, inter alia, capped punitive damages for large and small 
businesses and narrowed the standards for awarding such damages; 
eliminated joint and several liability for non-economic damages; 
created a fifteen-year statute of repose and a two-year statute of 
limitations; limited seller liability; and limited liability for 
medical implant suppliers. President Clinton subsequently vetoed the 
legislation.
  In the wake of President Clinton's veto, the White House entered into 
negotiations with Senators Rockefeller and Gorton, which culminated in 
a somewhat narrower form of product liability legislation (the ``Senate 
Product Liability Proposal''). The Senate Product Liability Proposal 
was brought directly to the Senate floor but its proponents were unable 
to obtain cloture to cut off debate.
  The Senate Product Liability Proposal, among other things, capped the 
maximum amount of punitive damages which may be awarded against ``small 
businesses;'' narrowed the ground for the award of punitive damages to 
those cases where there is a ``conscious, flagrant, indifference to the 
rights or safety of others'' which can be established by ``clear and 
convincing evidence;'' provided for a national statute of limitations 
and statute or repose; and offered relief to product sellers, lessors, 
and renters by specifying that they may only be subject to product 
liability suit where they (1) failed to exercise reasonable care, (2) 
violated an express warranty, or (3) engaged in intentional wrongdoing.
  H.R. 2366 is similar to the 1998 Senate Product Liability Proposal, 
however, it is broader in that it is not limited entirely to product 
liability actions and it is narrower in that it excludes (1) the 
statute of repose provision and (2) potential pro-victim provisions 
such as a two-way preemptive federal statute of limitations running 
from the time the harm was actually discovered.
  I am skeptical of the need for this bill, as there is no credible 
empirical evidence to support the notion that there is currently a 
litigation explosion in the state and federal courts. Additionally, 
punitive damages tend to be awarded in only the most egregious cases. 
Furthermore, Congress should not be in the business of protecting the 
rogue small business from reckless or harmful behavior, particularly 
legislation such as this that rewards businesses that hire temporary 
employees rather than full time employees. Yet again, the Majority is 
attempting to undermine the principles of federalism by the federal 
preemption of the state-based liability system. Given my concerns, I 
will not support this bill which jeopardizes the right of innocent 
victims to recover for corporate wrongdoing. We must continue to 
protect our children, our loved ones, and to encourage the deterrence 
of corporate misconduct.
  Mr. ROGAN. Mr. Chairman, I am pleased to yield such time as he may 
consume to my friend the gentleman from Arkansas (Mr. Hutchinson).
  Mr. HUTCHINSON. Mr. Chairman, I thank the gentleman for yielding me 
time. I want to congratulate him for his outstanding work on this 
legislation and the spirit in which he worked with the different 
members on the committee.
  I also want to express my appreciation to the minority, because I 
believe their participation in the Committee on the Judiciary improved 
the entire process and the bill, and we have a very good product here.
  To the gentlewoman from Texas, she just raised a question about the 
instances of intentional conduct and she cited some examples. I believe 
she used the KKK, if they engage in some intentional conduct, that 
there would be caps on damages.
  There is an amendment, I would say to my friend the gentlewoman from 
Texas, that will be offered subsequently to this that would remove the 
cap on intentional conduct that causes harm. So, with that, which we 
will offer at a later time, it improves this bill even more. It makes 
sure everyone is protected.
  It is very important that litigants have access to the court. We 
wanted to make sure that is accomplished and preserved. It is an 
important right in America.
  But, at the same time, we want to have a balance, so that in those 
rare cases where the damages go out of whack, and that is what puts the 
chilling effect on small businesses, that that is brought back into 
scale and in line with the American system of justice.
  This bill does very simple things: It eliminates joint and several 
liability for the pain and suffering aspect of it, and then it puts 
some reasonable caps on punitive damages. It applies this to small 
business.
  Now, I am a trial lawyer. I made my living after I was a Federal 
prosecutor trying cases, going to court, representing litigants in 
personal injury cases.
  There is the rare case there is an abuse. I was with another lawyer 
friend of mine, and I said, ``Can you tell me a moral justification to 
defend joint and several liability?'' He tries more cases in Arkansas 
than probably anyone. He said, ``No, I can't.'' It was an honest 
answer. I believe this is good reform for the legal system.
  So I very much congratulate my friend the gentleman from California 
(Mr. Rogan) who has worked so hard on this legislation. What it does is 
that it makes sure that the plaintiff will get economic damages, first 
of all. That is the medical bills, the lost wages, the future lost 
wages, those are those out-of-pocket expenses that you can itemize for 
the jury. Those he can get without any limitation whatsoever. Pain and 
suffering, there is absolutely no limitation on pain and suffering. I 
think that is reasonable.
  The joint and several liability limitation only applies to the pain 
and suffering aspect. The punitive damages is what is capped. It is a 
very reasonable cap on punitive damages, and that is what is intended 
to punish, not intended to reward a plaintiff, and that is what we keep 
in scope. There should be a limitation on punishment.
  Again, with the amendment I am offering shortly, if there is 
intentional conduct, extremely egregious conduct, the judge can 
override that cap even at that instance so that justice can continue to 
be done. It applies only to small business, less than 25 employees. 
There are some amendments that I believe will be offered that will 
change the definition of that, but this is a good, simple, fair 
definition, less than 25 employees. It is easy to quantify. It is 
similar to the civil rights statutes in that regard.
  Again, I would ask my colleagues to support this bill. It is a good 
bill for small business, but it is also a good and fair bill for the 
legal system, which I cherish and honor and want to strengthen.
  Mr. CONYERS. Mr. Chairman, I yield myself 1 minute to discuss this 
lawyer's discussion that the gentleman from Arkansas has been having 
with other lawyers who think this is a fine bill.
  Well, maybe some of them do, but the fact of the matter is that as 
this measure stands now, we are going to eliminate joint and several 
liability for non-economic damages, and this is going to have a very 
harmful effect on the victims. You do not have to be a lawyer to figure 
that out. That is what the bill accomplishes, whether lawyers like it 
or not. The bill imposes severe evidentiary restrictions and an overall 
$250,000 cap on punitive damages in all civil cases.
  Now, 25 employees or less, you must know that there are businesses 
doing hundreds of millions of dollars of business with less than 25 
employees. Yes, it protects ``mom and pops,'' but it lets in at the 
other end these huge companies that are going to be so happy to

[[Page 1295]]

know that you have got this provision on the floor.
  Mr. ROGAN. Mr. Chairman, I am pleased to yield 3 minutes to my good 
friend, the gentleman from Virginia (Mr. Davis).
  Mr. DAVIS of Virginia. Mr. Chairman, I thank my friend for yielding 
me time.
  Mr. Chairman, just to respond to the gentleman from Michigan, victims 
are not hurt by capping punitive damages. They still get all their 
actual damages. They get economic damages. Punitive damages are to 
punish defendants who behave in the wrong way, not to reward the 
victims. This does not touch what the victims can get from actual 
damages.
  But I support this legislation. Small businesses are the engine that 
drives our economy. Small businesses account for 99.7 percent of the 
nation's employers, employing 53 percent of the private workforce, 
contributing 47 percent of all sales in this country and responsible 
for 50 percent of the private gross domestic product.
  In a recent Gallop survey, one out of every 5 small businesses 
claimed they do not hire more employees or expand their business or 
introduce a new product or improve an existing product out of fear of 
litigation.
  The facts show that nationwide liability reform is what our small 
businesses need. For example, there was an increase of 28 percent in 
civil filings in State courts since 1984, and the median awards in 
product liability cases increased 227 percent between 1997 and 1998. 
Small businesses simply cannot afford to stay in business if they spend 
their time, energy, and resources fighting lawsuits that are without 
merit.
  Small businesses are often severely burdened by frivolous lawsuits. 
Since 1960, the number of such lawsuits have tripled and unwarranted 
lawsuits have cost them billions of dollars, and in effect cost 
American consumers that same amount. Many small businesses are being 
forced to settle lawsuits, rather than bear the expense of litigation.

                              {time}  1230

  In an effort to counter this growing trend, H.R. 2366 seeks to 
protect small businesses by reducing their exposure to frivolous 
litigation. I believe this is much-needed legislation because it 
includes strategically targeted reforms which have strong bicameral, 
bipartisan support.
  This measure comprises several measures that will limit product 
liability in small businesses. Those businesses are defined as having 
fewer than 25 employees. This legislation will cap punitive damages at 
$250,000 or three times compensatory damages, whichever is less, in any 
civil lawsuit against small business. In order to receive damages, 
plaintiffs must meet the ``clear and convincing evidence'' standard 
that the defendant acted with willful misconduct and was flagrantly 
indifferent to the rights and safety of others.
  In addition, H.R. 2366 exempts small business defendants from joint 
and several liability for noneconomic damages, such as pain and 
suffering. Under this legislation, defendants will only be liable for 
the proportion of the judgment that corresponds to their percentage of 
the actual fault.
  Mr. Chairman, H.R. 2366 exempts retailers, renters, and lessors from 
legal responsibility for products that they receive from manufacturers, 
but did not alter, and which subsequently malfunctioned or caused 
damages, which makes perfect sense. I believe the uniform standard for 
awarding punitive damages outlined in this legislation is a vital and 
necessary part of tort reform. This is a fair and sensible solution to 
the high number of frivolous lawsuits clogging up our court today.
  Given that nearly 60 percent of the American workforce is employed by 
small business with 25 or fewer full-time employees, I think it is 
essential that we pass this legislation so our small businesses may 
become more innovative and competitive in today's global marketplace.
  I thank the gentleman for introducing this legislation, and I urge my 
colleagues to support it.
  Mr. CONYERS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Wisconsin (Mr. Kind).
  Mr. KIND. Mr. Chairman, I thank the ranking member for yielding me 
this time.
  Mr. Chairman, I rise in strong opposition to this legislation. I 
would encourage the rest of my colleagues to oppose it as well if, for 
no other reason, than because of the Federal preemption implications 
over State law and the work that many State legislatures throughout the 
country have put into this issue. This is another classic example of 
``Washington-knows-best'' when it comes to our system of justice in 
this country.
  This is not just a concern and a belief that I have, but even the 
Republican governor from my home State of Wisconsin has expressed this 
concern in a letter to our ranking member on the committee in which he, 
along with the chairman of the Council of State Governments, State 
Senator Kenneth McClintock, expressed their severe reservations to this 
legislation.
  In the letter they wrote, ``We are very concerned about the following 
preemption aspects of this bill:
  ``The bill establishes new evidentiary tests for punitive damages 
that would negate State laws for punitive damages, even though every 
State already requires that a plaintiff prove that a defendant acted in 
some particularly deliberate or egregious way to receive punitive 
damages.
  ``The bill overturns the doctrine utilized in many States of joint 
and several liability.
  ``The bill makes a dramatic and unacceptable change that alters the 
theory of strict product liability that is accepted and practiced in 
most States.
  ``The bill only preempts the laws of those States that offer greater 
protections to consumers, which we challenge from an equity 
perspective.''
  They went on to state, ``Protecting small business in this Nation is 
a laudable goal. We, as State officials, have a vested interest in the 
economic growth spawned by small business development, and to this end 
we are excited to join with you in creating effective and sound 
legislative solutions.
  ``We are very concerned with the seeming eagerness of Congress to 
attempt to preempt State law. We urge you to reconsider your approach 
to this issue.''
  Again, this is a Republican governor from the State of Wisconsin, 
Tommy Thompson, in opposition to H.R. 2366.
  I have another letter from the National Conference of State 
Legislatures in which Executive Director William Pound wrote that they 
oppose H.R. 2366 ``because of the damage it would due to our system of 
constitutional federalism. The tort law and its reform historically and 
appropriately have been matters within the jurisdiction of States.''
  So, Mr. Chairman, I think the attempt here may be laudable, but I 
hope it is not just an election-year gimmick to try to make some 
Members appear weak in their support of small businesses when, in fact, 
we are talking about the very serious issue of Federal preemption over 
State jurisdiction.
  The CHAIRMAN. The Chair would inform Members that the gentleman from 
California (Mr. Rogan) has 2 minutes remaining; the gentleman from 
Michigan (Mr. Conyers) has 1\1/2\ minutes remaining.
  Mr. CONYERS. Mr. Chairman, I yield our remaining time to the 
gentlewoman from Connecticut (Ms. DeLauro).
  The CHAIRMAN. The gentlewoman from Connecticut (Ms. DeLauro) is 
recognized for 1\1/2\ minutes.
  Ms. DeLAURO. Mr. Chairman, I rise in opposition to this misnamed and 
misguided piece of legislation under the guise of helping small 
businesses succeed, which is a goal that we can all support. This bill 
gives cover to businesses that make faulty products, that injure and 
even kill. This bill would protect companies that make cheap, poorly 
made firearms. These are weapons that are not made for hunting or for 
home protection; they are made to give criminals more bang for the 
buck.
  Let me give my colleagues an example. Intratec is best known for its 
inexpensive assault pistols, notably, the TEC-9, the TEC-DC9 and the 
AB-10.

[[Page 1296]]

The TEC-DC9 was one of the guns used in the 1999 massacre at Columbine 
High School in Colorado.
  This is also the company that markets Saturday night special handguns 
or what they call junk guns. Their advertising copy brags, and I quote, 
``that our guns are as tough as your toughest customers.'' In fact, 
this legislation, my friends, would provide cover to the makers of the 
weapons that were used at Columbine.
  I am dismayed that the Republican majority would not allow this House 
to consider an amendment that the gentlewoman from California (Ms. 
Lofgren) offered, which would have removed the protection from just the 
gun makers.
  This is wrong. We ought to be in the business of encouraging 
responsibility across the board, including small businesses; but this 
bill takes us in the wrong direction. It puts consumers, it puts our 
kids at undue risk by weakening key protections.
  Mr. ROGAN. Mr. Chairman, I yield myself the remainder of the time.
  I want to thank all of my colleagues who joined in this debate today. 
I appreciate their comments.
  I must say that I deeply regret hearing some of the characterizations 
of this bill and the way it has been twisted. I have sat here for the 
last hour listening to the fact that if we give a limitation of 
liability on punitive damages to small businesses, that people will be 
killed in the streets and that greedy corporate officers will rake in 
millions of dollars at the expense of working people; and that just 
simply is not the case, Mr. Chairman.
  When we talk about small business protection, who are these small 
businesses that we are addressing and that we are trying to demonstrate 
some protection for in this bill? Mr. Chairman, in our country today, 
fully 60 percent of every business would be characterized as a small 
business under the definition of this bill, 24 employees or less, and 
more than half of those businesses, Mr. Chairman, take in less than 
$50,000 per year. These are not rich corporate megamerger giant 
businesses that this bill protects.
  The Republican majority is attempting to protect those men and women 
who are out there trying to create jobs who are risking their capital 
and are attempting to provide an economic engine for our country. In 
fact, Mr. Chairman, median business earnings in 1996 were $25,000; 
about 25 percent of the self-employed earned less than $12,500, and 
about 25 percent earned more than $50,000. Only 9 percent of small 
business owners took over $100,000 from their business when these 
statistics were taken. That is the people that this bill is attempting 
to protect, those small businessmen and women who are investing their 
lives and their capital into making this country's economic engine run.
  The Congress of the United States has a moral obligation to protect 
them from frivolous lawsuits so that their livelihood, their families, 
their homes, and their businesses are not taken by greedy trial lawyers 
in frivolous lawsuits or worse, be forced to settle a case that has no 
merit because the gun of punitive damages has been cocked and put to 
their head and that threat is so great that they cannot afford to 
defend themselves.
  I urge support for this bill.
  Mr. Chairman, on behalf of the gentleman from Illinois (Mr. Hyde), 
the chairman of the Committee on the Judiciary, and the gentleman from 
Virginia (Mr. Bliley), the chairman of the Committee on Commerce, I 
submit the following exchange of letters:

                                    U.S. House of Representatives,


                                        Committee on Commerce,

                                Washington, DC, February 10, 2000.
     Hon. Henry J. Hyde,
     Chairman, Committee on the Judiciary, Rayburn House Office 
         Building, Washington, DC.
       Dear Henry: Please find enclosed my recent letter to the 
     Speaker agreeing to be discharged from further consideration 
     of the bill, H.R. 2366, the Small Business Liability Reform 
     Act. As you know, the Committee on Commerce's referral was 
     recently extended to February 14, 2000. I am agreeing to have 
     the Committee discharged without taking action on the bill in 
     light of the need to bring this important product liability 
     legislation to the floor in an expeditious manner.
       By agreeing to waive its consideration of the bill, the 
     Commerce Committee does not waive its jurisdiction over H.R. 
     2366 or similar bills. In addition, the Commerce Committee 
     reserves its authority to seek the appointment of an 
     appropriate number of conferees on this bill or similar 
     legislation that may be the subject of a House-Senate 
     conference. I ask for your commitment to support any request 
     by the Commerce Committee for conferees on H.R. 2366 or 
     similar legislation.
       I also ask that you include a copy of this letter and your 
     response as part of the Record during consideration of this 
     legislation on the House floor. Thank you for your assistance 
     and cooperation in this matter. I remain,
           Sincerely,
                                                       Tom Bliley,
     Chairman.
                                  ____

                                    U.S. House of Representatives,


                                        Committee on Commerce,

                                Washington, DC, February 10, 2000.
     Hon. J. Dennis Hastert,
     Speaker, U.S. House of Representatives, the Capitol, 
         Washington, DC.
       Dear Mr. Speaker: On February 7, 2000, you extended the 
     Committee on Commerce's referral of H.R. 2366, the Small 
     Business Liability Reform Act, for a period ending not later 
     than February 14, 2000. Recognizing the need to bring this 
     important product liability legislation to the floor as soon 
     as possible, I will agree to have the Committee on Commerce 
     discharged from further consideration of H.R. 2366. By 
     agreeing to be discharged, I am not waiving the Committee's 
     jurisdiction over H.R. 2366 or other similar legislation, and 
     I will seek the appointment of an appropriate number of 
     conferees should this legislation be the subject of a House-
     Senate conference.
       Thank you for your assistance and understanding in this 
     matter. I remain.
           Sincerely,
                                                       Tom Bliley,
     Chairman.
                                  ____

                                         House of Representatives,


                                   Committee on the Judiciary,

                                Washington, DC, February 11, 2000.
     Hon. Tom Bliley,
     Chairman, Committee on Commerce, House of Representatives, 
         Washington, DC.
       Dear Tom: Thank you for your letter regarding your 
     committee's jurisdictional interest in H.R. 2366, the ``Small 
     Business Liability Reform Act of 2000.''
       I acknowledge your committee's jurisdiction over title II 
     of this legislation and appreciate your cooperation in moving 
     the bill to the House floor expeditiously. As you are well 
     aware, your decision to forgo further action on the bill will 
     not prejudice the Commerce Committee with respect to its 
     jurisdictional prerogatives on this or similar legislation. I 
     will be happy to support your request for conferees on those 
     provisions within the Committee on the Commerce's 
     jurisdiction should they be the subject of a House-Senate 
     conference. I will also include a copy of your letter and 
     this response in the Congressional Record when the 
     legislation is considered by the House.
       Thank you again for your cooperation.
           Sincerely,
                                                       Henry Hyde,
     Chairman.
                                  ____

                                      Congressional Budget Office,


                                                U.S. Congress,

                                Washington, DC, February 16, 2000.
     Hon. Henry J. Hyde,
     Chairman, Committee on the Judiciary, U.S. House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman: In the cost estimate for the Small 
     Business Liability Reform Act of 2000 (H.R. 2366), as ordered 
     reported by the House Committee on the Judiciary on February 
     1, 2000, the Congressional Budget Office (CBO) stated that an 
     estimate of the bill's impact on the private sector would be 
     provided in a separate statement. CBO has now completed its 
     review of this bill.
       CBO finds that H.R. 2366 would impose no new private-sector 
     mandates as defined in the Unfunded Mandates Reform Act of 
     1995.
       If you wish further details on this analysis, we will be 
     pleased to provide them. The CBO staff contact is John Harris 
     (202-226-2949).
           Sincerely,
                                                 Barry B. Anderson
                                   (For Dan L. Crippen, Director).

  Mr. POMEROY. Mr. Chairman, I rise in opposition to H.R. 2366, the 
Small Business Liability Reform Act of 1999. I believe strongly that 
action must be taken to protect small businesses from the financial 
burdens imposed by frivolous lawsuits. In trying to address this issue, 
however, H.R. 2366 would supersede State tort law, including important 
statutes enacted in my own State of North Dakota. The preemptive 
provisions in H.R. 2366 would deny States the right to determine tort 
law free from Federal intrusion and thereby undermine the principle of 
federalism upon which our form of government rests.
  Mr. Chairman, there is little dispute that small businesses in this 
country deserve protection from frivolous lawsuits and the resulting 
increase in insurance costs. In North Dakota, small businesses are the 
cornerstone of our communities and have helped diversify and stimulate 
our rural economy. Although

[[Page 1297]]

these businesses are critically important to the future of States like 
North Dakota, many have been unfairly disadvantaged by costly lawsuits. 
Unfortunately, small businesses are often compelled to settle these 
lawsuits even if they would have prevailed in court, simply in order to 
avoid the costs of litigation. I believe, as do many of my colleagues, 
that States should reexamine their tort laws to address this problem.
  I also believe, however, that H.R. 2366 does not represent the 
appropriate Federal response to the issue of frivolous lawsuits. 
Historically, determination of tort law as well as its reform have 
fallen within the jurisdiction of the States. Over the past 15 years, 
several States have substantially reformed tort laws to provide 
manufacturers and retailers greater protection from liability. My own 
State of North Dakota, for example, has enacted a statute on punitive 
damages that is more protective of businesses than the punitive damages 
provision in this bill. H.R. 2366 would interfere with North Dakota's 
right, and the right of every State, to determine its own tort law. 
Because they recognize the potential threat H.R. 2366 poses to our 
system of federalism, I am joined in my opposition to this bill both by 
the Council on State Governments and the National Conference of State 
Legislatures.
  Mr. Chairman, although I do not support this particular vehicle for 
tort reform, I remain committed to protecting small businesses from 
excessive litigation. I also look forward to working with my colleagues 
on both sides of the aisle on legislative strategies to encourage small 
business development in all 50 States.
  Mr. DINGELL. Mr. Chairman, I rise in opposition to H.R. 2366, the 
Small Business Liability Reform Act of 2000. This legislation is very 
poorly drafted and unclear in its terms and application. It does not 
simply apply to reform of the product liability laws, which I support. 
Instead, H.R. 2366 exempts what it defines as small businesses from a 
broad and unspecified range of civil liability.
  There are provisions of this legislation which I have supported, such 
as the product seller protections in title II. However, I am extremely 
concerned that no one seems to have a clear and full understanding of 
all the circumstances in which this bill would limit the rights victims 
have to be compensated for the fraud and deception they suffer. The 
proponents of this legislation are asking for our support without 
identifying all the existing rights victims have that the bill may 
preempt.
  The sponsors have offered amendments they claim fix a lot of the 
bill's problems, but I am not at all sure they are right, and 
furthermore I am very sure we have not yet identified all the problems 
this legislation creates. For example, the Securities and Exchange 
Commission (SEC) staff say H.R. 2366 would still limit punitive damages 
that a victim of a securities ``boiler room'' scam could recover in a 
case he or she brings in State court. The SEC openly admits that it is 
not capable of taking on total responsibility for making sure the 
securities market is free of fraud and deception. Instead, the SEC says 
that private plaintiffs are a vital supplement to the Commission's 
enforcement program.
  Suing for fraud is the only way a securities ``boiler room'' victim 
can recoup his or her losses, other than commissions paid. With more 
and more Americans investing in securities every day, do the sponsors 
of this legislation really want to arbitrarily limit punitive damage 
awards that senior citizens and others may receive from State courts in 
cases of fraud perpetrated by securities ``boiler rooms''?
  That's definitely not the kind of litigation reform I support, and I 
seriously doubt if it's what many of my colleagues want, either. The 
threat of substantial and meaningful liability is a very important tool 
needed to keep securities fraud at a minimum. If that liability is 
reduced by this bill to a point that unscrupulous securities dealers 
are willing to absorb their reduced liability as a cost of doing 
business, investors, particularly the least sophisticated investors, 
will be victimized, and they will suffer.
  I cannot vote for a bill that so clearly increases, rather than 
reduces, the chance that innocent investors will be the victims of 
fraud and deception in the securities market. I would hope that my 
colleagues would also find that to be a totally unacceptable and 
dangerous outcome. Nor can I vote for a bill that is so ambiguous and 
potentially sweeping in its scope. For these reasons, I urge my 
colleagues to vote ``no'' on H.R. 2366. It is a fundamentally flawed 
piece of legislation that does not deserve your support.
  Mr. SENSENBRENNER. Mr. Chairman, I rise in strong support of H.R. 
2366, the Small Business Liability Reform Act of 2000. In my view, the 
American tort system is a disaster. It resembles a wealth 
redistribution lottery more than an efficient system designed to 
compensate those injured by the wrongful acts of others. Our current 
system raises the prices of goods made in America, forces State and 
local governments to expend precious resources, and causes unwarranted 
personal anguish and damages reputations. Companies should be held 
responsible for truly negligent behavior resulting in actual harm. But 
a civil justice system that perpetuates the concept of ``joint and 
several liability'' and has no effective mechanism, such as a loser 
pays rule, to deter frivolous lawsuits is simply not just. I am pleased 
that H.R. 2366 takes the first step toward alleviating this problem. 
H.R. 2366 would eliminate joint and several liability of small business 
defendants for non-economic damages, such as pain and suffering, but 
would retain it for economic damages, such as medical expenses. This 
would partially relieve the situation where a small business defendant 
is held liable for damages far in excess of its actual responsibility.
  I have been a longtime supporter of legislation to set uniform 
standards for product liability actions brought in State and Federal 
court. Inconsistencies within and among the States in rules of law 
governing product liability actions result in differences in State laws 
that may be inequitable with respect to plaintiffs and defendants, 
which, in turn, impose burdens on interstate commerce. Establishing 
uniform legal principles of liability for product seller, lessors, and 
renters will provide a fair balance among the interest of all parties 
in the chain of product manufacturing, distribution, and use, reduce 
costs and delays in product liability actions, and reduce the burdens 
on interstate commerce.
  Mr. Chairman, I urge passage of this long overdue legislation.
  Mrs. MINK of Hawaii. Mr. Chairman, I rise today in opposition to H.R. 
2366, the Small Business Liability Reform Act of 1999. H.R. 2366 takes 
away rights of victims to be compensated for injuries they suffer due 
to the negligence of manufacturers and retailers and in doing so, 
encourages corporations to evade their responsibility to provide 
consumers with safe products.
  This bill masquerades as an attempt to assist our Nation's small 
businesses. In reality however, only title I applies to small 
businesses, title II of the bill, the products liability provisions, 
applies to all businesses, despite H.R. 2366's title.
  H.R. 2366 will cap punitive damages at $250,000 and will eliminate 
joint and several liability for noneconomic damages like pain and 
suffering, loss of limb, loss of fertility, permanent disfigurement, 
and loss of a child. In doing so, this bill attempts to change a 
multitude of areas of law and does not solely concentrate on pure 
liability reform. Beyond that, this bill discriminates against women 
and our Nation's seniors who bear the greatest portion of noneconomic 
damages.
  If H.R. 2366 becomes law, our Nation's consumers will be left with 
very limited avenues of recourse if they suffer damages. This bill will 
set damage caps on liability suits at $250,000 for all businesses with 
fewer than 25 employees regardless of how much revenue the business 
generates. It will allow product liability suits in three instances 
only: when there is a failure to exercise reasonable care, when there 
is a violation of a manufacturer's express warranty, and when there is 
intentional wrong doing by the company.
  By eliminating joint and several liability, this bill makes unknowing 
and innocent members of the public bear the burden of their damages as 
small businesses will, under this bill, be considered judgment proof.
  It is no surprise that the National Conference of State Legislators 
are against this bill. First, this bill does not meet its goal of 
creating uniformity among our Nation's laws because of its unequal 
treatment of the issue of punitive damages. This bill does not create 
punitive damages in States where it does not exist, but it does cap 
punitive damages for the States that already have punitive damage 
awards.
  Second, H.R. 2366 will eliminate the rights of States and cities to 
sue gun manufacturers as most of them are considered small businesses 
under the definition of the bill and therefore are exempt from suit. 
This robs our States of the autonomy of deciding for themselves how to 
handle suits against gun manufacturers and retailers. Also, H.R. 2366 
raises serious federalism problems. This bill totally disregards States 
from exercising jurisdiction over their own tort laws, an area of law 
which has historically been reserved for them to exercise their own 
jurisdiction over. Many States have already set laws which require that 
higher standards be met before punitive damages can be awarded but no 
State has limited punitive damages for intentional injury. This bill 
would require States to do so. H.R. 2366 dictates to the States what 
recourse their own citizens have in their own State courts when

[[Page 1298]]

they are injured by manufacturers and retailers. It is curious to note 
that this bill affects our Nation's State courts but denies our Federal 
district courts the right to hear cases that would fall under this 
bill.
  I urge my colleagues to vote against this bill and not allow the 
victims of dangerous products to be robbed of their right to recourse. 
We need to vote against this bill and help our States decide for 
themselves how best to protect their own consumers.
  Mr. WAXMAN. Mr. Chairman, I rise in opposition to H.R. 2366. This 
bill would jeopardize the enforcement of the laws which protect our 
health and our environment, and undermine the responsibility of 
companies to make product safety a priority.
  It is wrong to assume that a company should be less accountable for 
damage it causes simply because it has fewer employees, or to pretend 
that a company's smaller size in any way mitigates the extent of the 
damage it can cause. Think of the far reaching impact of a biotech 
company that markets a faulty vaccine; a small chemical company that 
pollutes groundwater; or a small business gun dealer that sold weapons 
used in a school shooting.
  Furthermore, the $250,000 cap on punitive damages is not only an 
arbitrary slap in the face of the innocent individuals who suffer, it 
is a dangerous green light for corporate irresponsibility. Placing a 
quantitative limit on damages turns liability into a cost-benefit 
business equation where product safety becomes a choice rather than an 
imperative.
  Let me give you a very serious example of how this legislation could 
interfere with important efforts to deter environmental degradation. In 
literally thousands of locations throughout California, the fuel 
additive MTBE is showing up in groundwater.
  In my district, for example, the city of Santa Monica has faced the 
most serious MTBE contamination of any community in the country. Before 
MTBE contaminated Santa Monica's drinking water, groundwater provided 
70 percent of the city's water supply. Now, after the contamination, 
the city imports more than 80 percent of its drinking water from 
northern California and the Colorado River. In short, MTBE from leaking 
underground storage tanks has shut down our drinking water well fields, 
making the drinking water taste and smell like turpentine.
  This is not an isolated problem. It seems each week more MTBE 
contamination is found in California--as well as in the northeastern 
States. And in Santa Monica the cleanup could cost as much as $200 
million.
  Congress should be working to address this serious problem. We should 
be moving to prevent further contamination and working to aggressively 
clean up MTBE contamination. However, this legislation takes us in the 
opposite direction by shielding negligent polluters from punitive 
damages under State tort claims.
  Recently, the TV show ``60 minutes'' documented a small town in 
California which has been turned into a ghost town due to MTBE 
contamination from a single gas station. When the city lost their 
drinking water, the businesses shut down, the residents lost their 
livelihoods, and the few residents who remain are drinking contaminated 
drinking water. It makes no sense for Congress to move to protect this 
gas station owner from State tort claims, in any way, when their 
leaking underground storage tanks have decimated a small town.
  This bill would create a giant loophole for small companies to 
subvert Federal and State health and environmental laws, and severely 
weaken their deterrence against faulty business practices. If you want 
strong deterrence against MTBE contamination of groundwater, oppose 
this ill-considered legislation.
  I also want the record to be clear that the amendment offered by 
Representatives Rogan and Hutchinson does not address the critical 
problems with this legislation.
  Even with the adoption of their amendment, punitive damages awarded 
under State tort claims and citizen suits under environmental laws are 
severely limited.
  The Rogan-Hutchinson amendment would allow the $250,000 cap to be 
exceeded if the defendant acted with specific intent to cause the type 
of harm for which the action was brought. In the case of MTBE 
contamination, no business has acted with the intent to contaminate 
groundwater. However, some businesses may have acted so irresponsibly 
that we should send a clear signal that we cannot tolerate this 
behavior. Especially, when the cost is so great on our communities.
  With MTBE contamination showing up all over the country, why should 
we be establishing a safe harbor for polluters?
  I urge all members to oppose this bill, regardless of whether or not 
this amendment passes.
  The CHAIRMAN. All time for general debate has expired.
  Pursuant to the rule, the committee amendment in the nature of a 
substitute printed in the bill shall be considered as an original bill 
for the purpose of amendment under the 5-minute rule and shall be 
considered read.
  The text of the committee amendment in the nature of a substitute is 
as follows:

                               H.R. 2366

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Small 
     Business Liability Reform Act of 2000''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

            TITLE I--SMALL BUSINESS LAWSUIT ABUSE PROTECTION

Sec. 101. Findings.
Sec. 102. Definitions.
Sec. 103. Limitation on punitive damages for small businesses.
Sec. 104. Limitation on joint and several liability for noneconomic 
              loss for small businesses.
Sec. 105. Exceptions to limitations on liability.
Sec. 106. Preemption and election of State nonapplicability.

                TITLE II--PRODUCT SELLER FAIR TREATMENT

Sec. 201. Findings; purposes.
Sec. 202. Definitions.
Sec. 203. Applicability; preemption.
Sec. 204. Liability rules applicable to product sellers, renters, and 
              lessors.
Sec. 205. Federal cause of action precluded.

                       TITLE III--EFFECTIVE DATE

Sec. 301. Effective date.

            TITLE I--SMALL BUSINESS LAWSUIT ABUSE PROTECTION

     SEC. 101. FINDINGS.

       Congress finds that--
       (1) the defects in the United States civil justice system 
     have a direct and undesirable effect on interstate commerce 
     by decreasing the availability of goods and services in 
     commerce;
       (2) there is a need to restore rationality, certainty, and 
     fairness to the legal system;
       (3) the spiralling costs of litigation and the magnitude 
     and unpredictability of punitive damage awards and 
     noneconomic damage awards have continued unabated for at 
     least the past 30 years;
       (4) the Supreme Court of the United States has recognized 
     that a punitive damage award can be unconstitutional if the 
     award is grossly excessive in relation to the legitimate 
     interest of the government in the punishment and deterrence 
     of unlawful conduct;
       (5) just as punitive damage awards can be grossly 
     excessive, so can it be grossly excessive in some 
     circumstances for a party to be held responsible under the 
     doctrine of joint and several liability for damages that 
     party did not cause;
       (6) as a result of joint and several liability, entities 
     including small businesses are often brought into litigation 
     despite the fact that their conduct may have little or 
     nothing to do with the accident or transaction giving rise to 
     the lawsuit, and may therefore face increased and unjust 
     costs due to the possibility or result of unfair and 
     disproportionate damage awards;
       (7) the costs imposed by the civil justice system on small 
     businesses are particularly acute, since small businesses 
     often lack the resources to bear those costs and to challenge 
     unwarranted lawsuits;
       (8) due to high liability costs and unwarranted litigation 
     costs, small businesses face higher costs in purchasing 
     insurance through interstate insurance markets to cover their 
     activities;
       (9) liability reform for small businesses will promote the 
     free flow of goods and services, lessen burdens on interstate 
     commerce, and decrease litigiousness; and
       (10) legislation to address these concerns is an 
     appropriate exercise of the powers of Congress under clauses 
     3, 9, and 18 of section 8 of article I of the Constitution of 
     the United States, and the 14th amendment to the Constitution 
     of the United States.

     SEC. 102. DEFINITIONS.

       In this title:
       (1) Crime of violence.--The term ``crime of violence'' has 
     the same meaning as in section 16 of title 18, United States 
     Code.
       (2) Drug.--The term ``drug'' means any controlled substance 
     (as defined in section 102 of the Controlled Substances Act 
     (21 U.S.C. 802)) that was not legally prescribed for use by 
     the defendant or that was taken by the defendant other than 
     in accordance with the terms of a lawfully issued 
     prescription.
       (3) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from harm (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities) to the extent recovery for such loss is 
     allowed under applicable State law.
       (4) Harm.--The term ``harm'' means any physical injury, 
     illness, disease, or death or damage to property.
       (5) Hate crime.--The term ``hate crime'' means a crime 
     described in section 1(b) of the Hate Crime Statistics Act 
     (28 U.S.C. 534 note).
       (6) International terrorism.--The term ``international 
     terrorism'' has the same meaning as in section 2331 of title 
     18, United States Code.

[[Page 1299]]

       (7) Noneconomic loss.--The term ``noneconomic loss'' means 
     loss for physical or emotional pain, suffering, 
     inconvenience, physical impairment, mental anguish, 
     disfigurement, loss of enjoyment of life, loss of society and 
     companionship, loss of consortium (other than loss of 
     domestic service), injury to reputation, or any other 
     nonpecuniary loss of any kind or nature.
       (8) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity (including 
     any governmental entity).
       (9) Small business.--
       (A) In general.--The term ``small business'' means any 
     unincorporated business, or any partnership, corporation, 
     association, unit of local government, or organization that 
     has fewer than 25 full-time employees as determined on the 
     date the civil action involving the small business is filed.
       (B) Calculation of number of employees.--For purposes of 
     subparagraph (A), the number of employees of a subsidiary of 
     a wholly owned corporation includes the employees of--
       (i) a parent corporation; and
       (ii) any other subsidiary corporation of that parent 
     corporation.
       (10) State.--The term ``State'' means each of the several 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Virgin Islands, Guam, American Samoa, the Northern 
     Mariana Islands, any other territory or possession of the 
     United States, or any political subdivision of any such 
     State, commonwealth, territory, or possession.

     SEC. 103. LIMITATION ON PUNITIVE DAMAGES FOR SMALL 
                   BUSINESSES.

       (a) General Rule.--Except as provided in section 105, in 
     any civil action against a small business, punitive damages 
     may, to the extent permitted by applicable State law, be 
     awarded against the small business only if the claimant 
     establishes by clear and convincing evidence that conduct 
     carried out by that defendant through willful misconduct or 
     with a conscious, flagrant indifference to the rights or 
     safety of others was the proximate cause of the harm that is 
     the subject of the action.
       (b) Limitation on Amount.--In any civil action against a 
     small business, punitive damages shall not exceed the lesser 
     of--
       (1) 3 times the total amount awarded to the claimant for 
     economic and noneconomic losses; or
       (2) $250,000.

     SEC. 104. LIMITATION ON JOINT AND SEVERAL LIABILITY FOR 
                   NONECONOMIC LOSS FOR SMALL BUSINESSES.

       (a) General Rule.--Except as provided in section 105, in 
     any civil action against a small business, the liability of 
     each defendant that is a small business, or the agent of a 
     small business, for noneconomic loss shall be determined in 
     accordance with subsection (b).
       (b) Amount of Liability.--
       (1) In general.--In any civil action described in 
     subsection (a)--
       (A) each defendant described in that subsection shall be 
     liable only for the amount of noneconomic loss allocated to 
     that defendant in direct proportion to the percentage of 
     responsibility of that defendant (determined in accordance 
     with paragraph (2)) for the harm to the claimant with respect 
     to which that defendant is liable; and
       (B) the court shall render a separate judgment against each 
     defendant described in that subsection in an amount 
     determined under subparagraph (A).
       (2) Percentage of responsibility.--For purposes of 
     determining the amount of noneconomic loss allocated to a 
     defendant under this section, the trier of fact shall 
     determine the percentage of responsibility of each person 
     responsible for the harm to the claimant, regardless of 
     whether or not the person is a party to the action.

     SEC. 105. EXCEPTIONS TO LIMITATIONS ON LIABILITY.

       The limitations on liability under sections 103 and 104 do 
     not apply--
       (1) to any defendant whose misconduct--
       (A) constitutes--
       (i) a crime of violence;
       (ii) an act of international terrorism; or
       (iii) a hate crime;
       (B) results in liability for damages relating to the injury 
     to, destruction of, loss of, or loss of use of, natural 
     resources described in--
       (i) section 1002(b)(2)(A) of the Oil Pollution Act of 1990 
     (33 U.S.C. 2702(b)(2)(A)); or
       (ii) section 107(a)(4)(C) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9607(a)(4)(C));
       (C) involves--
       (i) a sexual offense, as defined by applicable State law; 
     or
       (ii) a violation of a Federal or State civil rights law;
       (D) occurred at the time the defendant was under the 
     influence (as determined under applicable State law) of 
     intoxicating alcohol or a drug, and the fact that the 
     defendant was under the influence was the cause of any harm 
     alleged by the plaintiff in the subject action; or
       (2) to any cause of action which is brought under the 
     provisions of title 31, United States Code, relating to false 
     claims (31 U.S.C. 3729-3733) or to any other cause of action 
     brought by the United States relating to fraud or false 
     statements.

     SEC. 106. PREEMPTION AND ELECTION OF STATE NONAPPLICABILITY.

       (a) Preemption.--Subject to subsection (b), this title 
     preempts the laws of any State to the extent that State laws 
     are inconsistent with this title.
       (b) Election of State Regarding Nonapplicability.--This 
     title does not apply to any action in a State court against a 
     small business in which all parties are citizens of the 
     State, if the State enacts a statute--
       (1) citing the authority of this subsection;
       (2) declaring the election of such State that this title 
     does not apply as of a date certain to such actions in the 
     State; and
       (3) containing no other provision.

                TITLE II--PRODUCT SELLER FAIR TREATMENT

     SEC. 201. FINDINGS; PURPOSES.

       (a) Findings.--Congress finds that--
       (1) although damage awards in product liability actions may 
     encourage the production of safer products, they may also 
     have a direct effect on interstate commerce and consumers of 
     the United States by increasing the cost of, and decreasing 
     the availability of, products;
       (2) some of the rules of law governing product liability 
     actions are inconsistent within and among the States, 
     resulting in differences in State laws that may be 
     inequitable with respect to plaintiffs and defendants and may 
     impose burdens on interstate commerce;
       (3) product liability awards may jeopardize the financial 
     well-being of individuals and industries, particularly the 
     small businesses of the United States;
       (4) because the product liability laws of a State may have 
     adverse effects on consumers and businesses in many other 
     States, it is appropriate for the Federal Government to enact 
     national, uniform product liability laws that preempt State 
     laws; and
       (5) under clause 3 of section 8 of article I of the United 
     States Constitution, it is the constitutional role of the 
     Federal Government to remove barriers to interstate commerce.
       (b) Purposes.--The purposes of this title, based on the 
     powers of the United States under clause 3 of section 8 of 
     article I of the United States Constitution, are to promote 
     the free flow of goods and services and lessen the burdens on 
     interstate commerce, by--
       (1) establishing certain uniform legal principles of 
     product liability that provide a fair balance among the 
     interests of all parties in the chain of production, 
     distribution, and use of products; and
       (2) reducing the unacceptable costs and delays in product 
     liability actions caused by excessive litigation that harms 
     both plaintiffs and defendants.

     SEC. 202. DEFINITIONS.

       In this title:
       (1) Alcohol product.--The term ``alcohol product'' includes 
     any product that contains not less than \1/2\ of 1 percent of 
     alcohol by volume and is intended for human consumption.
       (2) Claimant.--The term ``claimant'' means any person who 
     brings an action covered by this title and any person on 
     whose behalf such an action is brought. If such an action is 
     brought through or on behalf of an estate, the term includes 
     the claimant's decedent. If such an action is brought through 
     or on behalf of a minor or incompetent, the term includes the 
     claimant's legal guardian.
       (3) Commercial loss.--The term ``commercial loss'' means--
       (A) any loss or damage solely to a product itself;
       (B) loss relating to a dispute over the value of a product; 
     or
       (C) consequential economic loss, the recovery of which is 
     governed by applicable State commercial or contract laws that 
     are similar to the Uniform Commercial Code.
       (4) Compensatory damages.--The term ``compensatory 
     damages'' means damages awarded for economic and noneconomic 
     losses.
       (5) Dram-shop.--The term ``dram-shop'' means a drinking 
     establishment where alcoholic beverages are sold to be 
     consumed on the premises.
       (6) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from harm (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities) to the extent recovery for that loss is 
     allowed under applicable State law.
       (7) Harm.--The term ``harm'' means any physical injury, 
     illness, disease, or death or damage to property caused by a 
     product. The term does not include commercial loss.
       (8) Manufacturer.--The term ``manufacturer'' means--
       (A) any person who--
       (i) is engaged in a business to produce, create, make, or 
     construct any product (or component part of a product); and
       (ii)(I) designs or formulates the product (or component 
     part of the product); or
       (II) has engaged another person to design or formulate the 
     product (or component part of the product);
       (B) a product seller, but only with respect to those 
     aspects of a product (or component part of a product) that 
     are created or affected when, before placing the product in 
     the stream of commerce, the product seller--
       (i) produces, creates, makes, constructs and designs, or 
     formulates an aspect of the product (or component part of the 
     product) made by another person; or
       (ii) has engaged another person to design or formulate an 
     aspect of the product (or component part of the product) made 
     by another person; or
       (C) any product seller not described in subparagraph (B) 
     that holds itself out as a manufacturer to the user of the 
     product.

[[Page 1300]]

       (9) Noneconomic loss.--The term ``noneconomic loss'' means 
     loss for physical or emotional pain, suffering, 
     inconvenience, physical impairment, mental anguish, 
     disfigurement, loss of enjoyment of life, loss of society and 
     companionship, loss of consortium (other than loss of 
     domestic service), injury to reputation, or any other 
     nonpecuniary loss of any kind or nature.
       (10) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity (including 
     any governmental entity).
       (11) Product.--
       (A) In general.--The term ``product'' means any object, 
     substance, mixture, or raw material in a gaseous, liquid, or 
     solid state that--
       (i) is capable of delivery itself or as an assembled whole, 
     in a mixed or combined state, or as a component part or 
     ingredient;
       (ii) is produced for introduction into trade or commerce;
       (iii) has intrinsic economic value; and
       (iv) is intended for sale or lease to persons for 
     commercial or personal use.
       (B) Exclusion.--The term ``product'' does not include--
       (i) tissue, organs, blood, and blood products used for 
     therapeutic or medical purposes, except to the extent that 
     such tissue, organs, blood, and blood products (or the 
     provision thereof) are subject, under applicable State law, 
     to a standard of liability other than negligence; or
       (ii) electricity, water delivered by a utility, natural 
     gas, or steam.
       (12) Product liability action.--
       (A) General rule.--Except as provided in subparagraph (B), 
     the term ``product liability action'' means a civil action 
     brought on any theory for a claim for any physical injury, 
     illness, disease, death, or damage to property that is caused 
     by a product.
       (B) The following claims are not included in the term 
     ``product liability action'':
       (i) Negligent entrustment.--A claim for negligent 
     entrustment.
       (ii) Negligence per se.--A claim brought under a theory of 
     negligence per se.
       (iii) Dram-shop.--A claim brought under a theory of dram-
     shop or third-party liability arising out of the sale or 
     providing of an alcoholic product to an intoxicated person or 
     minor.
       (13) Product seller.--
       (A) In general.--The term ``product seller'' means a person 
     who in the course of a business conducted for that purpose--
       (i) sells, distributes, rents, leases, prepares, blends, 
     packages, labels, or otherwise is involved in placing a 
     product in the stream of commerce; or
       (ii) installs, repairs, refurbishes, reconditions, or 
     maintains the harm-causing aspect of the product.
       (B) Exclusion.--The term ``product seller'' does not 
     include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services in any case in 
     which the sale or use of a product is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who--

       (I) acts in only a financial capacity with respect to the 
     sale of a product; or
       (II) leases a product under a lease arrangement in which 
     the lessor does not initially select the leased product and 
     does not during the lease term ordinarily control the daily 
     operations and maintenance of the product.

       (14) State.--The term ``State'' means each of the several 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Virgin Islands, Guam, American Samoa, the Northern 
     Mariana Islands, any other territory or possession of the 
     United States, or any political subdivision of any such 
     State, commonwealth, territory, or possession.

     SEC. 203. APPLICABILITY; PREEMPTION.

       (a) Applicability.--
       (1) In general.--Except as provided in paragraph (2), this 
     title governs any product liability action brought in any 
     Federal or State court.
       (2) Actions for commercial loss.--A civil action brought 
     for commercial loss shall be governed only by applicable 
     State commercial or contract laws that are similar to the 
     Uniform Commercial Code.
       (b) Relationship to State Law.--This title supersedes a 
     State law only to the extent that the State law applies to an 
     issue covered by this title. Any issue that is not governed 
     by this title, including any standard of liability applicable 
     to a manufacturer, shall be governed by any applicable 
     Federal or State law.
       (c) Effect on Other Law.--Nothing in this title shall be 
     construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any State law;
       (2) supersede or alter any Federal law;
       (3) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (4) affect the applicability of any provision of chapter 97 
     of title 28, United States Code;
       (5) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation;
       (6) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum; or
       (7) supersede or modify any statutory or common law, 
     including any law providing for an action to abate a 
     nuisance, that authorizes a person to institute an action for 
     civil damages or civil penalties, cleanup costs, injunctions, 
     restitution, cost recovery, punitive damages, or any other 
     form of relief, for remediation of the environment (as 
     defined in section 101(8) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601(8))).

     SEC. 204. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS, 
                   RENTERS, AND LESSORS.

       (a) General Rule.--
       (1) In general.--In any product liability action covered 
     under this title, a product seller other than a manufacturer 
     shall be liable to a claimant only if the claimant 
     establishes that--
       (A)(i) the product that allegedly caused the harm that is 
     the subject of the complaint was sold, rented, or leased by 
     the product seller;
       (ii) the product seller failed to exercise reasonable care 
     with respect to the product; and
       (iii) the failure to exercise reasonable care was a 
     proximate cause of the harm to the claimant;
       (B)(i) the product seller made an express warranty 
     applicable to the product that allegedly caused the harm that 
     is the subject of the complaint, independent of any express 
     warranty made by a manufacturer as to the same product;
       (ii) the product failed to conform to the warranty; and
       (iii) the failure of the product to conform to the warranty 
     caused the harm to the claimant; or
       (C)(i) the product seller engaged in intentional 
     wrongdoing, as determined under applicable State law; and
       (ii) the intentional wrongdoing caused the harm that is the 
     subject of the complaint.
       (2) Reasonable opportunity for inspection.--For purposes of 
     paragraph (1)(A)(ii), a product seller shall not be 
     considered to have failed to exercise reasonable care with 
     respect to a product based upon an alleged failure to inspect 
     the product, if--
       (A) the failure occurred because there was no reasonable 
     opportunity to inspect the product; or
       (B) the inspection, in the exercise of reasonable care, 
     would not have revealed the aspect of the product that 
     allegedly caused the claimant's harm.
       (b) Special Rule.--
       (1) In general.--A product seller shall be deemed to be 
     liable as a manufacturer of a product for harm caused by the 
     product, if--
       (A) the manufacturer is not subject to service of process 
     under the laws of any State in which the action may be 
     brought; or
       (B) the court determines that the claimant is or would be 
     unable to enforce a judgment against the manufacturer.
       (2) Statute of limitations.--For purposes of this 
     subsection only, the statute of limitations applicable to 
     claims asserting liability of a product seller as a 
     manufacturer shall be tolled from the date of the filing of a 
     complaint against the manufacturer to the date that judgment 
     is entered against the manufacturer.
       (c) Rented or Leased Products.--
       (1) Definition.--For purposes of paragraph (2), and for 
     determining the applicability of this title to any person 
     subject to that paragraph, the term ``product liability 
     action'' means a civil action brought on any theory for harm 
     caused by a product or product use.
       (2) Liability.--Notwithstanding any other provision of law, 
     any person engaged in the business of renting or leasing a 
     product (other than a person excluded from the definition of 
     product seller under section 202(13)(B)) shall be subject to 
     liability in a product liability action under subsection (a), 
     but any person engaged in the business of renting or leasing 
     a product shall not be liable to a claimant for the tortious 
     act of another solely by reason of ownership of that product.

     SEC. 205. FEDERAL CAUSE OF ACTION PRECLUDED.

       The district courts of the United States shall not have 
     jurisdiction under this title based on section 1331 or 1337 
     of title 28, United States Code.

                       TITLE III--EFFECTIVE DATE

     SEC. 301. EFFECTIVE DATE.

       This Act shall take effect with respect to any civil action 
     commenced after the date of enactment of this Act without 
     regard to whether the harm that is the subject of the action 
     occurred before such date.

  The CHAIRMAN. No amendment to the committee amendment in the nature 
of a substitute is in order, except those printed in House Report 106-
498. Each amendment may be offered only in the order printed in the 
report, by a Member designated in the report, shall be considered read, 
shall be debatable for the time specified in the report, equally 
divided and controlled by the proponent and an opponent, shall not be 
subject to amendment, and shall not be subject to a demand for division 
of the question.
  The Chairman of the Committee of the Whole may postpone a request for 
a recorded vote on any amendment and may reduce to a minimum of 5 
minutes the time for voting on any postponed question that immediately 
follows another vote, provided that the time for voting on the first 
question shall be a minimum of 15 minutes.
  It is in order to consider Amendment No. 1 printed in House Report 
106-498.

[[Page 1301]]




               Amendment No. 1 Offered by Mr. Hutchinson

  Mr. HUTCHINSON. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 1 offered by Mr. Hutchinson:
       Page 7, strike line 13 through line 6 on page 8 and insert 
     the following:

     SEC. 103. LIMITATION ON PUNITIVE DAMAGES FOR SMALL 
                   BUSINESSES.

       (a) General Rule.--Except as provided in section 105, in 
     any civil action against a small business, punitive damages 
     may, to the extent permitted by applicable Federal or State 
     law, be awarded against the small business only if the 
     claimant establishes by clear and convincing evidence that 
     conduct carried out by that defendant with a conscious, 
     flagrant indifference to the rights or safety of others was 
     the proximate cause of the harm that is the subject of the 
     action.
       (b) Limitation on Amount.--In any civil action against a 
     small business, punitive damages awarded against a small 
     business shall not exceed the lesser of--
       (1) 3 times the total amount awarded to the claimant for 
     economic and noneconomic losses, or
       (2) $250,000,

     except that the court may make this subsection inapplicable 
     if the court finds that the plaintiff established by clear 
     and convincing evidence that the defendant acted with 
     specific intent to cause the type of harm for which the 
     action was brought.
       (c) Application by the Court.--The limitation prescribed by 
     this section shall be applied by the court and shall not be 
     disclosed to the jury.

  The CHAIRMAN. Pursuant to House Resolution 423, the gentleman from 
Arkansas (Mr. Hutchinson) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Arkansas (Mr. Hutchinson).
  Mr. HUTCHINSON. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, I am pleased to rise in support of this carefully 
drafted and well-balanced legislation. I do believe that balanced tort 
reform can be achieved, and this bill takes us in the right direction 
to do that. I want to thank the gentleman from California (Mr. Rogan) 
again for his work and leadership on this.
  With the language that we have developed in this amendment, I am now 
able to lend my enthusiastic support to the legislation.
  Small businesses across the country operate in fear of being named as 
a defendant in a liability case. Though they may be found minimally 
responsible in the case, the weight of the legal expenses can crush a 
small enterprise. According to a Gallup survey, one out of every five 
small businesses do not hire more employees, expand their business, 
improve their existing products, or introduce new products out of fear 
of litigation. This legislation addresses the situation by reforming 
joint and several liability, which ensures that defendants are held 
liable only for the portion of the harm that they cause. It limits 
punitive damages in routine cases and establishes uniform liability 
standards.
  Over the last several weeks, after the Committee on the Judiciary 
passed this bill out, the gentleman from California and I have worked 
on language that I was very concerned about which would provide an 
override for the cap on punitive damages. As originally drafted, the 
bill capped punitive damages awards at $250,000, or three times the 
total compensatory award, whichever is less, with no provision for 
departure in cases of extreme misconduct. I was specifically concerned 
that the bill did not include a judicial override provision allowing 
judges to respond to the most egregious cases, and some of the Members 
have raised this issue even in the debate today.
  The amendment that I offer today provides an opportunity for judges 
to exceed the punitive damages cap if the plaintiff establishes by 
clear and convincing evidence that the defendant acted with specific 
intent to cause the type of harm for which the action was brought. I 
think we can all agree that intentional behavior demonstrates such a 
callousness on the part of a defendant that merits application of the 
full punitive damage award as approved by the jury. This concept of a 
judicial override has manifested itself previously, but I believe that 
this language is even better than what has been offered before. The 
provision is carefully crafted to achieve a balance that provides full 
punitives in the most egregious cases, while not creating a loophole 
that undermines the concept of a cap.
  There have been a number of discussions as to exactly what a 
plaintiff has to prove under this language. Let me first say what the 
plaintiff does not have to prove. The plaintiff will not have to prove 
that the defendant intended to harm that particular plaintiff or that 
the defendant intended to cause the harm that occurred. In other words, 
the plaintiff can prove by clear and convincing evidence that the 
defendant intended to cause harm to people. He or she does not have to 
prove that the defendant set out to harm the person specifically.
  In addition, if a plaintiff can prove that the defendant intended to 
cause physical injury, illness, disease, death or property damage, he 
or she does not have to prove that the defendant meant to cause a 
specific injury such as a broken leg, dislocated back, or a particular 
strain of disease. Proving that a defendant intentionally set out to 
harm others, regardless of who was ultimately hurt or what particular 
harm resulted, is sufficient to activate this judicial override 
provision.
  So I would like to note for my colleagues that in the 104th Congress, 
the President vetoed comprehensive tort reform legislation because he 
was concerned that there was not an adequate judicial override. This 
addresses his concern. I believe it will lead to the President's 
signature hopefully on this bill.
  There were a number of other technical corrections that were made, 
including clarifying that the limitation on punitive damages applies 
only to punitive damages against small businesses. This is very 
important. The original bill was not clear as to how multidefendant 
cases where some defendants who did not qualify as a small business 
would be treated under the bill. This change makes it clear that only 
small business defendants will enjoy the provisions of this 
legislation.
  So I believe it is a good amendment; it improves the bill. I 
appreciate my friend and colleague working with me to come up with this 
language, and I would ask my colleagues to support it.

                              {time}  1245

  Mr. ROGAN. Mr. Chairman, will the gentleman yield?
  Mr. HUTCHINSON. I am happy to yield to the gentleman from California.
  Mr. ROGAN. Mr. Chairman, first I want to congratulate and commend my 
colleague, the gentleman from Arkansas, for his exceptional work on 
this. We spent many long and arduous hours during the committee, both 
in committee and after hours, trying to perfect this amendment.
  I believe that through this amendment we are increasing the scope of 
fairness to a fundamentally important area. Once again, I want to thank 
my colleague for his sensitivity, his hard work and his commitment. I 
enthusiastically support this amendment.
  The CHAIRMAN. Does the gentleman from Michigan (Mr. Conyers) seek to 
control the time in opposition?
  Mr. CONYERS. Yes, I do, Mr. Chairman.
  The CHAIRMAN. The gentleman from Michigan (Mr. Conyers) is recognized 
for 5 minutes.
  Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I want to commend our distinguished colleague, the 
gentleman from Arkansas (Mr. Hutchinson), for his effort. If he thinks 
that the president is not going to continue his veto over this 
legislation because of this amendment, then I am afraid he has another 
thought coming, because this is too little and too late. This amendment 
falls well short and offers far too much protection for drug dealers, 
polluters, copyright infringers, and other types of misconduct.
  I am going to explain how and why that is. First of all, the carve-
out is purely discretionary with the court. The court does not have to 
do this, I say to the gentleman from California (Mr. Rogan), it is up 
to them, so the

[[Page 1302]]

damage cap may apply or the damage cap may not apply. A judge that may 
be considered pro-defendant in legal circles would have total 
discretion to render the Rogan-Hutchinson amendment to be a nullity.
  Second, the amendment fails to safeguard the wide variety of civil 
statutes on the books which authorize punitive damages and which are 
based on far less stringent evidentiary requirements than set forth in 
the amendment. State laws frequently permit award of punitive damages 
against businesses based on more lenient evidence standards.
  So in some areas we may be of marginal help, but in other areas we 
are not helping at all. For example, in Illinois, the Drug Dealer 
Liability Act authorizes punitive damages against corporations 
participating in illegal drug markets, which would be overturned by the 
legislation. Florida has an environmental liability law which provides 
for treble damages in private actions against unlawful pollution or 
discharge, which would also be overturned by this bill.
  The last thing we would want to be doing is creating further legal 
obstruction to bring drug dealers and corporate polluters to justice. I 
do not think that this is intentionally set about as an objective, but 
still, this is the result. It is another example of intent to do well 
versus the results of what happens when this measure is put into 
practice.
  The copyright law, let us look at this. Plaintiffs are entitled to 
receive up to $150,000 in penalties where the defendant acted 
willfully, which is a much lower standard than is put forth in the 
Hutchinson amendment. The standard for Hutchinson is ``specific 
intent,'' so the gentleman is making it harder to get those people that 
may be acting in violation of copyright law.
  This is a current major issue in litigation over the I Crave TV web 
site, a foreign firm which is accused of stealing copyrighted 
television signals and airing them on the Internet. Unfortunately, the 
legislation continues to severely minimize liability for copyright 
theft and harm of all our Nation's intellectual property owners.
  Finally, even in the ordinary tort context there are numerous 
examples of misconduct which should be subject to punitive damages, but 
which will never meet the ``specific intent'' standard set forth in the 
amendment. Example: What about the trucking companies? Three hundred 
thousand trucking companies, most of which have less than 25 employees, 
would be shielded for punitive damages for flagrant highway accidents, 
even if they violate State regulations and injure or kill drivers or 
passengers. This is of particular concern to all of us who are 
concerned about highway safety.
  So I sympathize, I say to the gentleman from Arkansas, with what the 
gentleman is trying to do with the amendment, but it falls short. It 
does not go far enough. It will not protect us from a presidential 
veto, which has happened before in this kind of case, and it is not the 
kind of thing that we would want to have happen in terms of giving 
protection to drug dealers, polluters, copyright infringers, and other 
types of misconduct.
  The CHAIRMAN. All time has expired on the amendment.
  The question is on the amendment offered by the gentleman from 
Arkansas (Mr. Hutchinson).
  The amendment was agreed to.
  The CHAIRMAN. It is now in order to consider amendment No. 2 printed 
in House Report 106-498.


            Amendment No. 2 Offered by Mr. MORAN of Virginia

  Mr. MORAN of Virginia. Mr. Chairman, I offer an amendment made in 
order by the rule.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 2 offered by Mr. Moran of Virginia:
       Page 6, insert after line 15 the following:
       (9) Punitive damages.--The term ``punitive damages'' means 
     damages awarded against any person or entity to punish or 
     deter such person, entity, or others from engaging in similar 
     behavior in the future. Such term does not include any civil 
     penalties, fines, or treble damages that are assessed or 
     enforced by an agency of State or Federal government pursuant 
     to a State or Federal statute.

  The CHAIRMAN. Pursuant to House Resolution 423, the gentleman from 
Virginia (Mr. Moran) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from Virginia (Mr. Moran).
  Mr. MORAN of Virginia. Mr. Chairman, I yield myself such time as I 
may consume.
  Mr. Chairman, H.R. 2366 in my mind is a focused, tightly-crafted bill 
that will reduce unnecessary litigation and legal costs. It is careful 
not to overreach, and as such, gives us the opportunity to respond on a 
bipartisan basis to the concerns we have been hearing year after year 
from smaller employers about our civil justice system.
  For the smallest of the Nation's businesses, those with less than 25 
employees, Title I will abolish joint liability for noneconomic damages 
and to limit punitive damages. States may elect to opt out and instead 
apply their own joint liability and punitive damages rules in cases 
brought in State court when the parties are all citizens of the same 
State.
  Further, these provisions do not apply to civil cases that may arise 
from certain violations of criminal law or egregious misconduct.
  Today our smallest enterprises operate in fear that they will be 
named as a defendant in a lawsuit, be found minimally responsible for 
the claimant's harm, but be maximally crushed under the weight of all 
the damages as a result of the application of joint or deep pockets 
liability. Most States have recognized the inequity of the unfettered 
application of joint liability and have acted to abolish or restrain it 
in some way.
  The Small Business Liability Reform Act adopts a fair, balanced 
approach by limiting the noneconomic damages exposure of a small 
business defendant to its own proportionate share. Similarly, the 
owners and employees of a very small commercial enterprise know their 
business could be destroyed by the legal costs associated with simply 
defending against a civil action in a jurisdiction where punitive 
damages are unrestrained.
  Rather than face that prospect, small business defendants are coerced 
into inflated settlements of marginal, sometimes even meritless, 
lawsuits.
  Title II holds non-manufacturer product sellers, lessors, and renters 
liable for their own negligence and intentional wrongdoing, but it only 
holds them responsible for the supplier manufacturer's liability when 
that manufacturer is judgment-proof.
  This policy has been a noncontroversial part of Federal product 
liability legislation since the Carter administration published the 
model Uniform Product Liability Act 21 years ago.
  Most recently, the product seller liability standard in title II was 
included in the 1998 product liability compromise that President 
Clinton had agreed to sign. This provision will reduce the exposure of 
retailers and distributors to meritless product liability claims and 
unnecessary costs, while meticulously preserving the ability of injured 
persons to recover their full damages.
  Mr. Chairman, this modest but meaningful legislation will improve the 
administration of civil justice in the United States, and I urge my 
colleagues to support it.
  The amendment that I am offering today addresses the legitimate 
concerns raised by the White House in their statement of administration 
policy. The administration is concerned that without a specific 
definition of punitive damages, provisions of the bill may be read to 
cap the government's ability to impose civil penalties, civil fines, or 
treble damages, all of which are punitive in purpose.
  This amendment would define ``punitive damages'' in the bill as 
damages awarded against any person or entity to punish or deter such 
person, entity, or others from engaging in similar behavior in the 
future. That is the purpose of punitive damages.
  The amendment also makes clear that punitive damages, as defined in 
the bill, will not include any civil penalties, fines, or treble 
damages that are

[[Page 1303]]

assessed or enforced by an agency of State or Federal Government 
pursuant to a State or Federal statute.
  I can tell the Members, as an original cosponsor of the underlying 
legislation, none of the sponsors of this legislation intended for the 
bill to include such actions. I do applaud the administration for 
suggesting the clarifying language in this amendment.
  Mr. ROGAN. Mr. Chairman, will the gentleman yield?
  Mr. MORAN of Virginia. I yield to the gentleman from California.
  Mr. ROGAN. Mr. Chairman, I thank the gentleman for yielding to me. I 
simply want to commend the gentleman, both for his amendment, which I 
think makes a good bill much better, and secondly, from the bottom of 
my heart I thank the gentleman for not just his leadership on this 
bill, but for the pleasure of working with him on it. I am proud to 
have had him as an original cosponsor.
  Once again, I thank the gentleman for the impending success of a good 
piece of legislation.
  Mr. MORAN of Virginia. Mr. Chairman, I thank the gentleman very much 
for his remarks, and I yield back the balance of my time.
  The CHAIRMAN. Does the gentleman from Michigan (Mr. Conyers) seek to 
control time in opposition?
  Mr. CONYERS. Yes, Mr. Chairman.
  The CHAIRMAN. The gentleman from Michigan (Mr. Conyers) is recognized 
for 5 minutes.
  Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
  I want to start off, Mr. Chairman, by letting everyone know how much 
I think of the gentleman from Virginia (Mr. Moran). He is a good friend 
of mine.
  I suppose, in the final analysis, he has added a marginal benefit to 
the bill. What he has done is say that the government, that is, the 
Federal system and the States, should not be caught by the strictures 
of this bill, and we should allow them to move forward and be able to 
bring lawsuits in some range not encumbered by the limitations that we 
are placing on everybody else.
  In other words, a citizen or private environmental groups are not 
affected by the Moran Amendment. The governments are going to be given 
an exclusion, Federal and State, but not individual citizens and 
environmental suits.
  That is what we are trying to do in the environmental sector of 
improving our society. We are trying to encourage citizens and 
environmental organizations which are not within the purview of this 
bill.
  For example, the bill would continue to wipe out incentives for 
private citizens to enforce environmental laws by bringing private and 
whistleblower acts under the Clean Water Act. They would be caught by 
this bill, even with the Moran Amendment. That is why my praise for the 
gentleman from Virginia is so limited this afternoon. I really hate to 
go through this long list of things that are not accomplished by the 
Moran Amendment.
  Yet, it is a modest improvement, but it does not help anybody 
bringing a whistleblower action. It will not help any citizen suing 
under the Clean Water Act, the Solid Waste Disposal Act, the Clean Air 
Act, the Superfund, the Safe Drinking Water Act, the Toxic Substance 
Control Act, the Lead-Based Paint Hazard Reduction Act. Those and other 
cases brought by citizens or environmental organizations, these people 
will wave the Moran Amendment to their dismay when they find out that 
it only applies to State and local governments.
  Another problem with the amendment is that it fails to deal with the 
problems of the bill's overturning a wide variety of joint and several 
liability standards designed to deter misconduct. Now, in this area, 
the bill does not do anything for anybody. At least the gentleman is 
treating the citizens and the government fairly.
  This is a particular problem in the context, again, of environmental 
claims, which are frequently brought by State and Federal governments, 
as well as private individuals. There are numerous Federal 
environmental statutes which provide for joint and several liability 
for noneconomic damages by perpetrators, and are not carved out from 
the bill's protection.

                              {time}  1300

  These include the Clean Water Act, the National Marine Sanctuaries 
Act, the Park System Resource Protection Act, and other measures that 
would be overturned by this legislation with the Moran amendment.
  I cannot vote for an amendment that continues to protect corporations 
from oil spills which destroy natural sanctuaries and which damage our 
natural parks.
  So what can I say? The only way to truly fix this problem is to limit 
the bill's provisions to product liability cases as an amendment 
offered by myself and another gentleman from Virginia (Mr. Scott), 
which our amendment would do.
  Mr. MORAN of Virginia. Mr. Chairman, will the gentleman yield?
  Mr. CONYERS. I yield to the gentleman from Virginia.
  Mr. MORAN of Virginia. Mr. Chairman, I would say to the distinguished 
gentleman from Michigan (Mr. Conyers), an ardent leader of the full 
committee, that the purpose of the amendment was to address what was in 
the statement of administration policy, and I think the amendment does 
that.
  In terms of private rights of action, I suspect that may be addressed 
in conference and in the Senate as well, but I can understand the 
gentleman's concerns. I just do not necessarily share them as strongly 
as the gentleman does.
  Mr. CONYERS. Mr. Chairman, I yield back the balance of my time.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Virginia (Mr. Moran).
  The amendment was agreed to.
  The CHAIRMAN. It is now in order to consider amendment No. 3 printed 
in House Report 106-498.


         Amendment No. 3 Offered by Mr. Watt of North Carolina

  Mr. WATT of North Carolina. Mr. Chairman, I offer amendment No. 3.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 3 offered by Mr. Watt of North Carolina:
       Page 24, line 11, strike ``or 1337''.

  The CHAIRMAN. Pursuant to House Resolution 423, the gentleman from 
North Carolina (Mr. Watt) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from North Carolina (Mr. Watt).
  Mr. WATT of North Carolina. Mr. Chairman, I yield myself such time as 
I may consume.
  Mr. Chairman, my amendment deals solely with title II, the products 
liability part of the bill, a part of the bill which I would point out 
to my colleagues has no limitation to small businesses and is a 
complete usurpation of State law on products liability. It preempts all 
State law in this area to the extent that State laws are inconsistent 
with title II.
  I would point out to my colleagues that this is absolutely contrary 
to everything that my Republican colleagues say that they stand for. 
They tell us day after day after day that they believe in States' 
rights; they believe in moving government closer to the people, sending 
it back to the local level. This runs absolutely counter to that stated 
proposition. They have had to go out of their way to justify doing it, 
and I want to read specifically how they have done it.
  They have said products liability cases fall under the commerce 
clause of the United States. This is what they say in the findings 
leading into title II. ``Although damage awards in product liability 
actions may encourage the production of safer products, they may also 
have a direct effect on interstate commerce.''
  They go on to say, ``Some of the rules of law governing product 
liability actions are inconsistent within and among the States, 
resulting in differences in State laws that may be inequitable with 
respect to plaintiffs and defendants and may impose burdens on 
interstate commerce.''

[[Page 1304]]

  They go on to say, ``Under clause 3 of Section 8 of article I of the 
United States Constitution, it is the constitutional role of the 
Federal Government to remove barriers to interstate commerce.''
  These are their findings, and in the purpose of this section, this is 
what they say and I am quoting, ``The purposes of this title, based on 
the powers of the United States under clause 3 of Section 8 of article 
I of the United States Constitution, are to promote the free flow of 
goods and services and lessen the burdens on interstate commerce.''
  They have tried to take over this area of the law because they say 
there is a compelling Federal Government interest under the interstate 
commerce clause, but, Mr. Chairman, beware because then we get to the 
end of the bill. What do they say at the end of the bill? Despite this 
compelling Federal interest, they then say, ``The district courts of 
the United States,'' the Federal courts, ``shall not,'' shall not, 
shall not, Mr. Chairman, ``have jurisdiction under'' the commerce 
clause of the Constitution.
  So Big Brother is saying to the States, we know how to say what the 
law ought to be in this area, but Big Brother is also saying to the 
States and to the individual people, despite the compelling Federal 
interest that we have at the Federal level, we are not going to give 
access to the Federal courts to litigate these cases.
  Is there not something sinister and outrageous and unfair about that?
  All my amendment would do is say to them, if there is a compelling 
Federal reason for doing this, and I do not believe there is, but if 
there is, as they say there is, at least we ought to allow the citizens 
of our country to come to the Federal court to talk about and litigate 
about this supposed Federal remedy that we are giving to them under the 
statute.
  Mr. Chairman, I reserve the balance of my time.
  Mr. ROGAN. Mr. Chairman, would the gentleman yield for 15 seconds?
  The CHAIRMAN. The gentleman from North Carolina reserves the balance 
of his time.
  Does the gentleman from California seek to control the time in 
opposition?
  Mr. ROGAN. No, Mr. Chairman. I am in support of the amendment.
  Mr. WATT of North Carolina. Mr. Chairman, I yield myself such time as 
I may consume.
  Mr. Chairman, I am delighted and I want to express my absolute 
delight that despite the fact that they have fought this amendment all 
the way through the committee process, they have finally come to the 
light that if there is a Federal right here involved, there ought to at 
least be access to the Federal courts and I express my appreciation to 
the gentleman from California (Mr. Rogan).
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from North Carolina (Mr. Watt).
  The amendment was agreed to.
  The CHAIRMAN. It is now in order to consider amendment No. 4 printed 
in House Report 106-498.


                 Amendment No. 4 Offered by Mr. Conyers

  Mr. CONYERS. Mr. Chairman, I offered amendment No. 4.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 4 offered by Mr. Conyers:
       Page 6, line 23, insert before the period the following: 
     ``and had revenues in each of the last 2 years of $5,000,000 
     or less''.
       Page 19, line 10, strike ``(14)'' and insert ``(15)'' and 
     after line 9 insert the following:
       (14) Small business.--
       (A) In general.--The term ``small business'' means any 
     unincorporated business, or any partnership, corporation, 
     association, unit of local government, or organization that 
     has fewer than 25 full-time employees as determined on the 
     date the civil action involving the small business is filed 
     and had revenues in each of the last 2 years of $5,000,000 or 
     less.
       (B) Calculation of number of employees.--For purposes of 
     subparagraph (A), the number of employees of a subsidiary of 
     a wholly owned corporation includes the employees of--
       (i) a parent corporation; and
       (ii) any other subsidiary corporation of that parent 
     corporation.

                (Title II Applicable to Small Business)

       Page 21, line 12, insert after ``title'' the following: 
     ``brought against a small business''.

          (Definition of Product and Product Liability Action)

       Page 6, beginning in line 16 redesignate paragraphs (9) and 
     (10) as paragraphs (11) and (12), respectively, and add after 
     line 15 the following:
       (9) Product.--
       (A) In general.--The term ``product'' means any object, 
     substance, mixture, or raw material in a gaseous, liquid, or 
     solid state that--
       (i) is capable of delivery itself or as an assembled whole, 
     in a mixed or combined state, or as a component part or 
     ingredient;
       (ii) is produced for introduction into trade or commerce;
       (iii) has intrinsic economic value; and
       (iv) is intended for sale or lease to persons for 
     commercial or personal use.
       (B) Exclusion.--The term ``product'' does not include--
       (i) tissue, organs, blood, and blood products used for 
     therapeutic or medical purposes, except to the extent that 
     such tissue, organs, blood, and blood products (or the 
     provision thereof) are subject, under applicable State law, 
     to a standard of liability other than negligence; or
       (ii) electricity, water delivered by a utility, natural 
     gas, or steam.
       (10) Product liability action.--
       (A) General rule.--Except as provided in subparagraph (B), 
     the term ``product liability action'' means a civil action 
     brought on any theory for a claim for any physical injury, 
     illness, disease, death, or damage to property that is caused 
     by a product.
       (B) The following claims are not included in the term 
     ``product liability action'':
       (i) Negligent entrustment.--A claim for negligent 
     entrustment.
       (ii) Negligence per se.--A claim brought under a theory of 
     negligence per se.
       (iii) Dram-shop.--A claim brought under a theory of dram-
     shop or third-party liability arising out of the sale or 
     providing of an alcoholic product to an intoxicated person or 
     minor.

     (Making Title I Applicable to only Product Liability Actions)

       Page 6, line 22 and page 8, lines 1, 11, and 16, strike 
     ``civil action'' and insert ``product liability action''.

                       (Definition of Hate Crime)

       Page 5, strike lines 23 through 25 and insert the 
     following:
       (5) Hate crime.--The term ``hate crime'' means a crime in 
     which the defendant intentionally selects a victim, or in the 
     case of property crime, the property that is the object of 
     the crime, because of the actual or perceived race, color, 
     religion, national origin, ethnicity, gender, disability, or 
     sexual orientation of the victim or owner of the property.

  (Making Section 103 Applicable to Punitive Damages Irrespective of 
                               State Law)

       Page 7, beginning in line 17, strike ``, to the extent 
     permitted by applicable State law,''.

 (Allowing State to Elect Nonapplicability by Enacting a Referendum or 
                              Initiative)

       Page 11, line 9, after ``a statute'' insert ``, an 
     initiative, or referendum'', add ``and'' at the end of line 
     10, in line 13, strike ``; and'' and insert a period, and 
     strike line 14
       Page 21, insert after line 7 the following:
       (d) Election of State Regarding Nonapplicability.--This 
     title does not apply to any action in a State court against a 
     small business in which all parties are citizens of the 
     State, if the State enacts a statute, an initiative, or 
     referendum--
       (1) citing the authority of this subsection; and
       (2) declaring the election of such State that this title 
     does not apply as of a date certain to such actions in the 
     State.

  The CHAIRMAN. Pursuant to House Resolution 423, the gentleman from 
Michigan (Mr. Conyers) and a Member opposed each will control 20 
minutes.
  The Chair recognizes the gentleman from Michigan (Mr. Conyers).
  Mr. CONYERS. Mr. Chairman, I yield 4 minutes to the gentleman from 
Virginia (Mr. Scott), my cosponsor.
  Mr. SCOTT. Mr. Chairman, I thank the gentleman from Michigan (Mr. 
Conyers) for yielding me this time.
  Mr. Chairman, I rise to speak in support of the Conyers-Scott 
amendment which will simply conform the bill to its title and provide 
some truth in advertising and legislation. Despite its name, the truth 
about the Small Business Liability Reform Act is that it will reward 
all businesses, big and small, with broad and sweeping legal 
protections when they cause personal or financial harm, even 
intentionally due to defective products.
  For those parts of the bill which actually pertain to small 
businesses, the definition of small business in this bill contains no 
qualifiers pertaining to annual revenues, so even a billion dollar 
corporation, with relatively few employees, can still qualify for 
special protection as a small business.

[[Page 1305]]

  Furthermore, while this bill purports to constitute liability reform, 
the language is overbroad and covers contract law and other areas of 
the law not properly considered by the committee. So this amendment 
will first define a small business as one with fewer than 25 employees, 
as it has in the bill, but also one with under $5 million in annual 
revenues.
  Without this amendment, a company with less than 25 employees with 
revenues in the billions, an Internet corporation, for example, or a 
brokerage firm, could still be designated as a small business; and they 
could rip off millions of people for billions of dollars and still get 
protection under this bill.
  Second, this amendment would truly limit the bill to suits against 
small businesses. As it presently exists, the second part of the bill 
is a general products liability bill which notwithstanding the title of 
the bill applies to all businesses, large and small.
  Third, this bill would limit the scope of part one of the bill to 
product liability rather than civil action as the bill does. So the 
bill protects wrongdoers involving contract law, antitrust law, 
trademark protection and everything else. The scope of this title is 
unreasonably broad and expansive and should be narrowed to conform to 
the title Small Business Liability Reform Act.
  Fourth, this amendment would create consistency and uniformity in 
that all States would be required to provide for punitive damages under 
limited conditions set forth in the bill. As presently written, the 
bill unfairly disadvantages consumers, as it preempts any State law 
more favorable to consumers while leaving intact State laws more 
favorable to businesses in the area of punitive damages.
  Fifth, the bill allows an opt-out by States by statute. This 
amendment would allow the State to opt out by initiative and referendum 
for those States which also allow initiative and referendum in enacting 
laws.
  Sixth, this amendment expands the hate crime exclusion to include 
victims of gender discrimination. A hate crime based on gender 
discrimination is just as despicable as one based on race, religion, or 
national origin; and it should, therefore, be included in a definition 
of a hate crime and not protected by this bill.
  In closing, this bill sets some dangerous precedents as also it is 
dangerous to public health and safety. I strongly urge my colleagues to 
vote yes on this amendment which seeks to both conform the bill to its 
title, as well as provide a remedy for some of the most egregious 
aspects of the legislation.
  Mr. ROGAN. Mr. Chairman, I rise in opposition to the amendment, and I 
yield myself such time as I may consume.
  Mr. Chairman, this amendment would use the word ``revenue'' to define 
a small business rather than the current definition of 24 or fewer 
employees. Under the gentleman's suggested change, a small business 
would have to have revenues in each of the prior 2 years of $5 million 
or less.
  First, we know, Mr. Chairman, from what has been presented here 
today, that the bulk of small businesses do not make $5 million. The 
amendment is not sufficiently defined. For instance, is it proposing to 
use gross revenues or net?
  The simple statement that revenues should be used is not sufficient. 
Net revenue is more difficult to determine than the number of full-time 
employees. Full-time employees is a more constant measure of a small 
business. Revenue is more volatile year to year, whereas the number of 
full-time employees can easily be determined by looking at a company's 
W-2 form.
  Using gross revenues instead of the number of employees offers a very 
narrow view of small business. A small business' gross revenue can 
change dramatically over a period of time.
  I remind my colleagues that the Y2K Act approved by Congress and 
signed into law last year by the President capped punitive damages and 
defined a small business as fewer than 50 full-time employees, with no 
revenue limits.
  The standard in the underlying bill before this Chamber today, that 
is under 25 employees, ensures that only the smallest of America's 
small businesses will be covered.
  Further, litigation could end up focusing upon the sole issue of the 
period of gross revenue in question.
  Finally, defining a small business by any revenue sends a disturbing 
policy message that discourages owners and employees from achieving 
greater revenues.

                              {time}  1315

  Next, the amendment would substantially abbreviate the effect of 
Title I by limiting the applicability of its provisions to non-
manufacturing product sellers that are also small businesses as defined 
by Title I.
  This amendment would further complicate product liability law. 
Because product liability affects interstate commerce, the rules of the 
road governing the liability of product sellers for compensatory 
damages to claimants due to harms caused by defective products should 
be a uniform Federal standard applicable to all product sellers.
  Defeating this amendment and enacting Title II as presented in the 
underlying bill will reduce unnecessary lawsuits against blameless 
product sellers and reduce the wasteful legal and litigation-related 
costs that go hand in hand with them. Neither the content nor the 
effect of Title II is business-size sensitive.
  Because the practical effect of Title I will be to focus litigation 
on the parties alleged to have been truly responsible for causing the 
claimant's harm rather than to change outcomes, neither claimant nor 
consumers have anything whatsoever to gain by limiting the scope of 
Title II to product sellers which are small businesses.
  Next, the gentleman seeks to apply limitations on punitive damages to 
only product liability actions and not civil actions against a small 
business.
  The fear of having to settle a frivolous lawsuit is not just limited 
to product liability cases but to all civil actions. Many business 
owners are forced to settle out of court for significant awards due to 
the fear of unlimited punitive damages and civil actions even if the 
claim is unwarranted.
  Testimony submitted by Mr. David Harker before the House Committee on 
the Judiciary last year confirmed his frivolous suit was not over a 
product but over damages incurred to property. There are legions of 
other examples of such frivolous suits in the record of the committee.
  H.R. 2366 does not cap compensatory damages, that is economic and 
non-economic damages, for civil actions. Although compensatory damages 
in civil actions may be covered by liability insurance, punitive 
damages frequently are not covered and defendants must cover those out 
of pocket.
  Next, this amendment would create punitive damage awards in those 
States that do not recognize punitive damages. Under the current bill, 
punitive damages are only available if the State already has them. The 
intent of the legislation is to reduce frivolous litigation and legal 
costs. This amendment would significantly expand the number of States 
in which punitive damages are available and the potential for more 
widespread abuse.
  The punitive damage cap in the underlying bill is consistent with the 
Y2K act that was, again, signed into law by the President last year.
  Another section of this amendment would undermine the intent of Title 
II to create a uniform standard of liability for all non-manufacturing 
product sellers in product liability cases.
  Section 204, subsections (a) and (b), establish a uniform standard of 
liability for all non-manufacturing product sellers in product 
liability cases. A seller would be liable to the claimant for harm 
caused by a defective product when the harm is caused by the seller's 
own negligence, breach of an express warranty, or a seller's 
intentional wrongdoing.
  Under Title II, product sellers who injure consumers due to their 
failure to exercise reasonable care are liable. The failure to 
recognize reasonable care is neither driven nor affected in any way by 
the size of a business.

[[Page 1306]]

  Under Title II, if a claimant's injury was caused by a breach of the 
product seller's own express warranty, the seller is liable. Breaches 
of express warranties are neither caused nor in any way affected by the 
mere size of a business.
  Under Title II, product sellers are liable and will pay if the 
manufacturer is not subject to service of legal process or if the court 
determines that the claimant would not be able to enforce the judgment 
against a liable manufacturer. The relevant status of a culpable 
manufacturer is not in any way dependent upon the size of the product 
seller.
  The standard of product seller liability has nothing whatsoever to do 
with business size, and the two should not be linked to this bill.
  It is for those reasons, Mr. Chairman, that I urge a no vote on this 
amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I would point out a couple of items here made in the 
statement of the author of this bill against the amendment that I think 
we might want to review more carefully.
  First, the most commonsense response to whether this is a small 
business bill or not would be to put some limit on the revenues in each 
of the last 2 years of less than $5 million each year. That would solve 
all of the discussion about whether or not this is a bill in which a 
lot of large businesses in terms of their annual revenue are crowding 
under the umbrella of mom-and-pop stores.
  Here is an example of a wonderful intent demonstrated by the 
gentleman from California (Mr. Rogan) with no conception of the effect 
of what he is doing here. This would allow businesses with hundreds of 
millions of dollars of annual revenue to come under the umbrella.
  We do not want that, I say to the gentleman from California (Mr. 
Rogan), let me help. Let me help by amending his definition of ``small 
business'' not just to 25 employers or less. He knows that the high-
tech industries have people working in lofts in their own homes with 
only a few other people that are commanding much more than millions of 
dollars' worth of revenue every year.
  Why does my colleague not accept the limitation of small business, if 
that is what he is really concerned about, to those businesses that 
have revenues of less than $5 million a year?
  Most mom-and-pops do not come anywhere near $5 million a year. Most 
mom-and-pops are happy to get $100,000 or $200,000 or $300,000 worth of 
business a year. The gentleman told me himself, and I know it already. 
But why not a $5 million, $4 million, $6 million limitation? Those 
cannot be called mom-and-pop businesses.
  I think it is because the gentleman knows the effect of that unusual 
distorted definition that he is going to let in trucking companies, big 
businesses, people who certainly do not fit into the mom-and-pop 
category.
  Now, the gentleman says that this bill of his tracks the Y2K bill in 
terms of limiting punitive damages. Sorry. The Y2K bill limits punitive 
damages to the greater of three times compensatory damages. His bill 
limits the damages to the lesser of three times the compensatory 
damages, or $250,000, whichever is less.
  I know the gentleman from California (Mr. Rogan) just inadvertently 
thought that he was moving along the lines that the other bill 
supported by the administration was doing.
  So the argument that I present here in terms of the amendment that I 
and the gentleman from Virginia (Mr. Scott) offer is about truth in 
labeling. We are not limited to small businesses. There is no reason 
this Congress should shield from liability large businesses, and our 
amendment fixes it by a $5 million revenue limitation, rather high.
  In addition, Title II of the bill limits the liability of product 
sellers and contains no size limitation at all, whether based on 
employees or revenues. This means that Wal-Mart, Hertz Rent-A-Car, and 
other huge corporations could achieve multi-million-dollar windfalls, 
not to mention all the reckless gun sellers that have been referenced 
earlier whose carelessness and extended negligence lead to thousands of 
deaths or injury.
  Now, I am afraid that that, I say to the author of the bill, cannot 
be considered a harmless error or a mistake. I think that that is what 
he meant it to do. That is what the effect is, and that is the result 
that will occur if this measure is passed in the form, even with all 
the amendments that have been added to it so far today.
  Now, there is a misperception about the measure that this is somehow 
limited to product liability. It is not. Title 1 is truly breathtaking 
in its scope to any civil action, to any civil action, whether it 
relates to a contract claim, a copyright claim, environmental claim, a 
securities claim, civil RICO, a bankruptcy action, even a reckless 
driving claim or a malpractice claim.
  Now, I think this is changing the direction that we are going in in 
this legislation when we incorporate something of this magnitude in 
this bill. Why do we not limit it to product liability, as the 
discussion began, rather than protecting businesses against frivolous 
product liability suits. They have now taken the huge step forward to 
say that they would serve to protect businesses involved in criminal 
misconduct, foreign companies stealing U.S. copyrights, as well as 
careless corporate polluters.
  I do not buy that wide provision of insulating liability under the 
rubric of protecting small businesses in product liabilities cases. 
They have gone a bit too far this time. They have gone too far.
  And so, I am well aware that the body has tried to deal with the 
Rogan and Moran amendments to improve the situation, but the problems 
still remain. We are still protecting gun manufacturers, drug dealers, 
and polluters.
  Our amendment responds to this. This is the most important amendment 
that my colleagues may ever see on this bill. And I am stunned that, in 
their generous conduct on the floor today, they have accepted or 
supported every amendment but this one, the one that might take care of 
the problems and make it reasonable in the eyes of many people and 
organizations and the administration, as well.
  We are trying only to clarify the misleading provisions of the bill. 
My colleagues purport to have a hate crimes carve-out. But did they 
accidentally leave out gender-based hate crimes or did they 
deliberately leave out gender-based hate crimes? Nobody knows. But let 
us put it in. They are not, apparently, willing to do that.
  They want to claim that they are two-way preemptive, but they only 
preempt State laws in which punitive damages are more favorable to the 
victims. The bill appears to allow State opt-outs but limits it to 
legislative statutes.
  Might I ask why a referendum might not be acceptable and that they 
require just to pass through the House, as well? There are other ways 
for citizens to indicate their support. What about a referendum?
  Our amendment fixes these problems, providing for a real hate crimes 
carve-out, providing for a real two-way preemption, providing for a 
hate crimes provision that includes gender.
  And so, if we are going to vote on a bill to protect small 
businesses, we ought to be clear and honest enough to limit the bill to 
actual small businesses. And so, for that reason, I hope this bill may 
be made viable and whole by supporting our amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. ROGAN. Mr. Chairman, may I inquire how much time remains on both 
sides?
  The CHAIRMAN. The gentleman from California (Mr. Rogan) has 13\1/2\ 
minutes remaining, and the gentleman from Michigan (Mr. Conyers) has 7 
minutes remaining.
  Mr. ROGAN. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, first I say to my dear friend, my senior colleague, the 
gentleman from Michigan (Mr. Conyers), may I say that, although we 
differ philosophically on the concept of lawsuit abuse reform, I have a 
great deal of respect both for his talents and his seniority, as well 
as his acts.

[[Page 1307]]



                              {time}  1330

  I am sorry that I cannot accept his amendment because his amendment 
would undermine and gut the entire purpose of the underlying bill. I 
just want to take a moment if I may to correct the record and I think 
the gentleman may have misspoken. In my remarks, I talked about the 
liability aspects of the Y2K bill which currently now are law and how 
we attempted to track that in our bill. I believe the gentleman said 
that it did not track it. I invite the gentleman's attention to section 
5, subsection B, subsection 1, captioned Punitive Damages Limitation 
from the Y2K bill. It says that a Y2K action may not exceed the lesser 
of three times the amount awarded for compensatory damages or $250,000.
  Mr. Chairman, that is the standard that is now a part of the 
underlying bill, and so it does track the Y2K litigation reform that 
has passed both houses of Congress and the President signed last year. 
There is a fundamental difference between the Y2K standard and the 
standard of the underlying bill. In the Y2K standard that currently is 
law, small business is defined as 50 employees or less. In the 
underlying bill before us today, that standard has been cut in half, 
more than half, to 24 employees or less. The purpose of doing that was 
to ensure as faithfully as possible that this bill would impact the 
smallest of American businesses.
  Now, it is a tempting invitation from the gentleman to go on a 
revenue-based standard of what constitutes a small business rather than 
an employee-based standard; but for all of the reasons that I outlined 
in my opening remarks, Mr. Chairman, I think that it is unworkable. 
There are exceptions, certainly, to small businesses who have 24 or 
less employees that are doing very well. I know of some up in the 
Silicon Valley myself. But I would submit to the gentleman, and 
statistics prove it out, that those are the very rare exception and not 
the rule.
  The question before this House is will we allow the very small 
exception to upset and overturn the opportunity to provide needed 
relief to the millions and millions of men and women who comprise 
America's small business owners? I think not. The cosponsors of this 
bill have joined with me to ensure that those protections are adequate 
and fair. It is for those reasons and the reasons articulated in my 
previous statements, Mr. Chairman, that I am regrettably unable to join 
with my friend from Michigan in support of his amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
  I would like to point out that there are some companies that we may 
or may not want to be included in the provisions of the bill, and that 
is why this amendment exists. Take the famous American Derringer 
Company that has less than 25 employees but manufactures as many as 
10,000 cheap pistols a year, which will now be protected as a small 
business under the Rogan bill. Is that a small business? Is this a mom 
and pop?
  What about Davis Industries? It has 15 employees. It is in the home 
State of the author of this bill, of California, and is known for 
manufacturing the majority of Saturday night specials in this country. 
As many as 180,000 pistols a year. Is this a small business that we 
want to protect? And may I point out that the Conyers-Scott amendment 
limitation would stop this ridiculous assumption that businesses that 
are bringing in hundreds and hundreds of thousands of dollars, millions 
of dollars, are, in effect, small businesses, that we are concerned 
about the mom and pop effect.
  Again, it is a matter of Rogan intent versus the bill's effect. The 
effect is, you are giving an umbrella to those that do not deserve it. 
Intratec, the manufacturer of the infamous TEC-DC9 used at Columbine 
High School, has less than 25 employees but sells as many as 100,000 of 
these awful weapons a year. Is this a small business that we want to 
protect, or do we want the Conyers-Scott amendment to make sure that it 
will not reside under the protection of the Rogan bill?
  I say we should exclude all of these gun manufacturers from the 
provisions of the bill, not because of the death-dealing weapons they 
manufacture, but because they are not small businesses in the true 
sense of the definition. We need a revenue cap on the definition of 
small business. Thanks to the gentleman from California, American 
Derringer, Davis Industries, and Intratec all will be very grateful to 
know that you are refusing a cap that would catch them. The Rogan bill 
says that all of these are small businesses. Do we really want to 
protect them? I think not.
  I urge all of the Members in this body to support the Conyers-Scott 
amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. ROGAN. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I must respectfully again take issue with my dear 
friend from Michigan. He says in his remarks that small business gun 
manufacturers are now automatically protected under the Rogan bill. 
First, that is not a correct statement. Secondly, the statement itself 
and the arguments preceding the statement from some of our other 
colleagues appear to make the suggestion that there is something 
inherently evil about an otherwise lawful gun manufacturer being able 
to sell guns to law-abiding citizens. I would respectfully suggest to 
my colleague and to those who seem to take that same position that if 
it is really their intention to override the second amendment 
protection for law-abiding citizens to defend themselves in their homes 
or in their place of business, and abolish the private ownership of all 
handguns, then let them introduce their constitutional amendment to 
overturn the second amendment, let them introduce their legislation to 
preclude law-abiding citizens from being able to defend themselves, and 
let us then debate the merits of that bill up or down. But let us not 
destroy the protections of small business owners through America, 
millions and millions of men and women, who have nothing to do with 
guns, who have nothing to do with gun manufacturing, who have 
everything to do with driving our economic engine.
  By the way, I would just also suggest to my colleague that there are 
many poor people in this country who do not have the Secret Service 
protection that some of our top leaders in government have, who do not 
have a bevy of staff around them at all times to ease their comfort and 
pain, who live in the poorest neighborhoods, and the only protection 
they have when a dope addict or a murderer or a rapist is coming 
through their window is the protection that they find in their drawer.
  These are not evil people. These are law-abiding citizens trying to 
defend their families. There are a lot of single mothers in my district 
and I would suspect in the gentleman from Michigan's district who fall 
within that category. If it is the desire of my colleagues on the left 
to preclude them from being able to protect themselves, to sue out of 
business manufacturers of lawful handguns that which they cannot 
accomplish by way of legislation, then let them bring that bill 
forward. Even assuming that that was the case, that the manufacturing 
of handguns in this country was an inherently evil proposition, I would 
respectfully suggest to my colleague that the Rogan bill does not do 
what he suggests, that it protects them from liability for any harm 
that they cause.
  Nothing in this bill to a small business gun manufacturer would 
preclude an injured person from receiving economic damages. Nothing in 
this bill would preclude an injured victim from receiving lost wages, 
medical compensation, loss of business. Nothing in this bill would 
preclude them from receiving noneconomic damages. Nothing would 
preclude them from receiving payment for pain and suffering, for 
disfigurement, for loss of companionship or the bevy of other 
noneconomic damages that are available to them. And nothing in this 
bill as amended would preclude a victim from having punitive damages 
assessed on one of those manufacturers if the manufacturer intended a 
harm to occur and was found

[[Page 1308]]

to come within that intentional conduct that was amended into the bill 
by our friend from Arkansas.
  So this claim that gun manufacturers are going to be able to run 
rampant under this bill and put in the hands of murderers and killers 
inherently dangerous weapons that are inherently faulty, that have no 
legitimate social purpose and that this is somehow some disguised bill 
to protect them under cover of small business, I would suggest to my 
colleague is not a fair statement.
  Mr. Chairman, I reserve the balance of my time.
  Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume. 
I want to tell the gentleman from California how shocked I am to hear 
the last statements that he has uttered. He has been very calm and 
polite and generous in his discussion. But to say that we are naming 
gun manufacturers as evil and giving me instructions to go to a 
constitutional amendment to stop them is, of course, deliberately 
missing the point. We are not trying to hurt gun manufacturers. The 
Saturday night special is a faulty weapon. The gentleman is on the 
Committee on the Judiciary. He is a former member of the court. He is 
an attorney who has practiced law. The Saturday night special is not a 
protected weapon. It frequently is found to be a malfunctioning, 
dangerous weapon. We are not trying to put the gun dealers out of 
business.
  But for him to stand here and tell me that he is not going to help 
them by limiting their liability where they may be negligent is an 
incredible statement on his part. He imposes the cap on punitive 
recovery. He imposes the elimination of joint and several liability for 
everybody that comes under the definition of this bill. Davis 
Industries may not be evil, but they are the ones manufacturing the 
Saturday night specials. Intratec, I am not sure they are not evil 
people, there may be some nice ones there, but they are the ones who 
manufacture the TEC-DC9 used at Columbine. It is his State and cities 
and counties in California suing Davis Industries. We are not trying to 
put them out of business. We are trying to make them vulnerable to 
legal action, and he is protecting them. He is protecting them. Why 
does he disagree, I might ask, to the lawsuits that are being brought 
in California at this present moment?
  Mr. SCOTT. Mr. Chairman, will the gentleman yield?
  Mr. CONYERS. I yield to the gentleman from Virginia.
  Mr. SCOTT. I would ask the gentleman if he will notice in the bill 
where crimes of violence are exempted, so if a defendant whose 
misconduct constitutes a crime of violence, that would not be covered. 
But any other crime, an actual crime or criminal enterprise, would be 
covered. So if we have a business perpetrating actual criminal 
activity, stealing people's money, that that would be protected because 
it is not a crime of violence; and they would have the benefits under 
the bill, limits of punitive damages, and if you are not stealing much 
from everybody, you would be limited to the actual damage, the little 
bit of money, and three times that of punitive damages against each 
employee, even if you are committing a crime. Would those people be 
protected under this bill?
  Mr. CONYERS. Of course they would. Criminal sales of guns to felons 
would be caught by the protective provisions supposedly going to 
protect small businesses, mom and pop stores. We have heard mom and pop 
all day. These gun manufacturers are not mom and pop stores. Our 
definition would not put them out of business. All it would do is it 
would apply to all of those that have revenues in excess of $5 million 
a year. If they have revenues smaller than $5 million a year, they 
would enjoy the protections. So this is not an antigun, all-guns-are-
evil argument in which I have to refer to a constitutional provision. I 
am merely trying to take these gun manufacturers out of the protections 
that the gentleman from California is inadvertently giving them in 
trying to protect so-called small business.
  Mr. Chairman, I include the following letter for the Record:

                            Natural Resources Defense Council,

                                Washington, DC, February 16, 2000.
     Hon. Henry J. Hyde,
     Chairman, Committee on the Judiciary,
     House of Representatives.
     Hon. John Conyers, Jr.,
     Ranking Minority Member, Committee on the Judiciary, House of 
         Representatives.
       Dear Chairman Hyde and Ranking Member Conyers: On behalf of 
     the Natural Resources Defense Council's over 400,000 members, 
     I am writing to you to ask you to oppose passage of H.R. 
     2366, the ``Small Business Liability Reform Act of 2000,'' 
     because of the adverse effects that it would have on 
     enforcement of environmental protection statutes and private 
     causes of action against those who violate the law. The bill 
     is objectionable in its current form and would remain 
     objectionable even if the two proposed Rogan amendments are 
     approved.
       While the purpose of the bill appears to be to limit the 
     liability of small businesses for ``punitive damages'' in 
     personal injury and other tort lawsuits, the language is 
     sufficiently broad to impact federal, state, and citizen 
     environmental enforcement actions. For example, the 
     definition of ``noneconomic loss'' in Section 102 is broad 
     enough to include environmental degradation or even 
     environmental catastrophes. There is no definition of 
     ``punitive damages'' in the bill, and that term could be 
     interpreted to apply to civil penalties or fines, and even 
     treble damages--all of which are punitive in nature. Thus, 
     this bill could allow companies and individuals to violate 
     environmental laws with impunity, encouraging recalcitrant 
     behavior.
       It could be interpreted to supersede specifically-enacted 
     provisions designed to ensure adequate punishment and 
     deterrence for serious environmental violations, including 
     long-term noncompliance with statutes protecting public 
     health and the environment resulting in serious environmental 
     harm. Moreover, it could prohibit federal and state trustees 
     from recovering natural resource damages under a number of 
     environmental statutes. The bill also could prevent whistle-
     blowers from recovering damages under certain federal 
     environmental laws, including those that ensure safe drinking 
     water. In addition, victims of lead paint poisoning will be 
     less able to protect themselves.
       It would also restrict punitive damage recovery for 
     violations of clean up orders under Section 107(c)(3) of 
     CERCLA, which specifically provides for a punitive damage 
     recovery against those who fail to comply with such orders. 
     Removing the possibility of treble damages for failure to 
     comply with such orders would encourage companies to delay 
     compliance and instead hire attorneys to challenge those 
     orders. Delay and wasteful litigation would result.
       This bill would not only interfere with citizen's right to 
     bring enforcement actions to clean up their local waters and 
     air and prevent future violations, but could also stop 
     families from obtaining adequate compensation from severe 
     pollution that makes them sick. The bill does not even 
     contain an exemption for conduct that results in death. 
     Families should be able to obtain all the damages to which 
     they are entitled under current law when their health is 
     destroyed by the negligence of a small business as well as by 
     a large one. This bill could end up protecting small 
     businesses at the expense of injured families.
       For these reasons, the proposed amendments cannot repair 
     the harm that would result from this bill, and I respectfully 
     urge you to oppose this bill.
           Sincerely,

                                                 Nancy Stoner,

                                            Senior Staff Attorney,
                                Natural Resources Defense Council.

  The CHAIRMAN. The time of the gentleman from Michigan (Mr. Conyers) 
has expired. The gentleman from California (Mr. Rogan) has 6\1/2\ 
minutes remaining.

                              {time}  1345

  Mr. ROGAN. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, first, I certainly hope that my dear friend from 
Michigan does not mistake a serious policy difference in any way with a 
lack of respect or affection for him. I take a back seat to no one in 
this Chamber in admiration, both for his service and the strength of 
his positions. We do have a fundamental policy difference with respect 
to liability limitations as advocated in this bill. The gentleman sees 
it one way; certainly I see it another.
  I do not view this bill, Mr. Chairman, as giving protection to people 
who have violated the law, and in fact we have tried to craft it very 
carefully to ensure that if there is some intentional wrongdoing, even 
by a business that would qualify as a small business, they would not 
come under any cap of punitive damages, and under any event there is no 
cap on the other damages.

[[Page 1309]]

  I do believe from a policy perspective, I would say to my friend, 
that the concept of joint and several liability as currently upon the 
books is inherently unfair. The idea that somebody could have a very 
minuscule involvement in a harm, say, 1 percent, but could be required 
to have to pay 100 percent of the damages, is not a fair concept. I 
think a tort system where liability was based on percentage of fault 
would be a much better way in which to go.
  Mr. Chairman, again I want to thank my colleagues on both sides of 
the aisle for their participation in this debate. It is through the 
bipartisan effort that we have developed this important bill, and we 
hope that the spirit of consensus will carry this bill quickly through 
the House and on to the other body.
  Although this amendment should be defeated, I am pleased that today 
the House of Representatives will have an historic opportunity. With 
the defeat of this amendment and passage of the underlying bill, the 
House of Representatives will stand behind the 2 million small business 
owners in my State of California alone and the millions and millions 
more across the Nation.
  The message we will send to these small business owners is clear: 
frivolous and meritless lawsuits, or the threat of a frivolous and 
meritless lawsuit, are crippling the lifeblood of America's economy and 
they must be stopped.
  The Small Business Liability Reform Act will limit product liability 
for a product seller when their negligence is the responsibility of the 
product manufacturer.
  As we all know, some 20 percent of America's small businesses will 
not expand services, they will not increase employee benefits, they 
will not hire more workers, they will not create more jobs and they 
will not cut consumer costs out of fear of being saddled with a 
frivolous or crippling lawsuit and having to pay its debilitating 
costs.
  In addition, this legislation will bring fairness and justice to 
millions of small business owners by bringing relief from the 
destructive threat of frivolous lawsuits that threaten to close their 
doors, put workers on the unemployment line and severely damage our 
economy. We owe America's small businesses and their employers nothing 
less.
  Mr. Chairman, I again thank my cosponsors and colleagues for their 
valuable support in bringing forward this bill.
  Mr. Chairman, I yield back the balance of my time.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Michigan (Mr. Conyers).
  The question was taken; and the Chairman announced that the noes 
appeared to have it.


                             Recorded Vote

  Mr. CONYERS. Mr. Chairman, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 178, 
noes 237, not voting 19, as follows:

                             [Roll No. 24]

                               AYES--178

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baldwin
     Barrett (WI)
     Becerra
     Bentsen
     Berkley
     Berman
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Brady (PA)
     Brown (FL)
     Capuano
     Cardin
     Carson
     Clayton
     Clyburn
     Conyers
     Costello
     Coyne
     Crowley
     Cummings
     Davis (FL)
     Davis (IL)
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Doyle
     Duncan
     Edwards
     Engel
     English
     Eshoo
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Frost
     Gejdenson
     Gephardt
     Gonzalez
     Green (TX)
     Gutierrez
     Hall (OH)
     Hastings (FL)
     Hill (IN)
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holt
     Hooley
     Hoyer
     Inslee
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E.B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Klink
     Kucinich
     LaFalce
     Lampson
     Lantos
     Larson
     Lazio
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McDermott
     McGovern
     McIntyre
     McKinney
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Minge
     Mink
     Moakley
     Mollohan
     Moore
     Morella
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Scott
     Serrano
     Sherman
     Slaughter
     Smith (WA)
     Spratt
     Stabenow
     Stark
     Strickland
     Stupak
     Tauscher
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Traficant
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Weygand
     Wise
     Woolsey
     Wu
     Wynn

                               NOES--237

     Aderholt
     Archer
     Armey
     Baca
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Berry
     Biggert
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boyd
     Brady (TX)
     Bryant
     Burr
     Burton
     Buyer
     Calvert
     Camp
     Canady
     Cannon
     Castle
     Chabot
     Chambliss
     Chenoweth-Hage
     Clement
     Coble
     Coburn
     Collins
     Combest
     Condit
     Cook
     Cox
     Cramer
     Crane
     Cubin
     Cunningham
     Danner
     Davis (VA)
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dickey
     Dooley
     Doolittle
     Dreier
     Dunn
     Ehlers
     Ehrlich
     Emerson
     Etheridge
     Ewing
     Fletcher
     Foley
     Forbes
     Fossella
     Fowler
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goodling
     Gordon
     Goss
     Granger
     Green (WI)
     Greenwood
     Gutknecht
     Hall (TX)
     Hansen
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill (MT)
     Hilleary
     Hobson
     Hoekstra
     Holden
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Istook
     Jenkins
     John
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Kasich
     Kelly
     King (NY)
     Kingston
     Knollenberg
     Kolbe
     Kuykendall
     LaHood
     Largent
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McIntosh
     McKeon
     McNulty
     Metcalf
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Moran (VA)
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Ose
     Oxley
     Packard
     Paul
     Pease
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pickett
     Pitts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Quinn
     Radanovich
     Ramstad
     Regula
     Reynolds
     Riley
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Salmon
     Saxton
     Scarborough
     Schaffer
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shows
     Shuster
     Simpson
     Sisisky
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Spence
     Stearns
     Stenholm
     Stump
     Sununu
     Sweeney
     Talent
     Tancredo
     Tanner
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Toomey
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--19

     Baird
     Baldacci
     Bishop
     Brown (OH)
     Callahan
     Campbell
     Capps
     Clay
     Cooksey
     DeFazio
     Everett
     Graham
     Lowey
     Martinez
     McCollum
     Sanford
     Snyder
     Vento
     Watts (OK)

                              {time}  1412

  Messrs. GOODLING, SMITH of Michigan, KUYKENDALL, LEWIS of California, 
SIMPSON, SHUSTER, SESSIONS, RILEY, FORBES, TAUZIN, and Ms. DUNN changed 
their vote from ``aye'' to ``no.''
  Mr. GEPHARDT changed his vote from ``no'' to ``aye.''
  So the amendment was rejected.
  The result of the vote was announced as above recorded.
  The CHAIRMAN. The question is on the committee amendment in the 
nature of a substitute, as amended.
  The committee amendment in the nature of a substitute, as amended, 
was agreed to.
  The CHAIRMAN. Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr.

[[Page 1310]]

Sununu) having assumed the chair, Mr. Thornberry, Chairman of the 
Committee of the Whole House on the State of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 2366), to 
provide small businesses certain protections from litigation excesses 
and to limit the product liability of nonmanufacturer product sellers, 
pursuant to House Resolution 423, he reported the bill back to the 
House with an amendment adopted by the Committee of the Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  Is a separate vote demanded on any amendment to the committee 
amendment in the nature of a substitute adopted by the Committee of the 
Whole? If not, the question is on the amendment.
  The amendment was agreed to.
  The SPEAKER pro tempore. The question is on 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.
  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.


                             Recorded Vote

  Mr. CONYERS. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 221, 
noes 193, not voting 20, as follows:

                             [Roll No. 25]

                               AYES--221

     Aderholt
     Archer
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Biggert
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boyd
     Brady (TX)
     Bryant
     Burr
     Burton
     Buyer
     Calvert
     Camp
     Canady
     Cannon
     Castle
     Chabot
     Chambliss
     Chenoweth-Hage
     Clement
     Collins
     Combest
     Condit
     Cook
     Cox
     Cramer
     Crane
     Cubin
     Cunningham
     Danner
     Davis (VA)
     Deal
     DeLay
     DeMint
     Dickey
     Dooley
     Dreier
     Duncan
     Dunn
     Ehlers
     Emerson
     Ewing
     Fletcher
     Foley
     Ford
     Fossella
     Fowler
     Frank (MA)
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Goode
     Goodlatte
     Goodling
     Gordon
     Goss
     Granger
     Green (WI)
     Greenwood
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hansen
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill (MT)
     Hilleary
     Hobson
     Hoekstra
     Holden
     Horn
     Hostettler
     Houghton
     Hulshof
     Hutchinson
     Hyde
     Isakson
     Jenkins
     John
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Kasich
     Kelly
     Kingston
     Knollenberg
     Kolbe
     Kuykendall
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McIntosh
     McKeon
     McNulty
     Metcalf
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Moran (VA)
     Myrick
     Ney
     Northup
     Norwood
     Nussle
     Ose
     Oxley
     Packard
     Pease
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Quinn
     Radanovich
     Ramstad
     Regula
     Reynolds
     Riley
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Salmon
     Saxton
     Scarborough
     Schaffer
     Sensenbrenner
     Sessions
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simpson
     Sisisky
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Spence
     Stearns
     Stenholm
     Stump
     Sweeney
     Talent
     Tancredo
     Tanner
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Thomas
     Thornberry
     Thune
     Tiahrt
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                               NOES--193

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baldwin
     Barrett (WI)
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Brady (PA)
     Brown (FL)
     Capuano
     Cardin
     Carson
     Clayton
     Clyburn
     Coble
     Coburn
     Conyers
     Costello
     Coyne
     Crowley
     Cummings
     Davis (FL)
     Davis (IL)
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Dixon
     Doggett
     Doolittle
     Doyle
     Edwards
     Ehrlich
     Engel
     English
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Forbes
     Frost
     Gejdenson
     Gephardt
     Gilman
     Gonzalez
     Green (TX)
     Hastings (FL)
     Hill (IN)
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holt
     Hooley
     Hoyer
     Hunter
     Inslee
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E.B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy
     Kildee
     Kilpatrick
     Kind (WI)
     King (NY)
     Kleczka
     Klink
     Kucinich
     LaFalce
     Lampson
     Lantos
     Larson
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McDermott
     McGovern
     McIntyre
     McKinney
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Minge
     Mink
     Moakley
     Mollohan
     Moore
     Morella
     Murtha
     Nadler
     Napolitano
     Neal
     Nethercutt
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Paul
     Payne
     Pelosi
     Phelps
     Pickett
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Scott
     Serrano
     Shadegg
     Sherman
     Shows
     Skelton
     Slaughter
     Smith (WA)
     Spratt
     Stabenow
     Stark
     Strickland
     Stupak
     Sununu
     Tauscher
     Terry
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Toomey
     Towns
     Traficant
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Weygand
     Wise
     Woolsey
     Wu
     Wynn

                             NOT VOTING--20

     Baird
     Baldacci
     Bishop
     Brown (OH)
     Callahan
     Campbell
     Capps
     Clay
     Cooksey
     DeFazio
     Everett
     Graham
     Gutierrez
     Lowey
     Martinez
     McCollum
     Oberstar
     Sanford
     Snyder
     Vento

                              {time}  1432

  Mr. HUNTER changed his vote from ``aye'' to ``no.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________