    [House Report 109-123]
    [From the U.S. Government Publishing Office]

    109th Congress                                                   Report
                            HOUSE OF REPRESENTATIVES
     1st Session                                                    109-123

    ======================================================================

                      LAWSUIT ABUSE REDUCTION ACT OF 2005

                                    _______

     June 14, 2005.--Committed to the Committee of the Whole House on the
                  State of the Union and ordered to be printed

                                    _______

     Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the
                                   following

                                  R E P O R T

                                 together with

                        ADDITIONAL AND DISSENTING VIEWS

                            [To accompany H.R. 420]

          [Including cost estimate of the Congressional Budget Office]

      The Committee on the Judiciary, to whom was referred the bill
    (H.R. 420) to amend Rule 11 of the Federal Rules of Civil
    Procedure to improve attorney accountability, and for other
    purposes, having considered the same, reports favorably thereon
    with an amendment and recommends that the bill as amended do
    pass.

                                    CONTENTS

                                                                       Page
    The Amendment....................................................     2
    Purpose and Summary..............................................     3
    Background and Need for the Legislation..........................     5
    Hearings.........................................................    45
    Committee Consideration..........................................    45
    Vote of the Committee............................................    45
    Committee Oversight Findings.....................................    47
    New Budget Authority and Tax Expenditures........................    47
    Congressional Budget Office Cost Estimate........................    47
    Performance Goals and Objectives.................................    48
    Constitutional Authority Statement...............................    49
    Section-by-Section Analysis and Discussion.......................    49
    Changes in Existing Law Made by the Bill, as Reported............    50
    Markup Transcript................................................    51
    Additional Views.................................................   109
    Dissenting Views.................................................   111

                                 The Amendment

      The amendment is as follows:
      Strike all after the enacting clause and insert the
    following:

    SECTION 1. SHORT TITLE.

        This Act may be cited as the ``Lawsuit Abuse Reduction Act of
    2005''.

    SEC. 2. ATTORNEY ACCOUNTABILITY.

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

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

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

    SEC. 4. PREVENTION OF FORUM-SHOPPING.

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

    SEC. 5. RULE OF CONSTRUCTION.

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

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

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

    SEC. 7. PRESUMPTION OF RULE 11 VIOLATION FOR REPEATEDLY RELITIGATING
                        SAME ISSUE.

        Whenever a party attempts to litigate, in any forum, an issue that
    the party has already litigated and lost on the merits on 3 consecutive
    prior occasions, there shall be a rebuttable presumption that the
    attempt is in violation of Rule 11 of the Federal Rules of Civil
    Procedure.

    SEC. 8. ENHANCED SANCTIONS FOR DOCUMENT DESTRUCTION.

        (a) In General.--Whoever influences, obstructs, or impedes, or
    endeavors to influence, obstruct, or impede, a pending court proceeding
    through the intentional destruction of documents sought in, and highly
    relevant to, that proceeding--
                (1) shall be punished with mandatory civil sanctions of a
            degree commensurate with the civil sanctions available under
            Rule 11 of the Federal Rules of Civil Procedure, in addition to
            any other civil sanctions that otherwise apply; and
                (2) shall be held in contempt of court and, if an attorney,
            referred to one or more appropriate State bar associations for
            disciplinary proceedings.
        (b) Applicability.--This section applies to any court proceeding in
    any Federal or State court that substantially affects interstate
    commerce.

                              Purpose and Summary

        The Lawsuit Abuse Reduction Act of 2005 (``LARA''), H.R.
    420, was introduced by Rep. Lamar Smith. H.R. 420 will restore
    the teeth to Federal Rule of Civil Procedure 11 it once had to
    deter frivolous Federal lawsuits. It would also extend Rule
    11's protections to prevent frivolous lawsuits in state courts
    when state judges determine a case would have national economic
    consequences that affect interstate commerce. The bill would
    also prevent forum shopping, the nefarious practice by which
    personal injury attorneys bring lawsuits in courts that
    notoriously and consistently hand down astronomical awards even
    when the case has little or no connection to the court's
    jurisdiction. H.R. 420 would prevent forum shopping by
    requiring that personal injury cases be brought only in the
    plaintiff's place of residence, where the plaintiff was
    allegedly injured, where the defendant's principal place of
    business is located, or where the defendant resides.
        LARA would: (1) restore mandatory sanctions for filing
    frivolous lawsuits in violation of Rule 11; (2) remove Rule
    11's ``safe harbor'' provision that currently allows parties
    and their attorneys to avoid sanctions for making frivolous
    claims by withdrawing frivolous claims after a motion for
    sanctions has been filed; (3) allow monetary sanctions,
    including attorneys' fees and compensatory costs, against any
    party making a frivolous claim; (4) apply Rule 11's provisions
    to state cases a state judge finds affect interstate commerce;
    (5) require that personal injury cases be brought only where
    the plaintiff resides, where the plaintiff was allegedly
    injured, where the defendant's principal place of business is
    located, or where the defendant resides; (6) apply a ``three
    strikes and you're out'' rule to attorneys who commit Rule 11
    violations in Federal district court; (7) impose mandatory
    civil sanctions for document destruction intended to obstruct a
    pending court proceeding; and (8) provide that if a party
    attempts to relitigate a losing claim more than three
    consecutive times, there shall be a rebuttable presumption that
    Rule 11 has been violated.
        H.R. 420 applies to cases brought by individuals as well as
    businesses (both big and small), including business claims
    filed to harass competitors and illicitly gain market share.
    The bill also applies to both plaintiffs and defendants.\1\
    ---------------------------------------------------------------------------
        \1\ Under the pre-1993 Rule 11, sanctions were imposed on
    defendants for having raised frivolous defenses. In SEC v. Keating,
    1992 WL 207918, [1992 Transfer Binder] Fed.Sec.L.Rep. (CCH)  96,906
    (C.D.Cal.1992), the court imposed sanctions of the defendant Charles
    Keating because 12 of 14 ``shotgun'' defenses were ``patently
    frivolous.'' Sanctions were also imposed on defendants for filing
    inappropriate Rule 11 motions; See Berger v. Iron Workers, 843 F.2d
    1395 (D.C. Cir. 1988) (affirming in part per curiam 7 Fed. Rules Serv.
    3d 306 (D.D.C. 1986)); and also for filing frivolous or harassing
    counterclaims. See Aetna Insurance v. Meeker, 953 F.2d 1328 (11th Cir.
    1992) (affirming district court Rule 11 sanction of defendants for
    pursuing frivolous counterclaims of negligent salvage and conversion).
    In Swanson v. Sheppard, 445 N.W.2d 654 (N.D.1989), for example, the
    court imposed Rule 11 sanctions on the defendant because the defendant
    counterclaimed ``simply to discourage the plaintiff from continuing
    with his cause of action.'' Sanctions were imposed on defendants for
    failing to conduct a reasonable inquiry into the legal basis for their
    Rule 12(b)(6) motion to dismiss. In National Survival Game, Inc. v.
    Skirmish, U.S.A., Inc., 603 F. Supp. 339 (S.D.N.Y. 1985), the court sua
    sponte imposed Rule 11 sanctions on defendants' counsel on the ground
    that counsel failed to conduct a reasonable inquiry into the legal
    basis for the Rule 12(b)(6) motion to dismiss, stating ``Defendants
    failed to cite a single case or authority in their two-page memorandum
    [in support of the motion]. Apparently, they completely ignored the
    firmly established precedents directly contradictory to their position.
    No doubt exists that [defendants'] counsel failed to conduct the
    `reasonable inquiry' that Rule 11 requires to ensure that a motion `is
    warranted by existing law or a good faith argument for the extension,
    modification or reversal of existing law . . .' '' Id. at 341-42. See
    also Steele v Morris, 608 F. Supp. 274 (S.D.W.Va. 1985) (court granted
    the plaintiff's motion for Rule 11 sanctions to be imposed upon the
    defendant, concluding that the defendant's counsel failed to make
    reasonable inquiry into both the facts and the law before filing a
    motion to dismiss in this case which alleged, among other things, that
    the plaintiff suffered emotional distress due to the defendant's
    willful, deliberate, and outrageous conduct). Sanctions were also
    imposed on defendants when they were found to have ignored firmly
    established precedent. In National Survival Game, Inc. v. Skirmish,
    U.S.A., Inc., 603 F. Supp. 339, 341-42 (S.D.N.Y. 1985), Rule 11
    sanctions were imposed because defendants ``completely ignored the
    firmly established precedents directly contradictory to their
    position.'' See also Smith v. United Transp. Union Local 81, 594 F.
    Supp. 96, 101 (S.D. Cal. 1984) (Rule 11 sanctions imposed where
    defendants frivolously maintained suit by ignoring relevant law,
    relying on irrelevant law, and basing arguments on vacated cases).
    ---------------------------------------------------------------------------
        The bill also expressly provides, in Section 5, that
    ``Nothing in'' the changes made to Rule 11 ``shall be construed
    to bar or impede the assertion or development of new claims or
    remedies under Federal, State, or local civil rights law.'' The
    development of civil rights claims is thereby explicitly
    protected under the bill's Rule 11 provisions.

                    Background and Need for the Legislation

        H.R. 420 will prevent frivolous lawsuits and help dispel
    the legal culture of fear that has come to permeate American
    society.

     FRIVOLOUS LITIGATION HAS A CORROSIVE EFFECT ON AMERICAN CULTURAL AND
                              SOCIAL INSTITUTIONS

        As Philip Howard has pointed out, due to an onslaught of
    frivolous lawsuits ``[l]egal fear has become a defining feature
    of our culture.'' \2\ This values crisis caused by lawsuit
    abuse reaches all parts of American society:
    ---------------------------------------------------------------------------
        \2\ Philip K. Howard, The Collapse of the Common Good: How
    America's Lawsuit Culture Undermines Our Freedom (2001) at 11.
    ---------------------------------------------------------------------------
    Churches
        In response to litigation against a church after a
    parishioner committed suicide, churches have begun implementing
    policies discouraging counseling by ministers. Instead,
    parishioners are being referred to secular psychologists and
    other therapists.\3\ According to a recent Newsweek cover
    story, ``The Rev. Ron Singleton's door is always open. That
    way, when the Methodist minister of a small congregation in
    Inman, S.C., is counseling a parishioner, his secretary across
    the hall is a witness in case Singleton is accused of
    inappropriate behavior. (When his secretary is not around, the
    reverend does his counseling at the local Burger King.)
    Singleton has a policy of no hugging from the front; just a
    chaste arm around the shoulders from the side. And he's
    developed a lame little hand pat to console the lost and the
    grieving. The dearth of hugging is `really sad,' he says, but
    what is he going to do? He could ill afford a lawsuit.'' \4\
    ---------------------------------------------------------------------------
        \3\ Id. at 32.
        \4\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
    (December 15, 2003) at 43.
    ---------------------------------------------------------------------------
    Schools
        A recent poll found that ``[n]early 8 in 10 teachers (78%)
    said students are quick to remind them that they have rights or
    that their parents can sue.'' \5\
    ---------------------------------------------------------------------------
        \5\ Public Agenda, ``Teaching Interrupted: Do Discipline Policies
    in Today's Public Schools Foster the Common Good?'' (May 2004) at 2-3.
    ---------------------------------------------------------------------------
        The Supreme Court's 1975 Goss v. Lopez \6\ decision
    extended Federal due process rights to student discipline and
    literally made every school discipline decision a potential
    Federal case. According to Newsweek:
    ---------------------------------------------------------------------------
        \6\ 419 U.S. 565 (1975) (holding imposition of suspensions without
    preliminary hearings violated students' due process rights guaranteed
    by Fourteenth Amendment).

            ``Legal fear'' is just as intense in the educational
            system. Many Americans sense that schools have become
            chaotic and undisciplined over time and the quality of
            teachers has declined. Many teachers say that the joy
            has gone out of their jobs. What's not generally known
            is the role of courts and Congress in creating these
            problems by depriving teachers and principals of the
            freedom to use their own common sense and best
            judgment. Thanks to judicial rulings and laws over the
            past four decades, parents can sue if their kids are
            suspended for even a single day--for any reason--
            without adequate ``due process.'' \7\
    ---------------------------------------------------------------------------
        \7\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
    (December 15, 2003) at 48.

            Unruly students sense the teachers' fear and their own
            empowerment. ``A kid will be acting out in class, and
            you touch his shoulder, and he'll immediately come back
            with `Don't touch me or I'll sue,' or, `You don't have
            any witnesses,' '' says Rob Wiel, who taught high-
            school math and coached football and baseball in the
            Denver suburbs for 20 years before retiring
            recently.\8\
    ---------------------------------------------------------------------------
        \8\ Id. at 49.

        In New Jersey, ``A state judge . . . threw out a lawsuit
    filed by an Atlantic County man who said assigned seating in a
    school lunchroom violated his 12-year-old daughter's right to
    free speech. Superior Court Judge Valerie Armstrong said
    Galloway Township school administrators had the right to impose
    the restriction to maintain order and safety in a cafeteria
    that serves 260 students in each of four 30-minute lunch
    periods.'' \9\
    ---------------------------------------------------------------------------
        \9\ John Curran, ``Judge Rejects a Rights Suit Over School's Lunch
    Seating,'' The Philadelphia Inquirer (July 20, 2004) at B4.
    ---------------------------------------------------------------------------
        According to the St. Petersburg Times:

            In Pinellas County [Florida], two Palm Harbor
            University High School baseball players sued the school
            district claiming they were wrongly booted from school
            because of a roughhousing incident that occurred on a
            team road trip. In Hillsborough County, Robinson High
            School senior Nicole ``Nikki'' Youngblood filed suit
            after her picture was left out of the school yearbook
            when she refused to wear a feminine drape instead of a
            shirt and tie as she wished. These two cases only
            scratch the surface of lawsuits filed against local
            public school districts on an almost daily basis. More
            and more, offenses that used to be settled inside the
            schoolhouse now end up at the courthouse. The result,
            educators say, is less money for learning. ``We spend
            millions and millions on attorney fees every year that
            has nothing to do with the classroom,'' said Wayne
            Blanton, executive director of the Florida School
            Boards Association. ``Every lawsuit we have to defend
            is money that doesn't get to the classroom.'' . . .
            ``Lots of people file suit,'' said Crosby Few,
            Hillsborough School Board attorney. ``A lot of them are
            frivolous.'' . . . In the book, Judging School
            Discipline: The Crisis of Moral Authority, the authors
            argue that the hundreds of lawsuits challenging school
            disciplinary procedures have hurt the quality of public
            education. One of the authors, Richard Arum, an
            associate professor of sociology at New York
            University, said just the threat of lawsuits keeps
            teachers from taking charge of their classrooms.\10\
    ---------------------------------------------------------------------------
        \10\ Melanie Ave, ``Lawsuits Drain School Dollars'' St. Petersburg
    Times (February 2, 2004) (emphasis added).

    ---------------------------------------------------------------------------
        And as the Arizona Republic has reported:

            Scottsdale School Board member Christine Schild has
            called the legal fees ``outrageous.'' . . . Legal bills
            for the 2003-04 school year are estimated to be as high
            as $675,000. This is the highest amount in recent
            years, and possibly ever . . . Large school districts
            routinely spend thousands of dollars each year on
            attorneys. The most common expenses are for student
            expulsion hearings and employee discipline . . . [D]ay-
            to-day legal expenses involving disputes with employees
            and student discipline are not covered by insurance and
            come out of the operating budget.\11\
    ---------------------------------------------------------------------------
        \11\ Anne Ryman, ``Baracy to Pick In-house Attorney for School
    District,'' The Arizona Republic (July 8, 2004) at 1.

        Thanks to frivolous lawsuits, ``in America, hugging or,
    indeed, even a pat on the back is now considered so dangerous
    that teachers can't do it.'' \12\ According to Lynn Maher of
    the New Jersey chapter of the National Education Association
    (``NEA''), ``Our policy is basically don't hug children.'' \13\
    The guidelines of the Pennsylvania chapter of the NEA urge
    teachers to do no more than ``briefly touch'' a child's arm or
    shoulder.\14\
    ---------------------------------------------------------------------------
        \12\ Philip K. Howard, The Collapse of the Common Good: How
    America's Lawsuit Culture Undermines Our Freedom (2001) at 5.
        \13\ Id. at 5.
        \14\ Id. at 5.
    ---------------------------------------------------------------------------
        Salon.com has chronicled the threat frivolous lawsuits pose
    to a successful program designed to get children to exercise
    more by walking or bike riding to school. According to
    Salon.com:

            [A] new program is rising to the top in the bike-walk
            hierarchy. It's called Safe Routes to School, a rapidly
            expanding 4-year-old effort that coordinates
            transportation, health and education agencies to get
            children walking and biking to school. Statewide Safe
            Routes programs are already underway in California,
            Washington and Wisconsin, and the pending
            reauthorization of the highway and transit bill, TEA-3,
            contains a $1 billion appropriation for a Federal Safe
            Routes to School program.

            ``It has the potential to become one of the best ways
            to improve conditions for walking and biking,'' said
            Clark, describing the broad cross-section of Safe
            Routes supporters, including parents, including parents
            and teachers, health agencies and urban planners.
            ``There's an unassailable coalition.''

            Sharon Roerty, director of community programs at the
            National Center for Bicycling and Walking in Bethseda,
            Md., concurs. ``Safe Routes to School means a better
            walking and biking environment for everyone,'' she
            said. ``We picked schools because that's a motherhood
            and apple pie. But it could be a senior center; it
            could be a train station.''

            But if Safe Routes to School is a case study in
            successful grass-routes organizing, the story behind it
            also unfolds as a classic--and damning--parable of
            contemporary American culture .. . . Wendi Kallins,
            project manager for the Marin County SR2S program,
            which has become a national model for the burgeoning
            movement, says parents routinely cite safety as the
            main reason they prevent their kids from walking or
            biking to school. But more often than not, parents'
            safety arguments are like falling down the rabbit hole;
            plunge deeper, and it gets curiouser and curiouser.
            Fifty percent of the children hit by cars near schools
            are hit by vehicles driven by parents of other
            students, according to the National Highway Traffic
            Safety Administration. Researchers for the Marin County
            program found that up to 30 percent of morning traffic
            is caused by parents driving their children to school.
            (These figures have since been validated in other parts
            of the country.) . . .

            Fast forward to the 21st century, where liability
            insurance for kids who walk or bike to school has
            become one of the major challenges facing SR2S
            advocates. In 2002, the Environmental Protection Agency
            funded a $96,000 Portland project to develop a Walking
            School Bus--in which groups of kids walk designated
            routes to school under adult supervision--at a local
            elementary school. Organizers spent months mapping safe
            routes, conducting outreach to parents, and running
            criminal background checks on senior citizens
            volunteers, only to have the project collapse in the
            absence of liability coverage for kids who might become
            injured or go missing. A senior-citizen-led walking
            school bus in Larkspur, Calif. Met with a similar fact,
            according to Kallins.

            ``The fact that one would have to even consider kindly
            senior citizens being sued for walking kids to school
            says a lot about out culture,'' she observed.\15\
    ---------------------------------------------------------------------------
        \15\ Linda Baker, ``Walk to School, Yes, But Don't Forget Your
    Lawyer,'' Salon.com (October 13, 2004).
    ---------------------------------------------------------------------------
    Doctor's Offices
        According to Newsweek:

            Dr. Sandra R. Scott of Brooklyn, N.Y., has never been
            sued for malpractice, but that doesn't keep her from
            worrying. As an emergency-room doctor, she often hears
            her patients threaten lawsuits--even while she's
            treating them. ``They'll come in, having bumped their
            heads on the kitchen cabinet, and meanwhile I'll be
            dealing with two car crashes,'' she says. ``And if they
            don't have the test they think they should have in a
            timely fashion, they'll get very angry. All of a
            sudden, it's `You're not treating me, this hospital is
            horrible, I'm going to sue you.' '' \16\ ``I'm only a
            human being,'' she says. ``I'm an educated physician
            but the miracles are out of my hands.'' \17\
    ---------------------------------------------------------------------------
        \16\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
    (December 15, 2003) at 43-44.
        \17\ Id. at 51.

            When Dr. Brian Bachelder moved back to Mt. Gilead,
            Ohio, to practice family medicine in 1984, he hoped to
            emulate the country doc who'd treated him as a kid . .
            . But in recent years, Bachelder, 49, has watched
            litigation reshape his practice. Last December, facing
            malpractice premiums that soared from $12,000 in 2000
            to $57,000 in 2003, Bachelder decided to lower his bill
            by cutting out higher-risk procedures like vasectomies,
            setting broken bones and delivering babies--even though
            obstetrics was his favorite part of the practice . . .
            Today the threat of litigation hangs over nearly every
            move Bachelder makes, changing the very nature of his
            relationship with patients. He worries that the
            slightest mistake could provoke a lawsuit. ``Anything
            less than perfection is malpractice,'' he says. Even in
            confronting the most common ailments--headaches or ear
            infections--Bachelder must consider the possibility of
            a rare and devastating disease. He often orders
            expensive tests--not just to rule out the worst, but
            also to bolster his case before a potential jury . . .
            Bachelder's fear of lawsuits isn't just theoretical--
            he's been sued a half-dozen times in his 20-year
            career. In one case, Bachelder referred a boy with a
            bladder problem to a urologist. The urologist operated,
            and the patient subsequently sued; Bachelder was also
            named in the complaint. He was eventually dropped from
            the case, but not before his liability insurance paid
            out $40,000 in legal fees.\18\
    ---------------------------------------------------------------------------
        \18\ Debra Rosenberg, ``Hard Pill to Swallow'' Newsweek (December
    15, 2003) at 46.

        The most dangerously incompetent doctors often remain in
    place for many years, in part because employers fear wrongful-
    dismissal lawsuits by fired doctors even more than malpractice
    suits by their victims.\19\
    ---------------------------------------------------------------------------
        \19\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
    (December 15, 2003) at 48.
    ---------------------------------------------------------------------------
    Sports
        The New Yorker reports on how diving boards and U.S.
    Olympic diving medals have both become a thing of the past due
    to frivolous lawsuits: ``After a golden age in the seventies .
    . . the American pool has suffered a gradual decline: thanks,
    for the most part, to concerns about safety and liability,
    diving boards have been removed and deep ends undeepened. . . .
    Such developments have consequences. . . . In the last two
    Olympics, medal counts for [once-dominant] American divers
    reached their lowest levels since the 1912 Games.'' \20\
    ---------------------------------------------------------------------------
        \20\ Field Maloney, ``Cannonball!'' New Yorker, Talk of the Town
    (September 8, 2004).
    ---------------------------------------------------------------------------
        According to Newsweek:

            Ryan Warner is a volunteer who runs an annual softball
            tournament in Page, Ariz., that usually raises about
            $5,000 to support local school sports programs. But not
            this year. A man who broke his leg at a recent
            tournament sliding into third base filed a $100,000
            lawsuit against the city, and Warner fears he may be
            named as a defendant. ``It's very upsetting when you're
            doing something for the community, not making any money
            for yourself, to be sued over something over which you
            had no control,'' he says. So Warner canceled the
            tournament.\21\
    ---------------------------------------------------------------------------
        \21\ Id. at 44.

            Parents, on behalf of their children, increasingly sue
            not only for physical injuries, but for ``hurt
            feelings'' when they don't make a team, says John
            Sadler of Columbia, S.C., who insures amateur sports
            leagues .. If a ref steps into a fight, he can be sued
            if one of the players he is holding back takes a punch.
            If the ref doesn't intervene, he can be sued for
            allowing the fight to go on.\22\
    ---------------------------------------------------------------------------
        \22\ Id. at 49.

            Even apparently innocent soccer moms are at risk. In
            Jupiter, Fla., one mother volunteered to pick up a
            pizza for the team. She drove over the foot of a child
            who, left unattended, had run into the road. The police
            did not even give the woman a ticket. But the parents
            of the child sued the mother and the soccer league and
            tried to sue the city, the refs and various
            sponsors.\23\
    ---------------------------------------------------------------------------
        \23\ Id. at 49.

        Other examples include the following. In Vestavia Hills,
    Alabama, the father of Laura Brooke Smith ``sued [the] school
    district, saying his daughter's rejection from the high school
    cheerleading squad despite professional coaching has caused her
    humiliation and mental anguish.'' \24\
    ---------------------------------------------------------------------------
        \24\ Fox News (May 31, 2001).
    ---------------------------------------------------------------------------
        In North Haven, Connecticut, the ``families of two high
    school sophomores have filed a Federal lawsuit over the
    school's decision to drop them from the drum majorette squad.''
    \25\
    ---------------------------------------------------------------------------
        \25\ Ann DiMatteo, ``Families Sue Over Unfair Twirl Tryouts,'' The
    New Haven Register, May 18, 2001.
    ---------------------------------------------------------------------------
        A student was barred from participating in her high
    school's cheerleading tryouts ``as punishment for passing a
    profane note on a . . . school bus in 2003.'' In response, her
    father hired a lawyer and filed a lawsuit ``saying the
    punishment violated his daughter's constitutional rights.'' An
    appeals court dismissed the lawsuit, agreeing with school
    officials that students ``do not have a constitutional right to
    participate in extra-curricular activities.'' \26\
    ---------------------------------------------------------------------------
        \26\ Kelly Melhart, ``Court Dismisses Suit over Punishment,'' Fort
    Worth-Star Telegram (April 19, 2005).
    ---------------------------------------------------------------------------
        And in Pennsylvania, ``[a] teenager, who felt she was
    destined for greatness as a softball player, has filed a
    $700,000 lawsuit against her former coach, alleging his
    `incorrect' teaching style ruined her chances for an athletic
    scholarship.'' \27\
    ---------------------------------------------------------------------------
        \27\ Dave Sommers, ``Legal Pitch,'' The Trentonian, May 1, 2001.
    ---------------------------------------------------------------------------
        ABC News reports that:

            When his 16-year-old son didn't get the most valuable
            player award, Michel Croteau didn't get upset. He hired
            a lawyer and sued his son's youth hockey league to the
            tune of more than $200,000 . . . The Croteaus are not
            alone. In the last year, parents have filed more than
            200 non-injury-related sports lawsuits against coaches,
            leagues and school districts in the United States,
            according to Gil Fried, a University of New Haven
            professor who specializes in sports law . . . The
            Butzke family sued the Comsewogue, N.Y., school
            district because their eighth-grade daughter was taken
            off the varsity high school soccer team. The Branco
            family took legal action against the Washington
            Township, N.J., school district after their son, David,
            was cut from the junior varsity basketball team . . .
            The Rubin family sued California's New Haven Unified
            School District for $1.5 million because their son got
            kicked off the varsity basketball team . . . The family
            felt James Logan High School Coach Blake Chong may have
            cost their son not just a scholarship, but an NBA
            career.'' \28\
    ---------------------------------------------------------------------------
        \28\ ABCNews.com Report, ``Blame the Coach? Angry Parents Take
    School Coaches to Court'' (August 7, 2003).

        In 1999, even major league baseball issued a directive to
    players that they should no longer throw foul balls to eager
    fans in the stands because there might be a lawsuit if someone
    got hurt trying to recover a souvenir.\29\ Yet another lawsuit
    was filed against Major League Baseball for injuries resulting
    from being hit by a practice ball before Game One of the 2000
    World Series.\30\
    ---------------------------------------------------------------------------
        \29\ Philip K. Howard, The Collapse of the Common Good: How
    America's Lawsuit Culture Undermines Our Freedom (2001) at 46.
        \30\ Zach Haberman, ``Fan Blinded by Ball Sues Yanks for $5M,'' The
    New York Post (April 11, 2005).
    ---------------------------------------------------------------------------
    Playgrounds
        The lawsuit culture is even changing the traditional
    American landscape: playgrounds are increasingly removing
    seesaws for fear of liability.\31\ According to Newsweek:
    ---------------------------------------------------------------------------
        \31\ Id. at 3.

            Playgrounds all over the country have been stripped of
            monkey bars, jungle gyms, high slides and swings,
            seesaws and other old-fashioned equipment once
            popularized by President John F. Kennedy's physical-
            fitness campaign. The reason: thousands of lawsuits by
            people who hurt themselves at playgrounds. But some
            experts say that new, supposedly safer equipment is
            actually more dangerous because risk-loving kids will
            test themselves by, for instance, climbing across the
            top of a swing set. Other kids sit at home and get
            fat--and their parents sue McDonald's.\32\
    ---------------------------------------------------------------------------
        \32\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
    (December 15, 2003) at 44.

        As Philip Howard has written, ``just letting a claim go to
    a jury . . . will affect whether seesaws stay in playgrounds
    all across America.'' \33\
    ---------------------------------------------------------------------------
        \33\ Philip K. Howard, The Collapse of the Common Good (New York:
    2001) at 58.
    ---------------------------------------------------------------------------
        Today, a brochure from the National Program for Playground
    Safety advises: ``Seesaw use is quite complex because it
    requires two children to cooperate and combine their actions,''
    and now ``there is a trend to replace [them] with spring-
    centered seesaws.'' \34\ A culture of legal fear is actually
    reducing the opportunities of American children to burn
    calories in playgrounds.
    ---------------------------------------------------------------------------
        \34\ U.S. Consumer Product Safety Commission, Handbook for Public
    Playground Safety, Pub. No. 325 at 23.
    ---------------------------------------------------------------------------
    Good Deeds
        According to the Chicago Daily Herald:

            By day, Dave Peterson works with diagnostic
            multiplexers and beam shakers to maintain the Fermi
            National Accelerator Laboratory's antiproton source.
            But at dawn and dusk the Geneva resident drags a
            homemade snowplow behind his daughter's Pacific Electra
            mountain bike, clearing a 16-inch wide section of the
            Fox River Trail as he rides to and from work in
            Batavia. Because he rides at a time when few are
            watching, he's become something of a local legend the
            last two winters, a Bigfoot. ``It's one of those weird
            things that has touched a nerve with a lot of people,''
            Peterson said. A whole lot. In fact, many of the path's
            regulars have come to expect it to be clear--and that
            has put Peterson's plowing on hiatus. The county has
            asked him to stop because if there's an expectation
            that the trail will be plowed, there's a greater chance
            for litigation, said Kane County Forest Preserve
            District operations supervisor Pat McQuilkin. ``If a
            person falls, you are more liable than if you had never
            plowed at all. Crazy world,'' wrote AnnMarie Fauske,
            the district's community affairs director, in response
            to a letter to Peterson. ``Unfortunately, the times we
            are in allow for a much more litigious environment than
            common sense would dictate.'' . . . ``There is
            something I can do here,'' Peterson said. ``I can use
            my skills as an engineer to make life easier for the
            little old ladies who walk on the path.'' But the
            forest preserve worries that if they take a wrong step
            and fall, those little old ladies might decide to
            sue.\35\
    ---------------------------------------------------------------------------
        \35\ Garrett Ordower, ``County Tells Bicyclist Thanks, But Stop
    Plowing Trail,'' The Chicago Daily Herald (February 21, 2004).
    ---------------------------------------------------------------------------
    The Girl Scouts
        The Girl Scouts in Metro Detroit alone have to sell 36,000
    boxes of cookies each year just to pay for liability
    insurance.\36\ According to former Girl Scout Laurie Super [of
    Downington, Pennsylvania], ``[i]t's getting harder to sell
    [cookies] . . . Our local Wawa stores said they couldn't let
    the girls set up their booth anymore, because of liability
    issues.'' \37\
    ---------------------------------------------------------------------------
        \36\ See ``Fine Filers of Frivolous Lawsuits,'' The Detroit News
    (February 24, 2004).
        \37\ Julia Moskin, ``Crave Thin Mints?'' The New York Times (March
    14, 2004).
    ---------------------------------------------------------------------------
    Santa Clause
        Even Santa Claus lives under a constant threat of legal
    harassment. As the Los Angeles Times quoted one Santa Claus,
    ``When I started doing this years ago, I never even thought
    about liability . . . But Santas have a pretty good chance of
    getting sued . . .'' \38\
    ---------------------------------------------------------------------------
        \38\ J.R. Moehringer, ``Ho! Ho! Is More Like Uh-Oh,'' The Los
    Angeles Times (December 23, 2004).
    ---------------------------------------------------------------------------
    Everyone
        The corrosive effects of lawsuit abuse were recently
    summarized by Newsweek:

            Americans will sue each other at the slightest
            provocation. These are the sorts of stories that fill
            schoolteachers and doctors and Little League coaches
            with dread that the slightest mistake--or offense to an
            angry or addled parent or patient--will drag them into
            litigation hell, months or years of mounting legal fees
            and acrimony and uncertainty, with the remote but scary
            risk of losing everything . . . Americans don't just
            sue big corporations or bad people. They sue doctors
            over misfortunes that no doctor could prevent. They sue
            their school officials for disciplining their children
            for cheating. They sue their local governments when
            they slip and fall on the sidewalk, get hit by drunken
            drivers, get struck by lightning on city golf courses--
            and even when they get attacked by a goose in a park
            (that one brought the injured plaintiff $10,000). They
            sue their ministers for failing to prevent suicides.
            They sue their Little League coaches for not putting
            their children on the all-star team. They sue their
            wardens when they get hurt playing basketball in
            prison. They sue when their injuries are severe but
            self-inflicted, when their hurts are trivial and when
            they have not suffered at all. Many of these cases do
            not belong in court. But clients and lawyers sue
            anyway, because they hope they will get lucky and win a
            jackpot from a system that allows sympathetic juries to
            award plaintiffs not just real damages--say, the cost
            of doctor's fees or wages lost--but millions more for
            impossible-to-measure ``pain and suffering'' and highly
            arbitrary ``punitive damages.'' (Under standard
            ``contingency fee'' arrangements, plaintiffs' lawyers
            get a third to a half of the take.) . . . Many
            Americans sue because they have come to believe that
            they have the ``right'' to impose the costs and burdens
            of defending a lawsuit on anyone who angers them,
            regardless of fault or blame. The cost to society
            cannot be measured just in money, though the bill is
            enormous, an estimated $200 billion a year, more than
            half of it for legal fees and costs that could be used
            to hire more police or firefighters or teachers.\39\
    ---------------------------------------------------------------------------
        \39\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
    (December 15, 2003) at 44-45.

            [T]he time may come when ordinary Americans recognize
            that for every sweepstakes winner in the legal lottery,
            there are millions of others who have to live with the
            consequences--higher taxes and insurance rates,
            educational and medical systems seriously warped by
            lawsuits, fear and uncertainty about getting sued
            themselves.\40\
    ---------------------------------------------------------------------------
        \40\ Id. at 51. Although the American Trial Lawyers Association has
    vociferously attacked the Newsweek article, Newsweek stands solidly by
    its report, stating ``NEWSWEEK received a large volume of mail from
    trial lawyers critical of our cover story. We stand by the story as
    both accurate and fair. The criticisms are for the most part easily
    refuted with material in the public record.'' Newsweek, ``Mail Call''
    (January 12, 2004).

        As Will Rogers once observed, Americans are ``letting
    lawyers instead of their conscience be their guide.''

        POLLS SHOW AMERICANS OVERWHELMINGLY SUPPORT LEGISLATION BARRING
                               FRIVOLOUS LAWSUITS

        We all pay for these frivolous lawsuits through higher
    prices as consumers and through higher taxes as taxpayers.
        A recent poll found that 83% of likely voters believe there
    are too many lawsuits in America, 76% believe lawsuit abuse
    results in increased prices for goods and services, and 65%
    said they would be more likely to vote for congressional
    candidates who supported curbs on lawsuit abuse.\41\ Another
    poll found that 73% of Americans support requiring sanctions
    against attorneys who file frivolous lawsuits.\42\
    ---------------------------------------------------------------------------
        \41\ See American Tort Reform Association, ``National Poll on Tort
    Reform'' (February 27, 2003).
        \42\ See Insurance Research Council, ``IRC Study Finds Strong
    Support for Wide Variety of Civil Justice Reform Measures'' (April 5,
    2004) at 4.
    ---------------------------------------------------------------------------
        Small businesses rank the cost and availability of
    liability insurance as second only to the costs of health care
    as their top priority,\43\ and both problems are fueled by
    frivolous lawsuits.
    ---------------------------------------------------------------------------
        \43\ Bruce D. Phillips, ``Small Business Problems and Priorities''
    (National Federation of Independent Business Research Foundation, June
    2004).
    ---------------------------------------------------------------------------
        When Business Week wrote an extensive article on what the
    most effective legal reforms would be, Business Week stated
    that what's needed is ``Penalties That Sting.'' As Business
    Week recommends, ``Give judges stronger tools to punish
    renegade lawyers. Before 1993, it was mandatory for judges to
    impose sanctions such as public censures, fines, or orders to
    pay for the other side's legal expenses on lawyers who filed
    frivolous lawsuits. Then the Civil Rules Advisory Committee
    (CRAC), an obscure branch of the courts, made penalties
    optional. This needs to be reversed . . . by Congress.'' \44\
    ---------------------------------------------------------------------------
        \44\ Mike France, ``Special Report--Tort Reform: How to Fix the
    Tort System,'' Business Week (March 14, 2005) at 76.
    ---------------------------------------------------------------------------
        The Class Action Fairness Act, which recently became
    law,\45\ prohibits forum shopping when the case is styled as a
    class action. The same policy should apply to individual
    lawsuits as well, and LARA would fill that gap in policy. As
    The Wall Street Journal said in a recent editorial, ``One
    suggestion is blending class action reform with the Lawsuit
    Abuse Reduction Act (LARA), a related measure that also passed
    the House last year. LARA would also reduce forum shopping and
    frivolous personal injury claims and fine lawyers who bring
    them.'' \46\
    ---------------------------------------------------------------------------
        \45\ Public Law No. 109-2.
        \46\ ``Tort Reform Roadmap,'' The Wall Street Journal (editorial)
    (January 27, 2005) at A12.
    ---------------------------------------------------------------------------

     FRIVOLOUS LAWSUITS AGAINST INNOCENT VICTIMS HAVE BECOME COMMONPLACE,
            ESPECIALLY THREATENING SMALL BUSINESSES AND HEALTH CARE

        Because existing rules against frivolous lawsuits are
    ineffective, as one commentator has pointed out, ``The right to
    sue has been exploited by lawyers. They can gamble on taking
    cases on a contingency basis because they need only win 1 in 10
    to score the big judgment that will make up for the other
    losses.'' \47\
    ---------------------------------------------------------------------------
        \47\ Mortimer B. Zuckerman (Editorial) ``Welcome to Sue City,
    U.S.A.'' U.S. News & World Report (June 16, 2003) at 64.
    ---------------------------------------------------------------------------
        Small businesses and workers suffer. This year, the
    nation's oldest ladder manufacturer, family-owned John S.
    Tilley Ladders Co. of Watervliet, New York, near Albany, filed
    for bankruptcy protection and sold off most of its assets due
    to litigation costs. Founded in 1855, the Tilley firm could not
    handle the cost of liability insurance, which had risen from 6%
    of sales a decade ago to 29%, even though the company never
    lost an actual court judgment. ``We could see the handwriting
    on the wall and just want to end this whole thing,'' said
    Robert Howland, a descendant of company founder John
    Tilley.\48\
    ---------------------------------------------------------------------------
        \48\ Carrie Coolidge, ``The Last Rung; The Tort System Takes Down a
    149-year-old Ladder Manufacturer,'' Forbes (January 12, 2004) at 52.
    ---------------------------------------------------------------------------
        A recent report by the AEI-Brookings Joint Center for
    Regulatory Studies has concluded that ``The tort liability
    price tag for small businesses in America is $88 billion a
    year'' and that ``Small businesses bear 68 percent of business
    tort liability costs, but take in only 25% of business
    revenue.'' \49\ The small businesses studied in the report
    account for 98% of the total number of businesses with
    employees in the United States.\50\
    ---------------------------------------------------------------------------
        \49\ Judyth Pendell and Paul Hinton, ``Liability Costs for Small
    Business'' (U.S. Chamber Institute for Legal Reform, June, 2004) at 1
    (``small business'' defined as ``those with less than $10 million in
    annual revenue and at least one employee in addition to the owner'').
        \50\ Id.
    ---------------------------------------------------------------------------
        As Bernie Marcus, co-founder and former chairman of The
    Home Depot, has described, ``An unpredictable tort system casts
    a shadow over every plan and investment. It is devastating for
    start-ups. The cost of even one ill-timed abusive lawsuit can
    bankrupt a growing company and cost hundreds of thousands of
    jobs. CEOs and their boards are forced to lower their
    aspirations and hold back on innovations to manage defensively.
    This is holding our nation back from competing effectively in
    the global marketplace and offshore competition is seriously
    cutting into market share for U.S. companies.'' \51\
    ---------------------------------------------------------------------------
        \51\ Washington Legal Foundation, ``Conversations With . . .''
    (Fall 2004).
    ---------------------------------------------------------------------------
        Doctors and patients suffer. Before the 1960s, only one
    physician in seven had ever been sued in their entire
    lifetime,\52\ whereas today's rate is about one in seven
    physicians sued per year.\53\
    ---------------------------------------------------------------------------
        \52\ See ``Opinion Survey of Medical Professional Liability,'' JAMA
    164:1583-1594 (1957).
        \53\ See R. Bovbjerg, ``Medical Malpractice: Problems & Reforms,''
    The Urban Institute, Intergovernmental Health Policy Project (1995).
    ---------------------------------------------------------------------------
        Further, the Harvard Medical Practice Study found that over
    half of the filed medical professional liability claims they
    studied were brought by plaintiffs who suffered either no
    injuries at all, or, if they did, such injuries were not caused
    by their health care providers, but rather by the underlying
    disease.\54\ The researchers found that, of the 47 medical
    malpractice claims they studied that resulted in
    litigation,\55\ ``[i]n 14 cases, the physicians reviewed the
    record and found no adverse event. For most of these cases, the
    physicians examined the outcome and concluded that the cause
    was the underlying disease rather than medical treatment . . .
    In these 14 cases, our physician reviewers took a stand
    opposite to that of the plaintiff-patient's expert.'' \56\
    Further, the reviewers found that in an additional 10 cases an
    adverse event occurred, but there was no negligence on the part
    of the health care provider.\57\ Of the 47 claims filed that
    the researchers analyzed, less than half demonstrated any
    actual negligence, and many demonstrated no discernable
    injury.\58\
    ---------------------------------------------------------------------------
        \54\ See Harvard Medical Practice Study to the State of New York,
    Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation,
    and Patient Compensation in New York at 11-5 (1990) (``[T]he tort
    system imposes the costs of defending claims on [health care] providers
    who may not even have been involved in an injury, let alone a negligent
    injury.'').
        \55\ See id. at 7-1.
        \56\ See id. at 7-33.
        \57\ See id. at 7-33.
        \58\ See also Paul Weiler, et al., A Measure of Malpractice (1993)
    at 71 (``[Of those 47,] 10 claims involved hospitalization that had
    produced injuries, though not due to provider negligence; and another
    three cases exhibited some evidence of medical causation, but not
    enough to pass our probability threshold. That left 26 malpractice
    claims, more than half the total of 47 in our sample, which provided no
    evidence of medical injury, let alone medical negligence.'').
    ---------------------------------------------------------------------------

                         EXAMPLES OF FRIVOLOUS LAWSUITS

        Here are just a few examples of the frivolous lawsuits that
    have tormented innocent Americans.\59\
    ---------------------------------------------------------------------------
        \59\ Recently, Britain's most senior judges, the Appellate
    Committee of the House of Lords, branded Britain's U.S.-style claims
    system an ``evil'' that interferes with civil liberties and freedom in
    a landmark ruling in a compensation case. In the case of Tomlinson v.
    Congleton Borough Council, [2003] U.K.H.L. 47 (2003), the Appellate
    Committee stated ``The pursuit of an unrestrained culture of blame and
    compensation has many evil consequences and one is certainly the
    interference with the liberty of the citizen. Of course there is some
    risk of accidents arising out of the joie de vivre of the young, but
    that is no reason for imposing a grey and dull safety regime on
    everyone.''

             According to Reuters, ``A lawsuit against . .
            . U.S. weather forecasters . . . over the South Asian
            tsunami disaster is fueling calls for greater curbs on
            what critics say are frivolous cases brought by lawyers
            out to make a quick buck. The suit, brought on behalf
            of a group of tsunami victims, `perfectly illustrates'
            the need for U.S. laws to hold lawyers liable for the
            economic damages they inflict on those they sue, said
            legal scholar Lester Brickman.'' \60\ The petition was
            filed in Federal court in Manhattan.\61\
    ---------------------------------------------------------------------------
        \60\ Gail Appleson, ``Tsunami Suit Shows Need to Curb Lawyers,
    Critics Say,'' Reuters (March 8, 2005).
        \61\ Id.

             Austin Aitken filed a lawsuit against NBC's
            ``Fear Factor'' television program. Austin Aitken told
            the Associated Press that he watches ``Fear Factor''
            often and had no problem with past installments in
            which the reality show's participants ate worms and
            insects in pursuit of a $50,000 prize--but eating rats
            went ``too far.'' Aitken says he became ``dizzy and
            lightheaded'' and vomited after watching contestants
            eat rats. He also ran into a doorway because he was
            disoriented, ``causing suffering, injury and great
            pain.'' Aitken's lawsuit asks for $2.5 million as
            compensation. ``I just put any figure,'' he told the
            Associated Press.\62\
    ---------------------------------------------------------------------------
        \62\ ``Viewer Sues NBC Over Rat-Eating Fear Factor,'' Associated
    Press (January 6, 2005).

             U.S. District Judge Loretta Preska had to say
            about the current state of Federal litigation:
            ``Plaintiffs here have lost their way; they need to
            consult a map or a compass or a Constitution because
            Plaintiffs have come to the judicial branch for relief
            that may only be granted by the legislative branch.
            This action is one of dozens of similar bootless
            actions filed in twenty-three district courts across
            the United States on behalf of uninsured and indigent
            patients, wherein Plaintiffs argue, without basis in
            law, that private non-profit hospitals are required to
            provide free or reduced-rate services to uninsured
            persons . . . This orchestrated assault on scores of
            nonprofit hospitals, necessitating the expenditure of
            those hospitals' scares resources to beat back
            meritless legal claims, is undoubtedly part of the
            litigation explosion that has been so well-documented
            in the media . . . For the foregoing reasons, the
            Defendants' motions to dismiss the above-captioned
            actions are granted in their entirety with prejudice.
            The Clerk of the Court shall mark these actions closed
            and all pending motions denied as moot.'' \63\
    ---------------------------------------------------------------------------
        \63\ Kolari v. New York-Presbyterian Hospital, 2005 WL 710452
    (S.D.N.Y.), at *1-*2, *14.

             Barbara Streisand sued the California Coastal
            Records Project, which took thousands of pictures of
            the California coastline intended to protect the
            state's shoreline. The photographs are made available
            free of charge to state and local governments,
            university researchers, conservation organizations, and
            others. Streisand sued because a picture of her Malibu
            estate (her mansion composed only 3% of one photo among
            thousands) was posted on the public interest
            organization's Web site. She sued for $50 million (five
            separate claims for $10 million each), but on May 10,
            2004, Streisand was ordered to pay the people she sued
            $154,000 in legal fees they accrued defending against
            her ridiculous lawsuit.\64\
    ---------------------------------------------------------------------------
        \64\ See Jennifer Pittman, ``The Blame Game'' The Silicon Valley/
    San Jose Business Journal (January 9, 2004); Kenneth R. Weiss,
    ``Streisand Sues Over Photograph of Her Coast Home on Web Site,'' The
    Los Angeles Times (May 30, 2003) at B1; Streisand v. Adelman, Case No.
    SC077257 (Sup. Ct. Los Angeles Cty.) (complaint filed May 30, 2003);
    Streisand v. Adelman, Case No. SC077257 (Sup. Ct. Los Angeles Cty.)
    (ruling on submitted matters: Motion to Tax Costs and Motion for
    Attorneys; Fees).

             According to the Indianapolis Star, ``Indiana
            drivers who get into wrecks with someone who is talking
            on a cell phone can forget about suing the phone's
            manufacturer. The Indiana Court of Appeals on Friday
            dismissed an Evansville lawsuit in which Terry L.
            Williams tried to do just that after a March 2002
            traffic crash. Williams collided with Kellie Meagher,
            who was allegedly talking on a Cingular Wireless phone.
            In the lawsuit, Williams alleged Cingular knew--or
            should have known--that Meagher would use the phone
            while driving. Vanderburgh Superior Court Judge Mary
            Margaret Lloyd dismissed Cingular from the suit. After
            the dismissal, Williams asked the judge to reconsider,
            citing new evidence that included a `Blondie' cartoon
            strip in which Blondie, while talking on a cell phone,
            caused an accident. But the Evansville judge was
            unmoved. Now an appellate court also agrees that
            Cingular was not liable.'' \65\
    ---------------------------------------------------------------------------
        \65\ Kevin Corcoran, ``Court: Don't Blame Cell-Phone Maker for
    Crash,'' The Indianapolis Star (June 5, 2004).

             In April, 1995, Carl and Diana Grady sued
            Frito Lay claiming that Dorito chips stuck in Charles
            Grady's throat and tore his esophagus. The Gradys
            wanted to present the ``expert'' testimony of Dr.
            Charles Beroes to support their claim that Doritos are
            inherently dangerous and negligently designed. Beroes'
            research included pressing Doritos onto a scale until
            the tip snapped off, and measuring the amount of time
            it took saliva to soften the Doritos. None of Beroes'
            tests involved chewing. After eight years of costly
            litigation, the Pennsylvania Supreme Court threw out
            the case, noting that Dr. Beroes' tests ``smacked of a
            high school science fair project and did not bear any
            relationship to the reality of the . . . consumption of
            foodstuffs.'' \66\ Justice Saylor pointed out in his
            concurring opinion ``the common sense notion that it is
            necessary to properly chew hard foodstuffs prior to
            swallowing.'' \67\
    ---------------------------------------------------------------------------
        \66\ Grady v. Frito-Lay, Inc., 839 A.2d 1038, 1042 (8th Cir. 2003)
    (citing Grady v. Frito-Lay, Inc., 2000 WL 33436367, at *2) (Pa.Com.Pl.
    April 3, 2000)).
        \67\ Id. at 1053 (Saylor, J., concurring).

             After three years of litigation, an appeals
            court finally held that the survivor of a crash cannot
            sue an airline for punitive damages when the pilots did
            not intentionally crash the plane. At midnight on June
            1, 1999, during a severe thunderstorm, a fully loaded
            American Airlines jet crashed while trying to land in
            Little Rock, Arkansas. Eleven people died, including
            the pilot. Two passengers sued seeking compensatory and
            punitive damages. A U.S. district court judge ruled
            that ``uncontroverted evidence'' showed the pilots had
            a good faith belief that the plane could be landed
            safely.\68\ Upholding the district court's decision,
            Judge Morris Arnold held that no reasonable jury could
            find that the members of the flight crew crashed the
            plane on purpose. Judge Morris wrote, ``[s]tated
            differently, we hold that no reasonable jury could find
            that the members of the flight crew knew, or ought to
            have known, in light of the surrounding circumstances,
            that their conduct would naturally and probably result
            in injury.'' \69\
    ---------------------------------------------------------------------------
        \68\ In re: Aircraft Accident at Little Rock, Arkansas on June 1,
    1999, 231 F.Supp. 852, 879 (E.D.Ark. 2002).
        \69\ Id. at 878-79.

             After five years of litigation, the Nevada
            Supreme Court dismissed the appeal of Lane Holmes, who
            sued the Turtle Stop in Las Vegas, claiming a cup
            caused him to suffer leg burns from dripping hot
            coffee.\70\ The court upheld the decision of the trial
            court that ruled ``[t]he danger is open and obvious.''
            \71\
    ---------------------------------------------------------------------------
        \70\ Holmes v. Turtle Stop, Inc., 62 P.3d 1165 (2000).
        \71\ Cy Ryan, ``Court Says Warning About Hot Coffee Unnecessary,''
    The Las Vegas Sun (July 11, 2000).

             A woman in Knoxville, Tennessee, sought
            $125,000 in damages against McDonald's, claiming a hot
            pickle dropped from a hamburger, burning her chin and
            causing her mental injury. Her husband also sued for
            $15,000 for loss of consortium.\72\
    ---------------------------------------------------------------------------
        \72\ See Randy Kenner, ``Lawsuit on Hot Pickle Draws Attention
    Around the Globe,'' Knoxville News-Sentinel (October 10, 2000) at A1.

             On September 3, 2003, a Federal district
            judge in New York threw out for a second time a lawsuit
            filed on behalf of obese children claiming McDonald's
            Corporation was legally responsible for their over-
            consumption of food.\73\ The court earlier noted the
            national ramifications of the complaint and the
            requested damages, stating ``McDonalds has also,
            rightfully, pointed out that this case, the first of
            its kind to progress far enough along to reach the
            stage of a dispositive motion, could spawn thousands of
            similar `McLawsuits' against restaurants . . . The
            potential for lawsuits is even greater given the
            numbers of persons who eat food prepared at other
            restaurants in addition to those serving fast food.''
            \74\
    ---------------------------------------------------------------------------
        \73\ See Pelman v. McDonald's Corp., S.D.N.Y. 02 Civ. 7821 (RWS),
    at 34-35 (September 3, 2003).
        \74\ Pelman v. McDonald's Corp., 237 F.Supp.2d 512, 518 (S.D.N.Y.
    2003).

             The Michigan Court of Appeals threw out a
            case brought by Richard Overton, who ``pointed to
            defendant's television advertisements featuring Bud
            Light as the source of fantasies coming to life,
            fantasies involving tropical settings, and beautiful
            women and men engaged in unrestricted merriment.
            Plaintiff sought monetary damages in excess of $10,000,
            alleging that defendant's misleading advertisements had
            caused him physical and mental injury, emotional
            distress, and financial loss.'' \75\
    ---------------------------------------------------------------------------
        \75\ Overton v. Anheauser-Busch Co., 517 N.W.2d 308, 309 (Mich.
    App. 1994).

             In Florida, a woman sued Universal Studios
            for $15,000 for ``extreme fear, emotional distress and
            mental anguish'' because the theme park's annual
            haunted house was too scary.\76\
    ---------------------------------------------------------------------------
        \76\ Tim Barker, ``Universal Fall Leads to Lawsuit,'' Orlando
    Sentinel (January 5, 2000) at C1.

             After over three years of litigation,
            Georgia's Court of Appeals held that the day trading
            firms where Mark Barton invested before embarking on a
            shooting rampage are not liable for the victims'
            injuries and deaths. A unanimous panel on the court
            stated ``We find this case is one in which the issue of
            proximate cause is so plain, palpable and indisputable
            as to demand summary judgment for the defendants.''
            \77\ The court noted that it was ``troubled by the
            implication that the list of defendants potentially
            liable for any person's violence, if sparked by
            economic misfortune, would be limited only by the
            number of stock brokers, investment advisers, lawyers,
            business partners, lottery ticket sellers, etc., whom
            the assailant blamed for his financial losses.'' \78\
    ---------------------------------------------------------------------------
        \77\ Brown v. All-Tech Investment Group, 2003 WL 23315394 (Ga.
    App.) at *5.
        \78\ Id. at *7, n.5.

             After a decade of litigation, Texas' 1st
            Court of Appeals reversed a $43 million judgment
            against a car manufacturer in a products liability suit
            that alleged a defective seat belt caused the 1992
            drowning death of a woman with a blood-alcohol level of
            0.17 who failed to escape from her Honda Civic when it
            became submerged under water.\79\
    ---------------------------------------------------------------------------
        \79\ Honda of America Manufacturing, Inc. v. Norman, 104 S.W.3d.
    600 (2003) (Tex.App. 1st.).

             The family of a man who died on a fishing
            trip sued the Weather Channel for $10 million, claiming
            that the man relied on the channel's forecast for his
            safety. In dismissing the case, the Miami Federal court
            stated that if forecasters were held accountable, ``the
            duty could extend to farmers who plant their crops
            based on a forecast of no rain, construction workers
            who pour concrete or lay foundation based on the
            forecast of dry weather, or families who got to the
            beach for the weekend.'' \80\
    ---------------------------------------------------------------------------
        \80\ See ``Storm Death Is Not Weatherman's Fault,'' New York Post
    (March 29, 1999) at 84.

             A West Virginia man who fell down an
            escalator at an airport finally dropped a lawsuit filed
            against US Airways over the accident. According to the
            Associated Press, ``The lawsuit in circuit court in
            Fort Myers alleged the airline didn't warn Floyd
            Shuler, 61, about the adverse affects of drinking
            alcohol on a plane. Shuler said in a news release from
            Wheeling, W.Va., that he didn't intend for the suit to
            be filed. `I learned about the filing of the lawsuit
            against US Airways . . . along with everyone else,'
            Shuler said. `It was never my intent to take on the
            airline industry. I apologize for any inconvenience
            this has caused US Airways.' Shuler's attorney, Paul
            Kutcher, did not return a phone call from The
            Associated Press seeking comment. The suit . . . said
            US Airways was negligent by failing to warn Shuler that
            the effects of alcohol are greater at night on airline
            passengers. The suit also alleged that the company did
            not properly maintain the escalator at Southwest
            Florida International Airport when he fell down it on
            Aug. 28, 1999, and it sought damages in excess of
            $15,000.'' \81\
    ---------------------------------------------------------------------------
        \81\ Associated Press, ``Man Drops Suit Filed Against Airline After
    He Drank Booze, Fell,'' USA Today (April 4, 2004).

             Several months after the Escondido,
            California library's resident cat attacked Richard
            Espinosa's 50-pound Labrador-mix assistance dog,
            Espinosa filed a $1.5-million claim against the city,
            alleging that he was harmed due to the dog's injuries.
            According to the legal papers filed, Espinosa claimed
            his Federal and state constitutional rights were
            violated and that ``. . . the defendants actions and
            subsequent inactions caused Espinosa to suffer
            significant lasting, extreme and severe mental anguish
            and emotional distress including, but not limited to,
            terror, humiliation, shame, embarrassment,
            mortification, chagrin, depression, panic, anxiety,
            flashbacks, nightmares, loss of sleep . . .'' \82\
            According to the North County Times, ``It took a jury
            little more than 2 hours of deliberation Friday to
            reject a claim from a man that the city of Escondido
            violated his civil rights when a cat living in a city
            library attacked his assistance dog more than 3 years
            ago . . . Espinosa originally asked for $1.5 million in
            compensation and damages . . . During jury selection
            Wednesday, Judge Hofmann excused four potential jurors
            who said they felt the case was `frivolous' and that
            they could not be impartial. Others also said the case
            was without merit, but said they could look beyond that
            feeling. `After that first juror said the word
            ``frivolous,'' and so did the next five, I thought the
            whole panel should have been thrown out,' Espinosa said
            . . . The city offered twice to settle with Espinosa,
            including one offer of $1,000. Espinosa declined.
            Nelson was unable to estimate how much the city spent
            defending itself against Espinosa's allegations, but he
            said it was a considerable sum. He also said the case
            could drag on for months or years if Espinosa does
            appeal.'' \83\
    ---------------------------------------------------------------------------
        \82\ Chuck Shepherd, ``News of the Weird,'' The Orlando Weekly
    (August 30, 2001).
        \83\ Teri Figueroa, ``Jury Rejects Claim by Man in Attack on Dog by
    Library Cat,'' The North County Times (January 20, 2004).

             In Ohio, Hamilton County Commissioner Todd
            Portune sued the Bengals and the National Football
            League claiming the team violated its stadium lease by
            failing to be competitive. The complaint, which also
            named the other 31 NFL franchises as defendants,
            alleges fraud, civil conspiracy, antitrust violations
            and breach of contract.\84\
    ---------------------------------------------------------------------------
        \84\ Terry Kinney (the Associated Press) ``Commissioner Sues
    Bengals, NFL'' (January 31, 2003).

             After three years of litigation, the Nebraska
            Supreme Court upheld a lower court ruling and found
            Ford Motor Co. and Bridgestone/Firestone Inc. not
            liable for the death of a woman killed by a man who
            gave her a lift after she got a flat tire. The woman's
            parents claimed in the lawsuit that a Firestone
            Wilderness AT tire on their daughter's Ford Explorer
            failed, setting off the chain of events that resulted
            in her death. The Nebraska court said the companies
            could not have foreseen the murderer's criminal
            acts.\85\
    ---------------------------------------------------------------------------
        \85\ Kevin O'Hanlon, ``Court: Faulty Tire Didn't Cause Murder,''
    the Associated Press (August 8, 2003).

             According to the Albany Times Union, ``The
            spectacle of American spending always gets a little
            silly in the holiday season, but shoppers over the next
            few weeks will be hard-pressed to match the performance
            last year of Antoinette Millard. She ran up bills of
            almost $1 million in New York luxury stores like
            Cartier and Barneys, and, according to court papers,
            Millard is now suing American Express for improperly
            soliciting her to sign up for a big-spender's credit
            card, her purchasing weapon of choice.'' \86\
    ---------------------------------------------------------------------------
        \86\ Steve Lohr, ``Buying Easy, Paying Hard,'' Times Union
    (December 5, 2004) at A1.

             The Court of Appeals of Indiana had this to
            say about a recent lawsuit brought by a man who sued
            his cell phone company because he got in an accident
    ---------------------------------------------------------------------------
            while using it in his car. The court stated:

                  LWith respect to Cingular, the complaint alleged:
            ``That at the time of this collision the defendant
            Meagher was utilizing a telephone furnished by Cingular
            Wireless. That Cingular Wireless was negligent in
            furnishing a cellular phone to Meagher when it knew, or
            should have known, that it would be used while the user
            operated a motor vehicle.'' . . . A cellular phone does
            not cause a driver to wreck a car. Rather, it is the
            driver's inattention while using the phone that may
            cause an accident . . . For example, many items may be
            used by a person while driving, thus making the person
            less attentive to driving. It is foreseeable to some
            extent that there will be drivers who eat, apply make
            up, or look at a map while driving and that some of
            those drivers will be involved in car accidents because
            of the resulting distraction. However, it would be
            unreasonable to find it sound public policy to impose a
            duty on the restaurant or cosmetic manufacturer or map
            designer to prevent such accidents. It is the driver's
            responsibility to drive with due care. Similarly,
            Cingular cannot control what people do with the phones
            after they purchase them. To place a duty on Cingular
            to stop selling cellular phones because they might be
            involved in a car accident would be akin to making a
            car manufacturer stop selling otherwise safe cars
            because the car might be negligently used in such a way
            that it causes an accident . . . Ultimately, sound
            public policy dictates that the responsibility for
            negligent driving should fall on the driver.
            Legislation has already been drafted to address the
            issue of cellular phone use while driving and to place
            the responsibility on the driver to refrain from doing
            so. We are confident that the legislature is taking
            appropriate measures to protect public safety, and that
            is both its right and duty.'' \87\
    ---------------------------------------------------------------------------
        \87\ Williams v. Cingular Wireless, No. 82A01-0312-CV-476 (Ct. App.
    Ind. June 4, 2004), at 2, 7-9.
    ---------------------------------------------------------------------------

     TODAY'S PRODUCT WARNINGS ARE A SAD TESTAMENT TO THE LEGAL CULTURE OF
                                      FEAR

        Today, testaments to the age of frivolous lawsuits are
    written on all manner of product warnings that aim to prevent
    obvious misuse. A label on a snow sled says ``Beware: sled may
    develop a high speed under certain snow conditions.'' \88\ One
    warning label on a toilet brush states ``Do not use for
    personal hygiene.'' \89\ A 5-inch brass fishing lure with three
    hooks is labeled ``Harmful if swallowed.'' A warning on an
    electric router made for carpenters states ``This product not
    intended for use as a dental drill.'' A warning label on a baby
    stroller cautions ``Remove child before folding.'' A sticker on
    a 13-inch wheel on a wheelbarrow warns ``Not intended for
    highway use.'' A dishwasher carries the warning ``Do not allow
    children to play in the dishwasher.'' A manufactured fireplace
    log states ``Caution--Risk of Fire.'' A household iron contains
    the warning ``Never iron clothes while they are being worn.''
    \90\ And a cardboard car sun shield that keeps sun off the
    dashboard warns ``Do not drive with sun shield in place.'' \91\
    ---------------------------------------------------------------------------
        \88\ As one commentator has remarked, ``yet another popular
    sledding hill'' closed in Methuen, Massachusetts because nobody wants
    to ``assume the risk of paying damages for anyone who gets hurt. Of
    course, in a world with common sense, [we] wouldn't have to worry about
    it.'' Taylor Armerding, ``Liability, Litigation Make Sled Tracks
    Disappear,'' Gloucester Daily Times (December 28, 2004).
        \89\ David N. Goodman, ``Toilet Brush Warning Wins Consumer
    Award,'' The Associated Press (January 6, 2005).
        \90\ Sonny Garrett, ``Warning: People Are as Dumb as You Think,''
    The Baxter Bulletin (April 17, 2004) (compiling list from Michigan
    Lawsuit Abuse Watch in Annual Wacky Warning Label Contest).
        \91\ Larry D. Hatfield, ``Dumbest Warning Labels Get their Due,''
    The San Francisco Chronicle (January 24, 2002).
    ---------------------------------------------------------------------------

                       THE COSTS OF FRIVOLOUS LITIGATION

        It should be emphasized that statistics do not capture the
    very real experiences of victims of lawsuit abuse that
    constituents suffer, and this debate is not about aggregate
    statistics regarding the number of lawsuits filed.
        However, requiring sanctions when judges find lawsuits are
    frivolous will surely deter many frivolous cases from being
    brought. That will be a good thing, considering the cost of
    today's tort system to Americans is staggering. After leveling
    off during the 1990's, the system's direct costs soared by a
    stunning 14.4% in 2001 and another 13.3% in 2002, to a 2002
    total of $233 billion, the equivalent of a 5% tax on wages,\92\
    according to a report released by Tillinghast-Towers Perrin,
    which publishes the most definitive trend statistics on tort
    system costs. Inflation-adjusted direct U.S. tort costs per
    person have shot from $89 in 1950 to $809 in 2002.\93\
    ---------------------------------------------------------------------------
        \92\ Tillinghast-Towers Perrin, U.S. Tort Costs: 2003 Update:
    Trends and Findings on the Costs of the U.S. Tort System, at 1.
    Tillinghast's reports on tort system costs are funded internally.
        \93\ Id. at 1.
    ---------------------------------------------------------------------------
        The costs of America's lawsuit culture are staggering. As
    chronicled by Sebastian Mallaby in The Washington Post:

            The most complete study of the tort system's cost comes
            from the consulting firm Tillinghast-Towers Perrin.
            Tillinghast's clients are mainly insurers, which are at
            loggerheads with the trial bar, so you may mistrust its
            data. Nonetheless, Tillinghast has published seven
            updates to its original 1985 study, refining its
            methodology along the way. Its numbers are the best
            available. And they are stunning . . . the really
            shocking thing is where the billions went. Injured
            plaintiffs--the fabled little guys for whom the system
            is supposedly designed--got less than half the money.
            According to Tillinghast's 2002 data, plaintiffs'
            lawyers swallowed 19 percent of the $233 billion.
            Defense lawyers pocketed an additional 14 percent, and
            other administrative costs, mainly at insurance firms,
            accounted for a further 21 percent. The legal-
            administrative complex thus guzzled fully 54 percent of
            the money in the tort system, or $126 billion. That's
            43 times as much as the Federal Government has budgeted
            this year to combat the global AIDS pandemic. No other
            system for compensating misfortune has such outrageous
            administrative costs. To guard against the possibility
            of sickness, people buy medical insurance. The health
            insurance industry, justly regarded as a paper-clogged
            nightmare, has administrative costs of 14 percent. To
            guard against the danger of disability, we have the
            Social Security program. The overhead for the Social
            Security disability system is around 3 percent. If you
            want a really good number to set against the 54 percent
            overhead in the tort system, just take a look at
            Medicare. Its overhead is about 2 percent. So the tort
            system's administrative costs are a scandal . . .
            Measured as a share of GDP, America's tort system is
            more than twice as expensive as it was in 1960, twice
            as expensive as the current systems in France or
            Canada, and three times as expensive as the system in
            Britain. A reasonable goal for the American tort system
            is to halve it.\94\
    ---------------------------------------------------------------------------
        \94\ Sebastian Mallaby, ``The Trouble with Torts,'' The Washington
    Post (January 10, 2005) at A17. See also U.S. Tort Costs: 2004 Update:
    Trends and Findings on the Cost of the U.S. Tort System, Towers Perrin
    Tillinghast (2004) (``Looking ahead, we anticipate growth in U.S. tort
    costs to range from 5% to 8% in 2005, with a midpoint of 6.5% We expect
    a similar increase in 2006.'').

    ---------------------------------------------------------------------------
        As columnist Stuart Taylor, Jr., has observed:

            The most recent NCSC [National Center for State Courts]
            report states that its (incomplete) data ``indicate a
            40 percent increase in tort filings'' from 1975 to
            2002. Census figures indicate that the population
            increase from 1975 to 2002 was about 33 percent. So
            tort filings per capita have not declined by 8 percent
            since 1975; they have increased somewhat . . . And
            although the tort system's inflation-adjusted direct
            costs per capita did decline modestly during the
            1990's, they soared by a stunning 14.4 percent in 2001
            and another 13.3 percent in 2002, to an estimated 2002
            total of $233 billion. The tort system consumes 2.2
            percent of GDP in the U.S.--almost four times the
            percentage in 1950; more than triple the 0.6 percent in
            the United Kingdom; and more than double the 0.8
            percent in Japan, France, and Canada.\95\
    ---------------------------------------------------------------------------
        \95\ Stuart Taylor, Jr., `` `False Alarm' by Stephanie Mencimer
    [Washington Monthly, Oct. 2004]--A Response by Stuart Taylor, Jr.
    [Newsweek, National Journal],'' available at http://
    www.overlawyered.com/pages/taylormencimerwashingtonmonthly.html.

        According to the Economic Report of the President, ``The
    expansive tort system has a considerable impact on the U.S.
    economy. Tort liability leads to lower spending on research and
    development, higher health care costs, and job losses.'' \96\
    And according to the Council of Economic Advisers, ``the United
    States tort system is the most expensive in the world, more
    than double the average cost of other industrialized nations.''
    \97\ The direct costs of medical malpractice claims jumped by
    an average of 11.9 percent a year from 1975 to 2002.\98\
    ---------------------------------------------------------------------------
        \96\ Economic Report of the President (February 2004) at 203.
        \97\ Council of Economic Advisers, ``Who Pays for Tort Liability
    Claims? An Economic Analysis of the U.S. Tort Liability System'' (April
    2002) at 1.
        \98\ Tillinghast-Towers Perrin, U.S. Tort Costs: 2003 Update:
    Trends and Findings on the Costs of the U.S. Tort System, at 2.
    ---------------------------------------------------------------------------
        Of the $233 billion total, only 22 cents on the dollar went
    to compensate alleged victims' economic losses; almost as much
    (19 cents) went to their lawyers; 24 cents went to payments for
    inherently unquantifiable noneconomic losses, mainly pain and
    suffering; 14 cents went to defense costs; and 21 cents went to
    insurance overhead costs.\99\
    ---------------------------------------------------------------------------
        \99\ Id. at 17. According to an analysis of a report by the
    National Center for State Courts by Newsweek's Stuart Taylor, Jr.,
    although tort filings declined by 9 percent from 1992 to 2001, almost
    all of that decline came in routine car-crash lawsuits. The report
    shows that medical malpractice claims increased by 24 percent from
    1992-2001 and that total tort filings soared by 40 percent from 1975 to
    2001, despite a dip during the 1990's. See Stuart Taylor, Jr. Response
    to ATLA's Claims, available at http://www.overlawyered.com/archives/
    000708.html. Chief Justice Rehnquist released new data on January 1,
    2004, showing an 8 percent drop in civil filings in fiscal year 2003,
    ``primarily as a result of decreases in personal injury/product
    liability cases involving asbestos (such filings had soared 98 percent
    the previous year).'' William H. Rehnquist, 36 The Third Branch 1
    (January 2004), 2003 Year-End Report on the Federal Judiciary, Chapter
    III, n.5. See also Economic Report of the President (February 2004), at
    204-05 (``The number of injuries handles by the tort system has
    increased along with expenditures. The number of filings per capita
    started to rise in the early 1980's and peaked in the mid-1980's, at
    least in the 16 states for which data on lawsuit filings are available
    between 1975 and 2000. Much of the decline in filings since 1985
    appears to have occurred in California, where medical liability reforms
    included a $250,000 limit for noneconomic damages that was found
    constitutional in 1985.'').
    ---------------------------------------------------------------------------
        A recent report by Judyth Pendell, Senior Fellow at the
    AEI-Brookings Joint Center for Regulatory Studies, and Paul
    Hinton, Vice President of NERA Economic Consulting, has
    concluded that ``The tort liability price tag for small
    businesses in America is $88 billion a year'' and that ``Small
    businesses bear 68 percent of business tort liability costs,
    but take in only 25% of business revenue.'' \100\ The small
    businesses studied in the report account for 98% of the total
    number of businesses with employees in the United States.\101\
    ---------------------------------------------------------------------------
        \100\ Judyth Pendell and Paul Hinton, ``Liability Costs for Small
    Business'' (U.S. Chamber Institute for Legal Reform, June, 2004) at 1
    (``small business'' defined as ``those with less than $10 million in
    annual revenue and at least one employee in addition to the owner'').
        \101\ Id.
    ---------------------------------------------------------------------------
        Without the serious threat of punishment for filing
    frivolous lawsuits, innocent individuals and companies will
    continue to face the harsh economic reality that simply paying
    off frivolous claimants through monetary settlements is often
    cheaper than litigating the case. If it costs $10,000 to defend
    yourself in court against frivolous charges, it makes financial
    sense to settle the case for $9,000, even if you weren't at
    fault in any way. This perverse dynamic not only results in
    legalized extortion, but it leads to increases in the insurance
    premiums all individuals and businesses must pay.\102\
    ---------------------------------------------------------------------------
        \102\ Opponents of reform often claim that contingency fees--
    agreements by which personal injury attorneys are allowed a percentage
    cut from any monetary damages awarded to their client--provide a
    ``screening mechanism'' that weeds out frivolous cases. The argument
    used is that personal injury attorneys will not take frivolous cases
    because doing so would leave them with no monetary recovery. The
    perverse dynamic outlined above, and the fact that filing fees are
    usually no more than a hundred dollars and additional defendants can be
    named in the lawsuit at no extra charge, makes clear that contingency
    fee agreements provide no effective screening mechanism at all since
    personal injury attorneys can simply take advantage of the legal costs
    they impose on defendants simply in virtue of their filing a case to
    extort money from those they sue.
    ---------------------------------------------------------------------------
        The incentives for personal injury lawyers to file
    meritless nuisance lawsuits for their settlement value are
    clear. As leading commentators from Harvard Law School have
    described the situation under current law:

            [T]he plaintiff may choose to file a claim at some
            (presumably small) cost. If the defendant does not then
            settle with the plaintiff and does not, at a cost,
            defend himself, the plaintiff will prevail by default
            judgment . . . Given the model and the assumption that
            each party acts in his financial interest and realizes
            the other will do the same, it is easy to see how
            nuisance suits can arise. By filing a claim, any
            plaintiff, and thus the plaintiff with a weak case,
            places the defendant in a position where he will be
            held liable for the full judgment demanded unless he
            defends himself. Hence, the defendant should be willing
            to pay a positive amount in settlement to the plaintiff
            with a weak case--despite the defendant's knowledge
            that were he to defend himself, such a plaintiff would
            withdraw.\103\
    ---------------------------------------------------------------------------
        \103\ D. Rosenberg and S. Shavell, ``A Model in which Suits are
    Brought for their Nuisance Value,'' 5 International Rev. of Law and
    Economics 3, 3 (June 1985).

        These commentators point out that defendants will always
    have to suffer extortion through nuisance lawsuits because ``to
    defeat a claim, the defendant will have to engage in actions
    that are frequently more expensive than the plaintiff's cost of
    making the claim, for the defendant will have to gather
    evidence supporting his contention that he was not legally
    responsible for harm done to the plaintiff or that no harm was
    actually done.'' \104\ The same commentators offer the
    following illustration:
    ---------------------------------------------------------------------------
        \104\ Id. at 10.

            Suppose, for instance, that the plaintiff files a claim
            and demands $180 in settlement. The defendant will then
            reason as follows. If he settles, his costs will be
            $180. If he rejects the demand and does not defend
            himself, he will lose $1000 by default judgment. If he
            rejects the demand and defends himself, the plaintiff
            will withdraw, but he will have spent $200 to
            accomplish this. Hence, the defendant's costs are
            minimized if he accepts the plaintiff's demand for
            $180; and the same logic shows that he would have
            accepted any demand up to $200. It follows that the
            plaintiff will find it profitable to file his nuisance
            claim; indeed, this will be so whenever the cost of
            filing is less than the defendant's cost of
            defense.\105\
    ---------------------------------------------------------------------------
        \105\ Id. at 4.

        Personal injury lawyers can always extort money from
    innocent victims by filing nuisance lawsuits for their
    settlement value. H.R. 420 will prevent such extortion by
    giving victims an opportunity they do not have now to get
    financial compensation for the costs they are forced to bear by
    legal tormentors filing frivolous lawsuits.

              H.R. 420: THE LAWSUIT ABUSE REDUCTION ACT (``LARA'')

        What follows is a discussion of the need for The Lawsuit
    Abuse Reduction Act (``LARA''), which was introduced by
    Congressman Lamar Smith on June 15, 2004.
    Section 2 of LARA: Attorney Accountability
        As President Bush has stated, ``We have a responsibility to
    confront frivolous litigation head on.'' \106\ The Lawsuit
    Abuse Reduction Act of 2005 (``LARA''), H.R. 420, would do just
    that by providing for appropriate sanctions against frivolous
    lawsuits.
    ---------------------------------------------------------------------------
        \106\ CBS: Evening News (February 18, 2005).
    ---------------------------------------------------------------------------
        Federal Rule of Civil Procedure 11 (``Rule 11''), as
    originally adopted and prior to the adoption of weakening
    amendments in 1993, was widely popular among Federal judges,
    and it served to significantly limit lawsuit abuse.
        In 1990, the Judicial Conference's Advisory Committee on
    Civil Rules undertook a review of Rule 11 and asked the Federal
    Judicial Center to conduct an empirical study of its operation
    and impact. The survey of 751 Federal judges found that an
    overwhelming majority of Federal judges believed that Rule 11
    did not impede development of the law (95%); the benefits of
    the rule outweighed any additional requirement of judicial time
    (71.9%); the 1983 version of Rule 11 had a positive effect on
    litigation in the Federal courts (80.9%); and the rule should
    be retained in its then-current form (80.4%).\107\
    ---------------------------------------------------------------------------
        \107\ Federal Judicial Center Final Report on Rule 11 to the
    Advisory Committee on Civil Rules of the Judicial Conference of the
    United States (May 1991). A subsequent survey conducted by the Federal
    Judicial Center in June, 1995, consisting of 148 Federal judges and
    over 1,000 trial attorneys found that the 1993 amendments that
    disallowed monetary compensation for victims of frivolous lawsuits were
    a bad idea. In that survey, two-thirds of judges (66%), defense
    attorneys (63%), and other attorneys (66%), and even a substantial
    portion of plaintiff's attorneys (43%), supported restoring Rule 11's
    compensatory function once again. See John Shapard et. al., Federal
    Judicial Center, Report of a Survey Concerning Rule 11, Federal Rules
    of Civil Procedure at 5.
    ---------------------------------------------------------------------------
        Despite this wide judicial support for a strong Rule 11, in
    1991 the Civil Rules Advisory Committee included provisions to
    weaken Rule 11 in a much broader package of proposed amendments
    to the Federal Rules driven largely by the desire to avoid
    ``satellite litigation'' of Rule 11 issues that could burden
    allegedly overworked judges. The proposed changes were then
    sent to the Supreme Court for approval or modification.
    Exercising what it viewed to be a very limited oversight
    role,\108\ the Supreme Court approved the proposed changes in
    ministerial fashion and without substantive comment in April,
    1993.
    ---------------------------------------------------------------------------
        \108\ While the Supreme Court is authorized to ``prescribe'' the
    general rules of Federal court practice and procedure, see Judicial
    Improvements and Access to Justice Act, 28 U.S.C. Sec. 2072(a), in fact
    it has been the general practice of the Supreme Court to merely act as
    a conduit for the rule changes and rely on the Judicial Conference to
    make the decisions in this area. As pointed out in the House
    Judiciary's Committee Report on H.R. 988 in the 104th Congress, Justice
    White believed that, as a matter of practice, the role of the Supreme
    Court is to ``. . . transmit the Judicial Conference recommendations
    without change and without careful study as long as there is no
    suggestion that the committee system has not operated with integrity.''
    Indeed Chief Justice Rehnquist's April 22, 1993 letter conveying the
    rules to the Speaker states: ``While the Court is satisfied that the
    required procedures have been observed, this transmittal does not
    necessarily indicate that the court itself would have proposed these
    amendments in the form submitted.'' H.R. Rep. No. 104-62, at 11, n.14
    (1995).
    ---------------------------------------------------------------------------
        In a strongly worded dissent on the Rule 11 changes,
    Justice Scalia correctly anticipated that the proposed revision
    would eliminate a ``significant and necessary deterrent'' to
    frivolous litigation, stating ``the overwhelming approval of
    the Rule by the Federal district judges who daily grapple with
    the problem of litigation is enough to persuade me that it
    should not be gutted.'' \109\ Justices Scalia and Thomas
    properly dissented from the transmittal of the amendments to
    Rule 11 to Congress, arguing that ``[t]he proposed revision
    would render the Rule toothless, by allowing judges to dispense
    with sanction, by disfavoring compensation for litigation
    expenses, and by providing a 21-day `safe harbor' within which,
    if the party accused of a frivolous filing withdraws the
    filing, he is entitled to escape with no sanction at all.''
    \110\
    ---------------------------------------------------------------------------
        \109\ Id. at 11.
        \110\ 146 F.R.D. 401, 507-08 (1993).
    ---------------------------------------------------------------------------
        Rule 11 as it existed prior to the 1993 amendments was very
    popular with Federal judges. The Federal Judicial Center
    (``FJC'') was commissioned to conduct empirical studies and
    surveys on the operation of the old Rule 11,\111\ and in a
    survey of all Federal trial judges, the FJC found that 80% were
    of the opinion that the old Rule 11 had had an overall positive
    effect and should not be changed.\112\ We need to restore those
    positive effects once again.
    ---------------------------------------------------------------------------
        \111\ Standing Committee on Rules of Practice and Procedure of the
    Judicial Conference of the United States, Call for Written Comments on
    Rule 11 of the Federal Rules of Civil Procedure and Related Rules as
    Amended in 1983 (August 1990), reprinted in 131 F.R.D. 335 (1990).
        \112\ Interim Report on Rule 11, Advisory Committee on Civil Rules,
    reprinted in Georgene M. Vairo, Rule 11 Sanctions: Case Law
    Perspectives and Preventive Measures, App. at 1-8 to 1-10 (2d ed.
    1991).
    ---------------------------------------------------------------------------
        After the proposal to gut Rule 11 was forwarded to
    Congress, there was a 7-month period under the Rules Enabling
    Act in which the Congress had the authority to make changes,
    but time ran out before Congress could stop these damaging
    amendments to Rule 11.\113\
    ---------------------------------------------------------------------------
        \113\ Under the Rules Enabling Act, Congress has 7 months to act on
    the proposed rules; if Congress does not act, the proposed rules become
    law. See 28 U.S.C. Sec. 2074(a). Despite the introduction of H.R. 2979
    in the 103rd Congress by Carlos J. Moorhead, which would have delayed
    the effective date of the proposed changes to Rule 11, and a companion
    bill in the Senate, no formal action was taken in the Democrat-
    controlled House, and the revisions went into effect on December 1,
    1993. The House later passed H.R. 988 in the 104th Congress--which,
    among other things, would have restored Rule 11 to its original form--
    by a vote of 232-193, but it was not taken up in the Senate.
    ---------------------------------------------------------------------------
        Section 2 of LARA would restore teeth to Rule 11 once
    again.
        In particular, Section 2 of LARA would:

             Allow monetary sanctions against parties that
            file frivolous lawsuits. Shockingly, the 1993
            amendments to Rule 11 prohibited any monetary sanctions
            against parties who filed frivolous lawsuits. Rule 11
            currently states that ``[m]onetary sanctions may not be
            awarded against a represented party for a violation of
            subdivision (b)(2),'' and subdivision (b)(2) requires
            lawyers to certify that the case they're bringing is
            ``warranted by existing law or by a nonfrivolous
            argument for the extension, modification, or reversal
            of existing law or the establishment of new law.'' H.R.
            420 would require monetary penalties against parties
            who file frivolous lawsuits that cause economic harm to
            the victims of frivolous lawsuits. Indeed, a survey
            conducted by the Federal Judicial Center in June, 1995,
            consisting of 148 Federal judges and over 1,000 trial
            attorneys found that the 1993 amendments that
            prohibited monetary compensation for victims of
            frivolous lawsuits were a bad idea. In that survey,
            two-thirds of judges (66%), defense attorneys (63%),
            and other attorneys (66%), and even a substantial
            portion of plaintiff's attorneys (43%), supported
            restoring Rule 11's compensatory function once
            again.\114\ H.R. 420 would do just that.
    ---------------------------------------------------------------------------
        \114\ See John Shapard et. al., Federal Judicial Center, Report of
    a Survey Concerning Rule 11, Federal Rules of Civil Procedure at 5.

             Reverse the 1993 amendments to Rule 11 that
            made Rule 11 sanctions discretionary rather than
            mandatory. Because today, under a weak Rule 11,
            sanctions in frivolous cases are not mandatory, there
            is little incentive for a victim of a frivolous lawsuit
            to spend time and money seeking Rule 11 sanctions.
            Deterrence cannot be achieved without certain
            punishment. While a court should have discretion to
            fashion an appropriate sanction based on the
            circumstances of the violation, litigants making
            frivolous claims should not be allowed the opportunity
            to escape sanctions entirely. Even Senator John Edwards
            has written in Newsweek that ``[L]awyers who bring
            frivolous cases should face tough, mandatory
            sanctions.'' \115\ Senator Edwards also said on Meet
            the Press that ``I feel very strongly that we need real
            and enforceable penalties for frivolous lawsuits that
            may be filed in this country.'' \116\ And Senator
            Edwards' campaign issued a statement saying Senator
            Edwards ``believes that we need a national system in
            place that will weed out the meritless lawsuits without
            taking away patients' rights.'' \117\ H.R. 420 would do
            exactly that.
    ---------------------------------------------------------------------------
        \115\ John Edwards, ``Juries: `Democracy in Action,' '' Newsweek
    (December 15, 2003) at 53.
        \116\ NBC News, ``Meet the Press'' (May 5, 2002) (transcript).
        \117\ John Stossel, ``Lawyers and the Little Guy,'' ABCNews.com
    (``Give Me a Break'' commentary on ABC News' 20/20) (July 23, 2004).

             Reverse the 1993 amendments to Rule 11 that
            allow parties and their attorneys to avoid sanctions
            for making frivolous claims and demands by withdrawing
            them within 21 days after a motion for sanctions has
            been filed. Justice Scalia correctly pointed out that
            such amendments would in fact encourage frivolous
            lawsuits: ``In my view, those who file frivolous suits
            and pleadings should have no `safe harbor.' The Rules
            should be solicitous of the abused (the courts and the
            opposing party), and not of the abuser. Under the
            revised Rule, parties will be able to file thoughtless,
            reckless, and harassing pleadings, secure in the
            knowledge that they have nothing to lose: If objection
            is raised, they can retreat without penalty.'' \118\
            H.R. 420 would get rid of the free pass' lawyers have
            to file frivolous lawsuits under today's Rule 11.
    ---------------------------------------------------------------------------
        \118\ H.R. Rep. No. 104-62, at 11-12 (1995).

        It is important to remember that nothing in H.R. 420, the
    Lawsuit Abuse Reduction Act, changes the current standard by
    which frivolous lawsuits are judged. That is, under H.R. 420,
    the standard a judge will use to determine whether a case is
    frivolous will remain as it has been, namely a determination
    ---------------------------------------------------------------------------
    that:

             the case is not being presented for any
            improper purpose, such as to harass or to cause
            unnecessary delay or needless increase in the cost of
            litigation;

             the claims, defenses, and other legal
            contentions therein are warranted by existing law or by
            a nonfrivolous argument for the extension,
            modification, or reversal of existing law or the
            establishment of new law;

             the allegations and other factual contentions
            have evidentiary support or, if specifically so
            identified, are likely to have evidentiary support
            after a reasonable opportunity for further
            investigation or discovery; and

             the denials of factual contentions are
            warranted on the evidence or, if specifically so
            identified, are reasonably based on a lack of
            information or belief.

        Only cases that meet the criteria outlined above will be
    subject to Rule 11 sanctions under the Lawsuit Abuse Reduction
    Act. The baseless nature of arguments by reform opponents that
    Rule 11 somehow stifles growth in the law is belied by the fact
    that Rule 11 explicitly allows for growth in the law, but not
    for frivolous arguments for extensions of the law.
        Further, LARA expressly provides that ``Nothing in'' the
    changes made to Rule 11 ``shall be construed to bar or impede
    the assertion or development of new claims or remedies under
    Federal, State, or local civil rights law.'' The development of
    civil rights claims is thereby explicitly protected in the
    bill's Rule 11 provisions.
    Section 3 of LARA: Applying Rules Against Frivolous Lawsuits to State
            Cases Affecting Interstate Commerce
        Section 3 of LARA would extend Rule 11's provisions
    preventing frivolous lawsuits to state cases in which the state
    court determines, based on an analysis of the relief requested,
    that the case would affect interstate commerce. (For the most
    part, states' rules of civil procedure are modeled after
    Federal Rule 11,\119\ and sanctions for frivolous filings are
    not mandatory in 38 states and the District of Columbia, just
    as they are not mandatory under the Federal Rule 11.\120\)
    ---------------------------------------------------------------------------
        \119\ See Arkansas Rule 11, Addition to Reporter's Notes, 1997
    Amendment (``The rule has been amended by designating the former text
    as subdivision (a) and by adding new subdivision (b), which is based
    [on] Rule 11(c)(1) of the Federal Rules of Civil Procedure, as amended
    in 1993 . . . New subdivision (b) provides that requests for sanctions
    must be made as a separate motion, rather than simply be included as an
    additional prayer for relief in another motion. The motion for
    sanctions is not to be filed until at least 21 days, or other such
    period as the court may set, after being served . . .); Minn. R. Civ.
    P. 11.04 (Minnesota), Advisory Committee Comments, 2000 Amendments
    (``Rule 11 is amended to conform completely to the Federal rule . . .
    On balance, the Committee believes that the amendment to the Rule to
    conform to its Federal counterpart makes the most sense, given this
    Committee's long-standing preference for minimizing the differences
    between state and Federal practice . . .''); N.D. R. Civ. P. 1 (North
    Dakota), Explanatory Note (``As will become readily apparent from a
    reading of the rules, they are the Federal Rules of Civil Procedure
    adapted, insofar as practicable, to state practice.''), N.D. R. Civ. P.
    11, Explanatory Note (``Rule 11 was revised, effective March 1, 1996,
    in response to the 1993 revision of Rule 11.''); Tenn. R. Civ. P. 11
    (Tennessee), Advisory Commission Comment to 1995 Amendment (``Amended
    Rule 11 tracks the current Federal version. Sanctions no longer are
    mandatory, and non-monetary sanctions are encouraged. The 21-day safe
    harbor provision allows otherwise sanctionable papers to be withdrawn,
    thereby escaping sanctions.''); Utah R. Civ. P. 11 (Utah), Advisory
    Committee Note (``The 1997 amendments conform state Rule 11 with
    Federal Rule 11.''); Vt. R. Civ. P. 11 (Vermont), Reporter's Notes to
    1996 Amendment (``Rule 11 is amended to conform to the 1993 amendment
    of Federal Rule 11.''); W. Va. R. Civ. P. 11 (West Virginia) (West
    Virginia's Rule 11 as amended effective April 1, 1998, is identical to
    the current Federal Rule 11); Wyo. R. Civ. P. 11 (Wyoming) (Wyoming's
    Rule 11 is identical to the current Federal Rule 11); Restatement
    (Third) of the Law Governing Lawyers Sec. 170 reporter's note to cmt. c
    (Tentative Draft No. 8, 1997). State courts also often rely on Federal
    court decisions when interpreting their rules. See, e.g., Gray v.
    Washington, 612 A.2d 839, 842 (D.C. 1992); Bryson v. Sullivan, 412
    S.E.2d 327, 332 (1992); Bryant v. Joseph Tree, Inc., 829 P.2d 1099,
    1104-05 (Wash. 1992) (en banc).
        \120\ See Alabama Rule of Civil Procedure 11; Alaska Rule of Civil
    Procedure 11; Arkansas Rule of Civil Procedure 11; Cal.C.C.P.
    Sec. 128.5 (California); C.R.C.P. Rule 11 (Colorado); C.G.S.A. Sec. 52-
    190a (Connecticut); De.R.S.Ct. Rule 33 (Delaware); D.C.R.R.C.P. Rule 11
    (D.C.); Fl.St. R.C.P. Rule 1.150 (Florida); Hi.R.R.C.P. Rule 11
    (Hawaii); Il.C.S.S.Ct. Rule 137 (Illinois); In.St. Trial P. Rule 11
    (Indiana); L.S.A.-C.C.P. Art. 864 (Louisiana); Me.R.R.C.P. Rule 11
    (Maine); Md.Rules, Rule 1-311 (Maryland); Massachusetts Rules of Civil
    Procedure (Mass.R.Civ.P.), Rule 11; Minnesota Rules of Civil Procedure,
    Rule 11.03; Ms.R.R.C.P. Rule 11; Miss. Code Ann. Sec. 11-55-5
    (Mississippi); Missouri Supreme Court Rule 55.03; Ne.R.Civ.Pro.St.
    Sec. 25-824 (Nebraska); N.H.R.Super.Ct. Rule 59 (New Hamphsire);
    N.J.S.A. 2A:15-59.1 (New Jersey); N.M.R.Dist.Ct.R.C.P. Rule 1-011 (New
    Mexico); N.D.R.R.C.P. Rule 11 (North Dakota); Ohio Civ.R. Rule 11; 12
    Okl.St.Ann. Sec. 2011 (Oklahoma); Or.R.R.C.P. O.R.C.P. 17 (Oregon);
    Pa.R.C.P. No. 1023.1; Pa.R.C.P. No. 1023.4 (Pennsylvania); R.I.R.R.C.P.
    Rule 11 (Rhode Island); Rule 11, S.C.R.C.P. (South Carolina);
    Tn.R.R.C.P. Rule 11.03 (Tennessee); Texas Civil Practice & Remedies
    Code Sec. 10.004; Ut.R.R.C.P. Rule 11 (Utah); Vt.R.R.C.P. Rule 11
    (Vermont); Va.R.S.S.Ct. Rule 1:4; Va.R.S.Ct. Rule 4:1 (Virginia);
    Wa.R.Super.Ct.Civ. Cr. 11 (Washington); W.V.R.R.C.P. Rule 11 (West
    Virginia); W.S.A. 802.05 (Wisconsin); Wy.R.R.C.P. Rule 11 (Wyoming).
    ---------------------------------------------------------------------------
      In the remaining states various exceptions to the sanctions rule
    allow frivolous filings to go unpunished and undeterred. See Arizona
    Rules of Civil Procedure, Rule 11(a) (only ``appropriate'' sanction
    required, not a sanction ``sufficient to deter repetition of such
    conduct'' as under Federal Rule 11); Ga.St. Sec. 9-15-14 (Georgia)
    (standard is that frivolous pleading must include claims or defenses no
    court anywhere could be reasonably expected to accept); Id.R.R.C.P.
    Rule 11 (Idaho) (only ``appropriate'' sanction required, not a sanction
    ``sufficient to deter repetition of such conduct''); I.C.A. Rule 1.413
    (Iowa) (only ``appropriate'' sanction required, not a sanction
    ``sufficient to deter repetition of such conduct''); Ks.R.R.C.P. Code
    60-211 (Kansas) (does not apply to abusive discovery requests and only
    ``appropriate'' sanction required in other cases, not a sanction
    ``sufficient to deter repetition of such conduct''); Ky.St.R.C.P. Rule
    11 (Kentucky) (only ``appropriate'' sanction required, not a sanction
    ``sufficient to deter repetition of such conduct,'' and state rule
    postpones ruling on frivolous pleadings until after entry of final
    judgement); Mi.R.R.C.P.M.C.R. 2.114 (Michigan) (bars punitive damages
    for frivolous pleadings); Mt.R.R.C.P. Rule 11 (Montana) (only
    ``appropriate'' sanction required, not a sanction ``sufficient to deter
    repetition of such conduct''); Nv.St.R.C.P. Rule 11 (Nevada) (only
    ``appropriate'' sanction required, not a sanction ``sufficient to deter
    repetition of such conduct''); N.Y.C.P.L.R. Sec. 8303-a (New York)
    (sanctions limited to civil personal injury and property damage claims
    and subject to a $10,000 limit); N.C.St.R.C.P. Sec. 1A-1, Rule 11
    (North Carolina) (only ``appropriate'' sanction required, not a
    sanction ``sufficient to deter repetition of such conduct''); S.D.C.L.
    Sec. 15-6-11(b) (South Dakota) (only ``appropriate'' sanction required,
    not a sanction ``sufficient to deter repetition of such conduct'').
        Congress--under its constitutional authority in Article I,
    Section 8 to regulate interstate commerce--has a responsibility
    to require state judges to conduct their own analysis, upon
    motion of parties, to determine whether, based on the relief
    requested (including potentially huge monetary damage requests)
    the case is such that it would affect interstate commerce by
    threatening to bankrupt a multi-state industry, by risking the
    loss of out-of-state jobs, or by otherwise incurring costs to
    the interstate economy. Where a case filed in state court
    substantially affects interstate commerce, as determined by a
    state judge, it is entirely appropriate that national attorney
    accountability rules should govern. Liability litigation, under
    existing rules, presents a serious threat to state autonomy.
    Manufacturers have no practical way of keeping their products
    out of certain states. Personal injury lawyers, on the other
    hand, get to choose their own forum and law. As a result, the
    jurisdictions most friendly to personal injury lawyers can
    unfairly impose the costs of their rules on the entire country
    and redistribute income from out-of-state parties to in-state
    parties. As one commentator has stated, ``Products liability
    cases have surged since 2001 to an anticipated 25,700 cases in
    2004 and now make up nearly 10 percent of all Federal civil
    filings. In particular, the estimated 24,100 cases dealing with
    personal injuries continues to grow and now account for 94
    percent of all products liability cases.'' \121\
    ---------------------------------------------------------------------------
        \121\ Kevin Stehr, ``Spot the Litigation Trends,'' Legal Times
    (October 7, 2004).
    ---------------------------------------------------------------------------
        H.R. 420's application of Rule 11 to state cases that
    affect interstate commerce is entirely consistent with
    federalism principles. James Madison, in Federalist No. 42,
    described the purpose of the Commerce Clause as follows: ``A
    very material object of this power was the relief of the States
    which import and export through other States, from the improper
    contributions levied on them by the latter. Were these at
    liberty to regulate the trade between State and State, it must
    be foreseen that ways would be found out to load the articles
    of import and export, during the passage through their
    jurisdiction, with duties which would fall on the makers of the
    latter and the consumers of the former.'' \122\ That is,
    Madison foresaw the problem in which products or services would
    be made to cost more to consumers in one state because other
    states those products and services passed through would levy
    duties on them. That is precisely the problem today: some
    states, by allowing frivolous lawsuits to be brought for
    unlimited damages in cases involving products or services that
    touch their jurisdictions are raising the costs of providing
    those products and services to out-of-state customers,
    resulting in higher prices and lost jobs across multiple states
    or nationwide. It is the duty of Congress to prevent such
    unfairness.\123\ H.R. 420 addresses a problem directly
    analogous to the prime example James Madison used when
    describing the need for the Constitution's Commerce Clause.
    ---------------------------------------------------------------------------
        \122\ The Federalist Papers, Federalist No. 22 (Madison) at 267-68
    (Clinton Rossiter ed., 1961).
        \123\ James Madison, according to his own notes of what he argued
    at the Constitutional Convention (he referred to himself in the third
    person), made clear that Congress must have the power to regulate
    commerce in this manner: ``Whether the States are now restrained from
    laying tonnage duties depends on the extent of the power `to regulate
    commerce.' . . . He was more & more convinced that the regulation of
    Commerce was in its nature indivisible and ought to be wholly under one
    authority.'' Debates on the Adoption of the Federal Constitution in the
    Convention Held at Philadelphia in 1787 (Jonathan Elliot, ed. 1845) (as
    reported by James Madison, notes of May 31, 1787) at 548.
    ---------------------------------------------------------------------------
        Congress unquestionably has the authority to regulate
    economic activities that ``affect'' interstate commerce,\124\
    and such a provision would have state judges themselves
    determine whether the case before them affected interstate
    commerce and national interests that would trigger a Federal
    rule against frivolous lawsuits.
    ---------------------------------------------------------------------------
        \124\ See Kenneth Thomas, CRS Report for Congress, Federalism,
    State Sovereignty and the Constitution: Basis and Limits of
    Congressional Power (September 5, 2003) at 7 (stating that Congress can
    regulate ``economic activities which `affect' commerce'').
    ---------------------------------------------------------------------------
        Further, requiring state courts to determine whether a case
    substantially affects interstate commerce based on an
    assessment of the costs to the interstate economy, including
    the loss of jobs, ``were the relief requested granted'' is
    likely to deter trial lawyers from grossly inflating the size
    of damages requested (which are designed to pressure unfair
    settlements) because doing so will increase the chances that
    their case will be found to affect interstate commerce, thus
    triggering the application of Federal Rule 11's provisions
    preventing frivolous lawsuits. This provision takes personal
    injury attorneys requesting vast damages at their word
    regarding what damages might be appropriate, but then holds
    them to account for those requested damages by making them
    subject to an analysis of the interstate economic costs were
    such damages to be awarded. University of Chicago law professor
    Cass Sunstein, along with Nobel Prize winner Daniel Kahneman,
    have compiled research from studies involving more than 8,000
    jury-eligible citizens in Illinois, Colorado, Texas, Arizona,
    and Nevada that shows that juries give higher awards when
    personal injury attorneys simply demand higher amounts.\125\ As
    Philip Howard has written, ``A great thing about bringing
    lawsuits in modern America is that it's so easy to threaten the
    adversary's entire livelihood. One stroke of a finger on the
    lawyer's word processor, and damages go from $100,000 to
    $1,000,000. Three more keystrokes, and we're suing for a
    billion dollars. This is fun . . . Damages claimed today are
    completely arbitrary. Just stick your finger in the air and
    threaten someone with any number that comes to mind.'' \126\
    Section 3 of LARA will deter personal injury lawyers from
    making ridiculous claims for astronomical damages.
    ---------------------------------------------------------------------------
        \125\ See Cass Sunstein and Reid Hastie, Punitve Damages: How
    Juries Decide (University of Chicago Press 2002) at 62.
        \126\ Philip K. Howard, The Collapse of the Common Good: How
    America's Lawsuit Culture Undermines Our Freedom (2001) at 59.
    ---------------------------------------------------------------------------
        How ridiculous can damages claims get? In Michigan, a woman
    who had a $5 fingernail repair job done at a local salon filed
    a lawsuit for $500,000 or more in damages, claiming a
    beautician nicked her finger with cuticle scissors. The woman's
    lawyer said ``The $500,000 figure isn't necessarily what we'll
    get [in court]. It's to put some attention to the case, and to
    how important we consider it.'' \127\
    ---------------------------------------------------------------------------
        \127\ Chad Halcom, ``Woman Files $500,000 Lawsuit for `Ruined'
    Fingernail,'' The Macomb Daily (February 5, 2003).
    ---------------------------------------------------------------------------
        The following exchange between a 60 Minutes correspondent
    and Caesar Barber, who sued various restaurants for damages
    related to his overconsumption of their products, also
    illustrates the frivolous rationales behind gigantic damages
    claims:

            Caesar Barber: I'm saying that McDonald's affected my
            health. Yes, I am saying that.

            Richard Carleton (CBS News, 60 Minutes): So what do you
            want in return?

            Caesar Barber: I want compensation for pain and
            suffering.

            Richard Carleton But how much money do you want?

            Caesar Barber: I don't know . . . maybe $1 million.
            That's not a lot of money now.\128\
    ---------------------------------------------------------------------------
        \128\ ``Food Fight,'' CBS News ``60 Minutes'' (Australia)
    (September 15, 2002) (transcript).

        Section 3 of LARA is not likely to be abused for several
    reasons. Any party that fears it may run afoul of Rule 11
    sanctions for filing frivolous pleadings will not move the
    court to determine if the case substantially affects interstate
    commerce. Further, any party that does not fear sanctions under
    Rule 11 will only request that a state court rule on whether
    the case substantially affects interstate commerce in rare
    circumstances. This is because, first, no one is required under
    LARA to make such a request to a state court if they do not
    want to, and second, because the burden will be on any party
    who decides to move for a determination that the case
    ``substantially affects interstate commerce'' to show just
    that, and that will not be an easy case to make, especially in
    smaller cases. The end result will be that motions will be made
    under Section 3 of LARA only in those cases in which large
    amounts of money are at stake with clear interstate effects and
    only by those parties who have very strong reasons to believe
    the court system is being abused by a party filing frivolous
    pleadings. In such cases, it is entirely appropriate that a
    Federal rule sanctioning lawsuit abuse be available.
        Section 3 of LARA would serve national economic interests
    by focusing attention on the jobs costs of frivolous
    litigation. The provision would provide that the interstate
    economy, including workers and jobs, when potentially
    negatively affected, should be protected by a rule prohibiting
    frivolous claims. The provision provides that if your lawsuit
    in state court asks for damages that will cost jobs in other
    states, and your lawsuit is determined to be frivolous, you'll
    have to pay for the costs of that frivolous lawsuit.\129\
    ---------------------------------------------------------------------------
        \129\ Such a provision will not result in state cases being removed
    to Federal court, as a Federal standard does not confer Federal
    question jurisdiction in the absence of Congressional creation of a
    Federal cause of action. Under Supreme Court precedent, Congress has
    given the lower courts jurisdiction to hear, originally or by removal
    from a state court, only those cases in which a well-pleaded complaint
    establishes either that Federal law creates the cause of action or that
    the plaintiff's right to relief necessarily depends on resolution of a
    substantial question of Federal law. Federal question jurisdiction
    exists only if plaintiffs' right to relief depends necessarily on a
    substantial question of Federal law. See Merrell Dow Pharmaceuticals
    Inc. v. Thompson, 478 U.S. 804, 807 n.2 (1986); 28 U.S.C. Sec. 1331.
    ---------------------------------------------------------------------------
        Further, LARA expressly provides that ``Nothing in section
    3 . . . shall be construed to bar or impede the assertion or
    development of new claims or remedies under Federal, State, or
    local civil rights law.'' The development of civil rights
    claims is thereby explicitly protected in the bill's provisions
    governing the application of Rule 11 in cases with substantial
    interstate effects.
    Section 4 of LARA: Preventing Forum-Shopping for Favorably-minded
            Judges
        One of the nation's wealthiest personal injury attorneys is
    Richard ``Dickie'' Scruggs, who sued asbestos companies in the
    1980s and has made about $844 million from lawsuits against
    tobacco companies.\130\ Here is what Scruggs said about what he
    calls ``magic jurisdictions:''
    ---------------------------------------------------------------------------
        \130\ Tom Wilemon, ``Social Ties Bind Political Elite,'' The Biloxi
    Sun Herald (October 13, 2002) at 10.

            ``What I call the `magic jurisdiction,'. . . [is] where
            the judiciary is elected with verdict money. The trial
            lawyers have established relationships with the judges
            that are elected; they're State Court judges; they're
            popul[ists]. They've got large populations of voters
            who are in on the deal, they're getting their [piece]
            in many cases. And so, it's a political force in their
            jurisdiction, and it's almost impossible to get a fair
            trial if you're a defendant in some of these places.
            The plaintiff lawyer walks in there and writes the
            number on the blackboard, and the first juror meets the
            last one coming out the door with that amount of money
            . . . Any lawyer fresh out of law school can walk in
            there and win the case, so it doesn't matter what the
            evidence or law is.'' \131\
    ---------------------------------------------------------------------------
        \131\ Richard ``Dickie'' Scruggs, ``Asbestos for Lunch Panel
    Discussion'' at the Prudential Securities Financial Research and
    Regulatory Conference (May 9, 2002) (quoted in Industry Commentary
    (Prudential Securities, Inc., N.Y., New York) (June 11, 2002) at 5).

        Personal injury lawyers often file cases in places that
    have no connection to the case. They file their cases where
    court procedures and the law are systematically applied in an
    unfair manner against defendants, including in jurisdictions
    with reputations for high damage awards and lower standards for
    the admissibility of expert testimony.\132\ A recent poll found
    that 46% of judges said donations influenced their judicial
    decisions.\133\
    ---------------------------------------------------------------------------
        \132\ See generally, American Tort Reform Association, ``Bringing
    Justice to Judicial Hellholes'' (2003).
        \133\ Editorial, ``Getting Politics Out of the Courts,'' Business
    Week (September 27, 2004) at 140 (``In a poll of 894 elected judges
    conducted in 2001and 2002 by a nonpartisan watchdog group, 46% said
    donations influenced their judicial decisions.'').
    ---------------------------------------------------------------------------
        After Texas enacted legislation restricting forum shopping
    there, personal injury lawyers began eying its neighbor,
    Oklahoma, as the next best place to bring their lawsuits. The
    smoking gun on this issue is an undated ``Dear ATLA Colleague''
    letter sent by Oklahoma attorney Stratton Taylor to the
    Association of Trial Lawyers of America. Mr. Taylor is also
    President Pro Tempore Emeritus of the Oklahoma State Senate,
    and a current member of the state legislature. In his letter,
    Senator Taylor leads, ``With recent events that have occurred
    in Texas, you may be looking to file cases in Oklahoma.'' \134\
    Only Congress can protect all Americans from unfair forum
    shopping no matter where it occurs.
    ---------------------------------------------------------------------------
        \134\ Letter from Stratton Taylor to ``ATLA Colleague'' (undated)
    (on file with the House Committee on the Judiciary).
    ---------------------------------------------------------------------------
        West Virginia State Supreme Court Justice Richard Neely
    candidly described one of the reasons behind this phenomenon in
    a book: ``As long as I am allowed to redistribute wealth from
    out-of-state companies to injured in-state plaintiffs, I shall
    continue to do so. Not only is my sleep enhanced when I give
    someone else's money away, but so is my job security, because
    the in-state plaintiffs, their families, and their friends will
    reelect me . . . It should be obvious that the instate local
    plaintiff, his witnesses and his friends, can all vote for the
    judge, while the out-of-state defendants can't even be relied
    upon to send a campaign donation.'' \135\
    ---------------------------------------------------------------------------
        \135\ Richard Neely, The Product Liability Mess: How Business Can
    Be Rescued From The Politics of State Courts 4, 62 (1998).
    ---------------------------------------------------------------------------
        While businesses are hauled into court all over the
    country, local personal injury lawyers work with the same
    judges day after day, contribute to their election campaigns,
    and routinely socialize with them.
        Section 4 of LARA will help ensure that lawsuits have a
    logical connection with the jurisdiction in which they are
    heard.\136\ Section 4, by requiring plaintiffs to bring their
    cases where they live or where they were injured, or where the
    defendant's principal place of business is located, would help
    stop forum-shopping. It would also allow a court to refuse to
    hear a case if there is a more appropriate forum, including a
    different state, in which the case could and should be heard.
    By strengthening the rules governing venue and forum non
    conveniens, courts can help ensure that cases are heard in a
    court that has a logical connection to the claim, rather than a
    court that is expected to produce the highest award for the
    plaintiff.
    ---------------------------------------------------------------------------
        \136\ These anti-forum shopping provisions would not do anything to
    preclude lawsuits against foreign companies that are not already
    precluded by the Due Process Clause of the Constitution under current
    law. On October 8, 2004, Rep. Lamar Smith, in the Congressional Record,
    made the following statement dispelling false allegations to the
    contrary regarding a version of this legislation that passed the House
    during the 108th Congress in the form of H.R. 4571:

          Mr. Speaker, September 14 2004, the House debated and
          passed H.R. 4571, the Lawsuit Abuse Reduction Act, a bill I
          authored to help prevent frivolous lawsuits and the
          notorious practice of forum shopping from ruining America's
          small businesses. In the midst of floor debate on H.R.
          4571, the Congressional Research Service issued a self-
          described ``rush memorandum'' dated September 14, 2004, to
          the minority staff of the House Judiciary Committee, which
          stated ``H.R. 4571 does provide an option for filing a
          lawsuit where a business has a principal place of business
          . . . However, if a defendant's principal place of business
          was not in the United States, then this option could not be
          exercised in a United States court. Consequently, it would
          appear that in certain circumstances, a United States
          citizen or resident injured in this country would not have
          a judicial forum in the United States in which to seek
          relief.'' This statement left the misleading impression
          that H.R. 4571, were it to become law, would somehow make
          it more difficult to bring some personal injury lawsuits in
          the United States. Not surprisingly, the misleading
          impression left by the CRS memorandum was exploited by
          those on the opposite side of the aisle in the midst of
          debate on H.R. 4571, and later by the press. For example, a
          report in CongressDaily/A.M. describing debate on H.R. 4571
          stated ``Many Democrats . . . cited a Congressional
          Research Service memorandum advising lawmakers that the
          bill could prevent U.S. citizens from having their cases
          heard in a U.S. court if the defendant's main place of
          business is located in a foreign country. Rep. Jay Inslee,
          D-Wash., sarcastically called the legislation `the Foreign
          Corporation Protection Act.` '' Those statements are deeply
          misleading, and here's why. In fact, nothing in H.R. 4571
          would prevent cases from being brought against foreign
          defendants that are not already precluded under current
          law. I wrote to CRS requesting a clarification of current
          law, and I received the following response: ``Under the Due
          Process Clause, a foreign corporation that had its
          principal place of business overseas, engaged in little or
          no economic activity in the United States, and did not
          otherwise subject itself to the jurisdiction of the United
          States, could not be subject to the jurisdiction of the
          various state courts. If such a corporation engaged in a
          tortious activity such as manufacturing a defective
          product, then a plaintiff would be unable to bring an
          action in a state court forum for such tortious activity,
          even if the product caused an injury in the United States.
          In such a case, an injured party would be required to seek
          compensation in the courts of another country.'' This makes
          clear that while some Members on the other side of the
          aisle claimed that H.R. 4571, if enacted, would preclude
          certain lawsuits from being brought that could be brought
          under current law, the Due Process Clause of the
          Constitution has precluded under current law, and would
          continue to preclude under H.R. 4571, some plaintiffs from
          bringing an action in a state court forum against a foreign
          defendant for tortious activity in certain circumstances,
          even if the product caused an injury in the United States.
          The bottom line is that H.R. 4571 would do nothing to
          change current law in that regard. Indeed, no legislation
          could change current law in that regard since the
          constitutional requirements of the Due Process Clause
          cannot be changed by legislation. In fact, the venue
          statute of the gentleman from Washington Mr. Inslee's own
          state provides that ``An action . . . for the recovery of
          damages for injuries to the person or for injury to
          personal property may be brought, at the plaintiffs option,
          either in the district in which the cause of action, or
          some part thereof, arose, or in the district in which the
          defendant, or, if there be more than one defendant, where
          some one of the defendants, resides at the time the
          complaint is filed.'' That venue standard is for all
          practical purposes the same as that provided in H.R. 4571.
          H.R. 4571 provides that a personal injury lawsuit could be
          brought in any state where the person bringing the claim
          resides at the time of filing or resided at the time of the
          alleged injury, any state where the alleged injury or
          circumstances giving rise to the personal injury claim
          allegedly occurred, or where the defendant's principal
          place of business is located. Insofar as opponents of H.R.
          4571 have a complaint regarding the inability to bring
          certain lawsuits against foreign corporations in the United
          States, their complaint is with the Constitution's Due
          Process Clause, and not with H.R. 4571, which simply
          reflects the same standard that prevails among the state's
          venue laws, subject of course to the Due Process Clause of
          the Constitution. If a foreign corporation's contacts with
          the United States are so minimal as to make it
          unconstitutional under the Constitution's Due Process
          Clause to subject them to suit in the United States
          regardless of whether the venue criteria of H.R. 4571--or
          of any State venue statute--are met, there is nothing a
          legislature can do by statute to remedy that situation. To
          help set the record straight, I am submitting for the
          record both my letter to CRS requesting a clarification,
    ---------------------------------------------------------------------------
          and the CRS memorandum I received in response.

          150 Cong. Rec. E1839-01 (October 6, 2004) (attaching
          September 16, 2004 letter from Rep. Lamar Smith to Kenneth
          R. Thomas, Legislative Attorney, American Law Division,
          Congressional Research Service, and Mr. Thomas' letter in
          response of October 4, 2004).
        Section 4 of LARA would also prevent situations in which
    floods of cases by non-residents interfere with in-state
    residents' access to timely justice.
        Congress unquestionably has the authority to regulate
    economic activities that ``affect'' interstate commerce,\137\
    and forum shopping clearly has a substantial affect on
    interstate commerce by allowing opportunities for personal
    injury lawyers to exploit lax venue and forum non conveniens
    rules to pick and choose those courts with a reputation for
    consistently awarding near-limitless awards. Section 4 of the
    Lawsuit Abuse Reduction Act clearly applies to economic
    activities, as the definition of ``personal injury claim'' is a
    claim ``to recover'' for a person's personal injury. Such a
    provision is entirely consistent with federalism principles.
    James Madison, in Federalist No. 42, described the purpose of
    the Commerce Clause as follows: ``A very material object of
    this power was the relief of the States which import and export
    through other States, from the improper contributions levied on
    them by the latter. Were these at liberty to regulate the trade
    between State and State, it must be foreseen that ways would be
    found out to load the articles of import and export, during the
    passage through their jurisdiction, with duties which would
    fall on the makers of the latter and the consumers of the
    former.'' \138\ That is, Madison foresaw the problem in which
    products or services would be made to cost more to consumers in
    one state because other states allowed the companies that
    manufactured those products or supplied those services to be
    sued in those other states even when the facts and
    circumstances of the lawsuit had no connection to those states.
    When personal injury attorneys are allowed to bring cases in
    certain states and county courts that have a reputation for
    being most favorable to granting the most lucrative awards, the
    costs imposed on companies by such awards must be passed on to
    consumers nationwide. That is precisely the problem today: some
    states, by allowing lawsuits to be brought in local
    jurisdictions even when the facts and circumstances of the case
    have no connection to such local jurisdictions, are raising the
    costs of providing products and services to out-of-state
    customers, resulting in higher prices and lost jobs to people
    in multiple states. It is the duty of Congress to prevent such
    unfairness.\139\
    ---------------------------------------------------------------------------
        \137\ See Kenneth Thomas, CRS Report for Congress, Federalism,
    State Sovereignty and the Constitution: Basis and Limits of
    Congressional Power (September 5, 2003) at 7 (stating that Congress can
    regulate ``economic activities which `affect' commerce'').
        \138\ The Federalist Papers, Federalist No. 22 (Madison) at 267-68
    (Clinton Rossiter ed., 1961).
        \139\ James Madison, according to his own notes of what he argued
    at the Constitutional Convention (he referred to himself in the third
    person), made clear that Congress must have the power to regulate
    commerce in this manner: ``Whether the States are now restrained from
    laying tonnage duties depends on the extent of the power `to regulate
    commerce.' . . . He was more & more convinced that the regulation of
    Commerce was in its nature indivisible and ought to be wholly under one
    authority.'' Debates on the Adoption of the Federal Constitution in the
    Convention Held at Philadelphia in 1787 (Jonathan Elliot, ed. 1845) (as
    reported by James Madison, notes of May 31, 1787) at 548.
    ---------------------------------------------------------------------------
        Jurisdictions with ``magic jurisdiction'' reputations
    include the following:

             Madison County, Illinois. Twice, the Chicago
            Tribune crowned Madison County a ``jackpot
            jurisdiction.'' \140\ As the newspaper recognized,
            ``[t]he number of suits has shot through the roof, and
            local newspapers sport advertisements looking for the
            local plaintiff who can provide a convenient excuse to
            file in Edwardsville . . . [T]he Madison County
            phenomenon also provides a dramatic illustration of the
            potential for poor public policy when things get
            carried away.'' \141\ A retired Madison County Judge
            has said ``Eventually, because of the money created
            through the plaintiffs bar and the power that money
            brings, I believe there became an idea that the system
            was beholden to the plaintiffs bar.'' \142\ Retired
            Madison County judge John DeLaurenti has said that it
            took Madison County four decades to earn its
            reputation, ``but now, it is so big with so much money
            and potential influence on people's careers that is has
            become very difficult to limit it in any way.'' \143\
            That same judge has also said ``I don't know if it's a
            Judicial Hellhole, but just figure it out. When people
            come from hither and thither to file these cases,
            there's gotta be an inducement, doesn't there? They're
            not coming to see beautiful Madison County.'' \144\
    ---------------------------------------------------------------------------
        \140\ Editorial, ``A Madison County Jackpot,'' The Chicago Tribune
    (April 2, 2003), at 22; Editorial, ``The Judges of Madison County,''
    The Chicago Tribune (September 6, 2002) at 22.
        \141\ Editorial, ``The Judges of Madison County,'' The Chicago
    Tribune (September 6, 2002) at 22.
        \142\ David Bailey (Reuters), ``Illinois County Court a Corporate
    `Hellhole,' '' (October 5, 2003).
        \143\ Id.
        \144\ Marin Kasindorf, ``Robin Hood is Alive in Court, Say Those
    Seeking Lawsuit Limit,'' USA Today (March 8, 2004) at A1 (emphasis
    added).

              LMadison County judges are infamous for their
            willingness to take cases from across the country, with
            little or no local connection, and hand down decisions
            that regulate entire industries nationwide. Madison
            County's over-eagerness to hear cases from other parts
            of the state has even been criticized by the Supreme
            Court of Illinois. Both the Madison County Circuit
            Court and the Fifth District Court of Appeals have been
            reversed many times in cases in which they denied
            defendants' motions to transfer venue. In January 2002,
            the Supreme Court of Illinois counted fourteen cases
            since 1995 in which it ordered the Madison County
            Circuit Court to transfer venue. In another ten cases,
            the Supreme Court ordered the Fifth District to
            consider vacating its denial of a defendant's forum non
            conveniens motion.\145\
    ---------------------------------------------------------------------------
        \145\ See First National Bank v. Guerine, 764 N.E.2d 54, 64-66
    (Ill. 2002) (appendix).

              LAsbestos cases, in particular, find their way to
            Madison County Circuit Court at an astonishing rate.
            Madison County (population 259,000) now hosts more
            mesothelioma claims than New York City (population
            8,000,000), and a nine member law firm with one office
            in Madison County claims to handle more mesothelioma
            cases than any firm in the country.\146\ This is
            because, according to former Carter Administration U.S.
            Attorney General Griffin Bell, its judges accept cases
            from throughout the state and place them on
            extraordinarily expedited schedules that do not provide
            defendants with adequate time to prepare for
            trial.\147\
    ---------------------------------------------------------------------------
        \146\ See ``Asbestos Case Leads to $5.1 Million, Sanction,''
    National Law Journal (December 2, 2002) at A4.
        \147\ See Griffin B. Bell, ``Asbestos & the Sleeping
    Constitution,'' 31 Pepp.L. Rev. 1, 8 (2003).

              LMadison County's newspapers have called Madison
            County ``lawyer heaven,'' \148\ a ``jackpot
            jurisdiction,'' a ``hotbed of megabucks litigation,'' a
            ``local slot machine,'' and ``the most magic of all''
            magic jurisdictions.\149\
    ---------------------------------------------------------------------------
        \148\ Editorial, ``Lawsuit Heaven,'' St. Louis Post-Dispatch
    (January 13, 2003) at B6.
        \149\ Greg Burns, ``Lawyers Bring an International Class Action to
    Rural Madison County . . . Why? Because It's the Lawsuit Capital,'' The
    Chicago Tribune (March 8, 2004) at 1; Christi Parsons, ``Downstate
    County is a `Plaintiff's Paradise,' '' The Chicago Tribune (June 17,
    2002) at 1; Amity Shlaes, ``Commentary, Big Judgments, Bigger Mistakes:
    Legal Windfalls in Madison County Demonstrate the Need to Limit Forum
    Shopping of Class Action Lawsuits,'' The Chicago Tribune (June 29,
    2004) at 15; Editorial, ``A Madison County Jackpot,'' The Chicago
    Tribune (April 2, 2003) at 22.

             Jefferson County (Beaumont), Texas. The
            Austin American-Statesman has recognized that ``[o]ver
            the past few decades, personal injury lawyers have
            claimed this territory as their own, establishing
            Beaumont, Port Arthur, Orange, and nearby towns as an
            enclave where . . . juries often pass down sizable
            judgments.'' \150\ As a result, huge verdicts against
            doctors have caused medical professional liability
            insurance rates to soar, sending Jefferson County
            neurosurgeons, obstetricians, and other doctors fleeing
            the area.\151\
    ---------------------------------------------------------------------------
        \150\ David Pasztor, ``As Quinn Laid to Rest, Mourners Contemplate
    Irony of His Slaying,'' The Austin American-Statesman (June 16, 2002)
    at A1.
        \151\ See Andrea Wright, ``Beaumont, Texas, Area Loses Doctors to
    High Cost of Malpractice Insurance,'' Knight-Ridder Tribune Business
    News (November 6, 2001).

             22nd Judicial Circuit (Copiah, Claiborne and
            Jefferson Counties), Mississippi. Fayette, the county
            seat of Jefferson County, Mississippi, was dubbed the
            ``jackpot justice capital of America'' by CBS's 60
            Minutes program.\152\ In this small, rural county, the
            number of plaintiffs far exceeds the number of
            residents.\153\ The national media, including the Los
            Angeles Times,\154\ The New York Times,\155\ and the
            Washington Times,\156\ have all recognized the
            Jefferson County phenomenon. In November 2002, the CBS
            News program, ``60 Minutes,'' devoted a program to
            explaining why Mississippi's 22nd Judicial Circuit,
            which includes Copiah, Claiborne, and Jefferson County
            is a favorite place for plaintiffs' lawyers to flock
            from all over the Nation. After the airing of the 60
            Minutes program, Media General Operations, which owns
            the local CBS-affiliate, the 60 Minutes producers, and
            several individuals who commented in the program, found
            themselves named as defendants in a $6.4 billion
            defamation lawsuit in Jefferson County.\157\
    ---------------------------------------------------------------------------
        \152\ Transcript, ``Jackpot Justice,'' 60 Minutes (November 25,
    2002).
        \153\ See Robert Pear, ``Mississippi Gaining as Lawsuit Mecca,''
    The New York Times (August 20, 2001) at A1 (``Jefferson County, with
    9,740 residents, is a small county, but litigation there is a big
    business. An affidavit . . . said that more than 21,000 people were
    plaintiffs in Jefferson County from 1995 to 2000.'').
        \154\ See Ken Ellingwood, ``Mississippi Curbs Big Jury Awards Caps
    on Liability Verdicts Are Seen as Pro-Business: Critics Say Companies
    Will be Less Accountable,'' The Los Angeles Times (December 4, 2002) at
    A1.
        \155\ See Robert Pear, ``Mississippi Gaining as Lawsuit Mecca,''
    The New York Times (August 20, 2001) at A1.
        \156\ See Tim Lemke, ``Best Place to Sue?'' The Washington Times
    (June 30, 2002) at A1.
        \157\ See ``Judge Dismisses Two Mississippi Defendants from `60
    Minutes' Defamation Lawsuit,'' Mercury News (July 3, 2003). The lawsuit
    was filed by two former jurors who were offended by the program. See
    id.

              LOne small business, Bankston Drug Store, has been
            called ``ground zero'' in the pharmaceutical litigation
            business because, as the only pharmacy in Jefferson
            County, it has been named in hundreds of lawsuits
            alleging the defective manufacture of consumer
            prescription drugs in order to bring a large, out-of-
            state pharmaceutical company into local court.\158\ The
            costs are real, and staggering. As Ms. Bankston
            explained, ``I've searched record after record and made
            copy after copy for use against me . . . I've had to
            hire personnel to watch the store while I was dragged
            into court on numerous occasions to testify. I have
            endured the whispers and questions of my customers and
            neighbors wondering what we did to end up in court so
            often. And I have spent many sleepless nights wondering
            if my business would survive the tidal wave of lawsuits
            cresting over it.'' \159\
    ---------------------------------------------------------------------------
        \158\ See Jerry Mitchell, ``Jefferson County Ground Zero for
    Cases,'' The Clarion-Ledger (June 17, 2001) at A1.
        \159\ Tom Wilemon, ``Judicial Probe Looking at Big Jury Awards,''
    Sun Herald (July 12, 2003).

              LIn recent years, the 22nd Judicial Circuit has
            handed out numerous awards of $100 million or
            more.\160\
    ---------------------------------------------------------------------------
        \160\ See Betty Liu, ``The Poor Southern County That's Big on
    Lawsuits,'' Financial Times (August 20, 2001).

              LAnd in June 2003, it was reported that the Federal
            Bureau of Investigation was probing possible judicial
            corruption in South Mississippi as well as the
            multimillion-dollar awards in Jefferson County.\161\
    ---------------------------------------------------------------------------
        \161\ See Tom Wilemon, ``Judicial Probe Looking at Big Jury
    Awards,'' Sun Herald (July 12, 2003); Tom Wilemon and Beth Musgrave,
    ``Indictments Cast Doubt on Trial Lawyers, Mississippi Justice
    System,'' Sun Herald (July 26, 2003).

             West Virginia, particularly Kanawha County.
            Litigation activity has increased 53.6% more rapidly in
            West Virginia than in the nation as a whole over the
            last 10 years.\162\ Current West Virginia Chief Justice
            Larry Starcher has been quoted as saying, ``I have a
            hard time not being lenient, as a jurist, on behalf of
            those people.'' \163\
    ---------------------------------------------------------------------------
        \162\ See West Virginia Chamber of Commerce, Perryman Study,
    ``Negative Impact On The Current Civil Justice System On Economic
    Activity In West Virginia'' (February 2003).
        \163\ Court Watch, West Virginia Chamber of Commerce (July 2003).

             Philadelphia, Pennsylvania (Court of Common
            Pleas). The impact of extraordinary awards is most
            noticed in Pennsylvania in the healthcare industry,
            where, according to The Philadelphia Inquirer,
            ``hitting the `malpractice lottery' is a made-for-
            Philadelphia phrase.'' \164\ According to a 2003 study
            by the Pew Charitable Trusts, Pennsylvania is in one of
            the worst situations in the nation regarding the
            provision of affordable professional medical liability
            insurance for physicians and hospitals.\165\ The report
            shows that, in Philadelphia, plaintiffs are twice as
            likely to win jury trials as in the rest of the nation
            and a substantial percentage of cases result in
            verdicts greater than $1 million.\166\
    ---------------------------------------------------------------------------
        \164\ Josh Goldstein, ``Malpractice Lawsuits Thrive in City; Still,
    Few are Filed, and Few are Decided by a Jury,'' Philadelphia Inquirer
    (December 10, 2001) at A1.
        \165\ See Randall R. Bovbjerg and Anna Bartow, ``Understanding
    Pennsylvania's Medical Malpractice Crisis: Facts About Liability
    Insurance, The Legal System, and Health Care in Pennsylvania'' (Pew
    Charitable Trusts 2003).
        \166\ See id. at 32.

             City of St. Louis, Missouri. St. Louis City
            Circuit Court is reportedly ``the place to be'' if you
            are a plaintiff.\167\ Plaintiffs move cases to St.
            Louis City because ``St. Louis City is a better
            venue,'' according to one St. Louis plaintiffs'
            attorney.\168\ Even Missouri Supreme Court Judge
            Michael Wolff has recognized that ``[t]he preponderance
            of anecdotal evidence is that jurors in the city of St.
            Louis are far more favorably disposed toward injured
            plaintiffs' claims than are their counterparts in
            suburban St. Louis County or in most other counties in
            the state.'' \169\
    ---------------------------------------------------------------------------
        \167\ See Roland Klose, ``Venue's on the Menu For Lawyers Trying to
    Take a Bite of Doe Run, St. Louis is the Place to Be,'' Riverfront
    Times (April 10, 2002); Tim Bryant, ``Question of Merging City, County
    Jury Pools is Revived; State Supreme Court Judge Suggested Move Last
    Year,'' St. Louis Post-Dispatch (November 27, 2002) at B1 (discussing
    the suggestion by Missouri Supreme Court Judge Michael Wolff of joining
    the juror pools of St. Louis City and County because plaintiffs'
    lawyers are known for trying to get their personal injury cases into
    St. Louis City Circuit Court for a more sympathetic jury, to make the
    issue of venue less important).
        \168\ Id.
        \169\ See State ex rel. Linthicum, 57 S.W.3d 855, 859 (Mo. 2001)
    (Wolff, J., concurring in part, dissenting in part).

             Eagle Pass, Texas. According to the San
            Antonio Express-News, ``L. Wayne Scott, a professor at
            St. Mary's University Law School . . . who has mediated
            civil cases in Eagle Pass, estimates defendants there
            are roughly 10 times more likely to lose than in
            conservative Dallas and two or three times more likely
            to fall than in San Antonio . . . Indeed, the prospect
            of facing a jury in Eagle Pass--where Mayor Joaquin L.
            Rodriguez also is one of the city's top plaintiff's
            attorneys--frequently makes companies more willing to
            settle and in higher amounts than they would agree to
            in other venues.'' Local plaintiff's attorney Earl
            Herring says that a case worth $10,000 in Eagle Pass
            would be ``worth $500 in Uvalde.'' \170\
    ---------------------------------------------------------------------------
        \170\ Greg Jefferson, ``Eagle Pass Remains Known as Plaintiff's
    Attorney Paradise,'' The San Antonio Express News (November 2, 2003).

             Hampton County, South Carolina. Examples of
            the forum shopping that is rampant in Hampton County
            include the following. Michigan-based General Motors
            and Ohio-based Cooper Tire faced a lawsuit in Hampton
            County simply because their products are sold in the
            county; the plaintiff lived 90 miles away and the
            accident occurred 350 miles away in Tennessee.\171\ In
            another case, a Beaufort County resident sued
            Continental Airlines because she was injured during a
            rough landing on a flight between Savannah, Georgia,
            and New Jersey, claiming that the airline does business
            in Hampton County because it sells tickets over the
            Internet.\172\
    ---------------------------------------------------------------------------
        \171\ See Michael Freedman, ``Home Court Advantage,'' Forbes (June
    10, 2002) at 74.
        \172\ See Editorial, ``Wide-open Venue Law Undermines Confidence in
    Court,'' The State (April 10, 2003) at A16.
    ---------------------------------------------------------------------------
    Amendments Adopted at Committee
        Three amendments adding additional provisions to the H.R.
    420 were adopted at Committee. The first, offered by Mr.
    Keller, applies a ``three strikes and you're out'' rule to
    attorneys who commit Rule 11 violations in Federal district
    court. The amendment provides that whenever a Federal district
    judge determines an attorney has violated Rule 11 of the
    Federal Rules of Civil Procedure three or more times within
    that Federal district court, the court shall suspend that
    attorney from practice of law in that Federal district court
    for 1 year, and may suspend that attorney from practice of law
    in that Federal district court for any additional period the
    court considers appropriate. Under such provision, an attorney
    has the right to appeal any such suspension, and such
    suspension shall not take place pending such appeal. Further,
    to be reinstated to the practice of law in a Federal district
    court after completion of such suspension, the attorney must
    first petition the court for reinstatement under such
    procedures and conditions as the court may prescribe.
        A second amendment, offered by Mr. Nadler, imposes
    mandatory civil sanctions that are commensurate with those
    available under Rule 11 of the Federal Rules of Civil
    Procedure, in addition to other civil sanctions otherwise
    applicable, for the intentional destruction of documents sought
    in \173\ a pending civil court proceeding, and highly relevant
    to such proceeding, with the intent to obstruct such
    proceeding. The amendment applies its rule to proceedings in
    Federal court, and in state courts where the court proceeding
    substantially affects interstate commerce.
    ---------------------------------------------------------------------------
        \173\ The term ``sought in'' as used in the amendment means sought
    pursuant to the rules of the relevant Federal or state court
    proceeding.
    ---------------------------------------------------------------------------
        A third amendment, offered by Mr. Scott, provides that
    whenever a party presents to a Federal court, or to a State
    court in a proceeding that substantially affects interstate
    commerce, a pleading, written motion, or other paper, that
    includes a claim, defense, or other legal contention that the
    party has already litigated and lost on the merits in any forum
    in final decisions not subject to appeal on 3 consecutive
    occasions, there shall be a rebuttable presumption that the
    presentation of such paper is in violation of Rule 11 of the
    Federal Rules of Civil Procedure.

    RESPONSE TO JUDICIAL CONFERENCE LETTER ON H.R. 4571, THE LAWSUIT ABUSE
                                 REDUCTION ACT

        On July 9, 2004, the Judicial Conference of the United
    States sent a letter to the Committee regarding H.R. 4571, the
    version of H.R. 420 the House of Representatives passed during
    the 108th Congress.\174\
    ---------------------------------------------------------------------------
        \174\ Letter from Leonidas Ralph Mecham, Secretary, United States
    Judicial Conference, to Chairman F. James Sensenbrenner (July 9, 2004)
    (``Judicial Conference Letter'').
    ---------------------------------------------------------------------------
        The letter states that Section 2 of H.R. 4571 would
    reinstitute provisions to Rule 11 that were removed in 1993,
    and that such provisions were removed ``because of the serious
    problems it engendered during a 10-year period of operation.''
    \175\ This assertion is contradicted by the Judicial
    Conference's Advisory Committee on Civil Rules's own survey.
    That committee undertook a review of Rule 11, in its pre-1993
    form, and asked the Federal Judicial Center to conduct an
    empirical study of its operation and impact. The survey of 751
    Federal judges found that an overwhelming majority of Federal
    judges believed that Rule 11 did not impede development of the
    law (95%); the benefits of the rule outweighed any additional
    requirement of judicial time (71.9%); the 1983 version of Rule
    11 had a positive effect on litigation in the Federal courts
    (80.9%); and the rule should be retained in its then-current
    form (80.4%).\176\ Indeed, the letter from the Judicial
    Conference admits as much with the cursory statement that ``The
    1991 Federal Judicial Center Survey noted that most Federal
    judges believed that the 1983 version of Rule 11 had positive
    effects.'' \177\
    ---------------------------------------------------------------------------
        \175\ Judicial Conference Letter, at 1.
        \176\ Federal Judicial Center Final Report on Rule 11 to the
    Advisory Committee on Civil Rules of the Judicial Conference of the
    United States (May 1991).
        \177\ Judicial Conference Letter, at 2.
    ---------------------------------------------------------------------------
        Despite this survey conducted at the behest of the Judicial
    Conference itself, the letter cites four ``serious problems''
    caused by the 1983 amendments to Rule 11.
        The first is that the 1983 amendments to Rule 11 resulted
    in ``creating a significant incentive to file unmeritorious
    Rule 11 motions by providing a possibility of monetary
    penalty.'' \178\ In response, first, any unmeritorious Rule 11
    motion could itself result in sanctions (and thereby deterred)
    under Rule 11.\179\ Second, yet another survey conducted by the
    Federal Judicial Center contradicts the assertion that the
    option of monetary penalties under Rule 11 caused problems. A
    survey conducted by the Federal Judicial Center in June, 1995,
    consisting of 148 Federal judges and over 1,000 trial attorneys
    found that the 1993 amendments that disallowed monetary
    compensation for victims of frivolous lawsuits were a bad idea.
    In that survey, two-thirds of judges (66%), defense attorneys
    (63%), and other attorneys (66%), and even a substantial
    portion of plaintiff's attorneys (43%), supported restoring
    Rule 11's compensatory function once again.\180\
    ---------------------------------------------------------------------------
        \178\ Id. at 2.
        \179\ See Berger v. Iron Workers, 843 F.2d 1395 (D.C. Cir. 1988)
    (affirming in part per curiam 7 Fed. Rules Serv. 3d 306 (D.D.C. 1986))
    (imposing sanctions for filing inappropriate Rule 11 motions).
        \180\ See John Shapard et. al., Federal Judicial Center, Report of
    a Survey Concerning Rule 11, Federal Rules of Civil Procedure at 5.
    ---------------------------------------------------------------------------
        The second problem the Judicial Conference letter cites is
    that the 1983 amendments to Rule 11 resulted in ``engendering
    potential conflict of interest between clients and their
    lawyers, who advised withdrawal of particular claims despite
    the clients' preference.'' \181\ In response, it is entirely
    appropriate that an attorney advise withdrawing claims a client
    wants to make when those claims are frivolous.
    ---------------------------------------------------------------------------
        \181\ Judicial Conference Letter, at 2.
    ---------------------------------------------------------------------------
        The third problem the Judicial Conference letter cites is
    that the 1983 amendments to Rule 11 resulted in ``exacerbating
    tensions between lawyers.'' \182\ In response, whatever
    tensions the amendments may have caused lawyers, the threat of
    frivolous lawsuits today has created a legal culture of fear
    that has come to permeate all of American society, threatening
    common sense judgments everywhere, from churches, to
    playgrounds, to schools, to doctors' offices, to small
    businesses nationwide, and everywhere in between. Surely if
    restoring teeth to Rule 11 results in some tension between
    lawyers, it is justified by helping to allow all Americans to
    live their lives free of the constant fear that their every
    innocent move could result in a devastating frivolous lawsuit.
    ---------------------------------------------------------------------------
        \182\ Id. at 2.
    ---------------------------------------------------------------------------
        The fourth problem the Judicial Conference letter cites is
    that the 1983 amendments to Rule 11 resulted in ``providing
    little incentive, and perhaps a distinct disincentive, to
    abandon or withdraw a pleading or claim--and thereby admit
    error--that lacked merit after determining that it no longer
    was supportable in law or fact.'' \183\ In response, the
    argument that mandatory sanctions deter offenders from
    retracting offending conduct is no more persuasive than the
    argument that stealing again and again should be allowed,
    provided each time the thief gets caught he or she returns the
    stolen goods; except in this case the argument is even weaker,
    since under the current Rule 11, the money victims of frivolous
    lawsuits are forced to spend to defend themselves, or to
    prepare to defend themselves, against frivolous claims is not
    even returned when an attorney is called to the carpet for
    filing a frivolous pleading: rather, such attorney need only
    withdraw the pleading and suffer no penalty whatsoever.
    ---------------------------------------------------------------------------
        \183\ Id. at 2.
    ---------------------------------------------------------------------------
        The letter from the Judicial Conference also states that,
    if Section 3 of H.R. 4571 is enacted, it ``could affect the
    cost and duration of a very large number of civil actions in
    state courts.'' \184\ In response, Section 3 of H.R. 4571 is
    not likely to be abused for several reasons. Any party that
    does not fear sanctions under Rule 11 will only request that a
    state court rule on whether the case substantially affects
    interstate commerce in rare circumstances. This is because,
    first, no one is required under H.R. 4571 to make such a
    request to a state court if they do not want to, and second,
    because the burden will be on any party who decides to move for
    a determination that the case ``substantially affects
    interstate commerce'' to show just that, and that will not be
    an easy case to make, especially in smaller cases. The end
    result will be that motions will be made under Section 3 of
    H.R. 4571 only in those cases in which large amounts of money
    are at stake with clear interstate effects and only by those
    parties who have very strong reasons to believe the court
    system is being abused by a party filing frivolous pleadings.
    In such cases, it is entirely appropriate that a Federal rule
    sanctioning lawsuit abuse be available. Section 3 of H.R. 4571
    would serve national economic interests by focusing attention
    on the employment costs of frivolous litigation. The provision
    would provide that the interstate economy, including workers
    and jobs, when potentially negatively affected, should be
    protected by a rule prohibiting frivolous claims.
    ---------------------------------------------------------------------------
        \184\ Id. at 3.
    ---------------------------------------------------------------------------
        Finally, the Judicial Conference letter states that H.R.
    4571 is ``inconsistent with the longstanding Judicial
    Conference policy opposing direct amendment of the Federal
    rules by legislation.'' \185\ However, Congress has never
    relinquished its constitutional authority to create and alter
    the rules of Federal court procedure,\186\ and it has a duty to
    do so to address pressing problems, in this case the threat of
    frivolous lawsuits that affect all aspects of American society.
    ---------------------------------------------------------------------------
        \185\ Id. at 1.
        \186\ See U.S. Const. Art. I, Sec. 8, cl. 9; Art. III, Sec. 1, cl.
    1; Art. III, Sec. 2, cl. 2.
    ---------------------------------------------------------------------------

             RESPONSE TO THE FEDERAL JUDICIAL CENTER'S 2005 SURVEY

        The Federal Judicial Center recently issued a survey of
    U.S. district court judges (``FJC 2005 Survey'') regarding Rule
    11 and the problem of frivolous lawsuits.\187\
    ---------------------------------------------------------------------------
        \187\ David Rauma and Thomas E. Willging, Report of a Survey of
    United States District Judges' Experiences and Views Concerning Rule
    11, Federal Rules of Civil Procedure (Federal Judicial Center 2005)
    (hereinafter ``FJC 2005 Survey'').
    ---------------------------------------------------------------------------
        As explained above, the Lawsuit Abuse Reduction Act would
    largely restore Federal Rule of Civil Procedure 11 to what it
    was before it was made toothless in 1993. Rule 11, prior to the
    adoption of weakening amendments in 1993 which eliminated
    mandatory and serious sanctions against those who filed
    frivolous lawsuits, was widely popular among Federal judges,
    and it served to significantly limit lawsuit abuse. In 1990,
    the Judicial Conference's Advisory Committee on Civil Rules
    (the same organization that requested the FJC 2005 Survey)
    undertook a review of Rule 11 at the time and asked the Federal
    Judicial Center to conduct an empirical study of its operation
    and impact. The survey of 751 Federal judges found that an
    overwhelming majority of Federal judges believed, based on
    their experience under both a weaker and stronger Rule 11, that
    a stronger Rule 11 did not impede development of the law (95%);
    the benefits of the rule outweighed any additional requirement
    of judicial time (71.9%); the stronger version of Rule 11 had a
    positive effect on litigation in the Federal courts (80.9%);
    and the rule should be retained in its then-current form
    (80.4%).\188\ Of the 751 judges surveyed in 1990, 583
    responded, roughly twice times as many as responded to the
    FJC's 2005 Survey.
    ---------------------------------------------------------------------------
        \188\ Federal Judicial Center Final Report on Rule 11 to the
    Advisory Committee on Civil Rules of the Judicial Conference of the
    United States (May 1991).
    ---------------------------------------------------------------------------
        In the Federal Judicial Center's latest survey, only 278
    judges responded to, and half of the judges surveyed (and over
    half of the judges that responded to the survey) had no
    experience at all with the stronger version of Rule 11. As the
    FJC 2005 Survey states, ``the Center E-mailed questionnaires to
    two random samples of 200 district judges each . . . One sample
    comprised solely judges appointed to the bench before January
    1, 1992 . . . [t]he other sample comprised solely judges
    appointed to the bench after January 1, 1992.'' \189\ The FJC
    report keeps secret the dates on which the respondent judges
    first came to serve on the bench, so we have no way of knowing
    whether any of those judges had any significant experience as
    judges under the stronger Rule 11 that was in effect the decade
    before 1993. Appendix A of the FJS 2005 Survey states that
    ``all judges in the first group [of 200 out of 400 surveyed]
    would have had at least 1 year on the bench before the 1993
    amendments to Rule 11 went into effect.'' \190\ That provides
    little comfort that any significant number of the judges
    surveyed had any significant experience under the stronger Rule
    11. So the survey is fundamentally flawed in that we have no
    reason to believe it included any significant number of judges
    who had any significant experience under the stronger Rule 11.
    ---------------------------------------------------------------------------
        \189\ FJC 2005 Survey, at 2.
        \190\ Id. at 16 (Appendix A).
    ---------------------------------------------------------------------------
        Further, the FJC 2005 Survey found that even of the Federal
    judges surveyed, 55% indicated that the purpose of Rule 11
    should be both deterrence and compensation,\191\ and the
    Lawsuit Abuse Reduction Act would fulfill both purposes.
    ---------------------------------------------------------------------------
        \191\ FJC 2005 Survey at 2.
    ---------------------------------------------------------------------------
        Of course, Federal judges themselves do not suffer in any
    direct way the costs of frivolous, abusive lawsuits. Those who
    do suffer those costs, including the large financial costs of
    nuisance lawsuits filed for their settlement value--namely the
    small business community--overwhelmingly support the Lawsuit
    Abuse Reduction Act. The National Federation of Independent
    Business, for example, has made passing the Lawsuit Abuse
    Reduction Act their top legislative priority. The small
    business community rejects the notion today the amount of
    frivolous lawsuits filed are ``just right.'' In just a few
    months, a coalition of over 100 organizations, called the
    Lawsuit Abuse Reform Coalition (``LARC''), came together to
    support LARA's common sense reforms.
        When sanctions for filing frivolous lawsuits are not
    mandatory, as they are not mandatory now, those who are the
    victims of frivolous lawsuits have no incentive to litigate the
    frivolous nature of the claims against them because there is
    currently no guarantee that even if the claims against them are
    found to be frivolous they will be compensated for the harm
    caused by those frivolous claims. What happens instead is that,
    today, the victims of frivolous lawsuits are routinely extorted
    to settle the case for certain sums just below those what would
    be necessary to litigate the case to judgment, at which point
    the case drops out of the dockets of the very judges who were
    surveyed by the FJC.
        Judges are unlikely to view frivolous litigation as a
    problem because such cases rarely reach the bench. An
    overwhelming number of cases settle before trial. When a
    frivolous claim is filed, one of two things occur under the
    current Rule 11: either the small business challenges the
    plaintiff and the plaintiff simply withdraws the claim and
    walks away (as they are allowed to do under the current Rule
    11); or the small business settles rather than proceed with a
    motion for sanctions because it is unlikely that the court will
    fully reimburse it for the cost of defending against the
    frivolous claim, and the cost of defending against the claim is
    more than the expense of settlement.
        The current situation favors judges, not small businesses
    who are harmed by the litigation. Under the current Rule 11,
    judges are relieved of their obligation to consider whether or
    not a case is frivolous. They do not need to hold a hearing on
    whether the case is frivolous and impose sanctions because, as
    a matter of practice, Rule 11 requires frivolous lawsuits to be
    withdrawn (with no reimbursement to the victim of the suit) or
    settled (for just under the cost of defending against it).
    While this is convenient for judges, it is not fair to small
    businesses.
        Everyone who sits back for a moment and reflects will
    understand that a limitless variety of frivolous lawsuits clog
    our courts in ways they did not in decades gone be. Judges do
    not feel the painful costs of frivolous lawsuits, and as they
    have sat as judges over the last decade they have only seen the
    standards of how frivolous lawsuits should be treated erode
    over time, starting with the explicitly forgiving nature of the
    toothless Rule 11 that was enacted in 1993. It is time courts
    were made to take the harm caused by frivolous lawsuits
    seriously again--by making sanctions for filing frivolous
    lawsuits mandatory, not discretionary, on the part of the
    judge--and to empower the victims of frivolous lawsuits with
    the certainty that they will be compensated for the frivolous
    lawsuits they suffer under. Only the Lawsuit Abuse Reduction
    Act can help free all Americans from the fear they feel today
    under the constant threat of frivolous lawsuits.
        Finally, the Federal judiciary has a history of opposing
    any legal reforms it does not itself propose. For example, the
    Federal Judicial Center has also opposed the Class Action
    Fairness Act,\192\ which overwhelmingly passed Congress and
    which became law earlier this year.\193\
    ---------------------------------------------------------------------------
        \192\ See Letter from Ralph Mecham, Secretary, Judicial Conference
    of the United States (Mar. 26, 2003).
        \193\ The Class Action Fairness Act passed the Senate by a vote of
    72 to 26, and the House by a vote of 279 to 149. It became Public Law
    No. 109-2.
    ---------------------------------------------------------------------------

                                    Hearings

        The Committee on the Judiciary held no hearings on H.R. 420
    during the 109th Congress.

                            Committee Consideration

        On May 25, 2005, the Committee met in open session and
    ordered favorably reported the bill H.R. 420 with an amendment
    by a recorded vote of 19 yeas to 11 nays, a quorum being
    present.

                             Vote of the Committee

        In compliance with clause 3(b) of Rule XIII of the Rules of
    the House of Representatives, the Committee notes that the
    following rollcall votes occurred during the committee''s
    consideration of H.R. 420.
        1. Mr. Conyers offered an amendment that would have
    provided that the Act would not apply to manufacturers,
    sellers, or trade associations that, on or after the date of
    enactment of the Act, shifts or transfers employment positions
    or facilities to a location outside the United States. By a
    rollcall vote of 11 yeas to 17 nays, the amendment was
    defeated.

                                                       ROLLCALL NO. 1
    ----------------------------------------------------------------------------------------------------------------
                                                                           Ayes            Nays           Present
    ----------------------------------------------------------------------------------------------------------------
    Mr. Hyde........................................................
    Mr. Coble.......................................................                              X
    Mr. Smith (Texas)...............................................                              X
    Mr. Gallegly....................................................                              X
    Mr. Goodlatte...................................................
    Mr. Chabot......................................................
    Mr. Lungren.....................................................                              X
    Mr. Jenkins.....................................................                              X
    Mr. Cannon......................................................                              X
    Mr. Bachus......................................................
    Mr. Inglis......................................................                              X
    Mr. Hostettler..................................................                              X
    Mr. Green.......................................................
    Mr. Keller......................................................                              X
    Mr. Issa........................................................                              X
    Mr. Flake.......................................................
    Mr. Pence.......................................................                              X
    Mr. Forbes......................................................                              X
    Mr. King........................................................                              X
    Mr. Feeney......................................................                              X
    Mr. Franks......................................................                              X
    Mr. Gohmert.....................................................                              X
    Mr. Conyers.....................................................              X
    Mr. Berman......................................................              X
    Mr. Boucher.....................................................
    Mr. Nadler......................................................              X
    Mr. Scott.......................................................              X
    Mr. Watt........................................................              X
    Ms. Lofgren.....................................................
    Ms. Jackson Lee.................................................
    Ms. Waters......................................................              X
    Mr. Meehan......................................................              X
    Mr. Delahunt....................................................
    Mr. Wexler......................................................
    Mr. Weiner......................................................              X
    Mr. Schiff......................................................              X
    Ms. Sanchez.....................................................              X
    Mr. Smith (Washington)..........................................
    Mr. Van Hollen..................................................              X
    Mr. Sensenbrenner, Chairman.....................................                              X
                                                                     -----------------------------------------------
        Total.......................................................             11              17
    ----------------------------------------------------------------------------------------------------------------

        2. Motion to report H.R. 420 with an amendment in the
    nature of a substitute was agreed to by a rollcall vote of 19
    yeas and 11 nays.

                                                       ROLLCALL NO. 2
    ----------------------------------------------------------------------------------------------------------------
                                                                           Ayes            Nays           Present
    ----------------------------------------------------------------------------------------------------------------
    Mr. Hyde........................................................
    Mr. Coble.......................................................              X
    Mr. Smith (Texas)...............................................              X
    Mr. Gallegly....................................................              X
    Mr. Goodlatte...................................................
    Mr. Chabot......................................................              X
    Mr. Lungren.....................................................              X
    Mr. Jenkins.....................................................              X
    Mr. Cannon......................................................              X
    Mr. Bachus......................................................              X
    Mr. Inglis......................................................              X
    Mr. Hostettler..................................................              X
    Mr. Green.......................................................
    Mr. Keller......................................................              X
    Mr. Issa........................................................              X
    Mr. Flake.......................................................
    Mr. Pence.......................................................              X
    Mr. Forbes......................................................              X
    Mr. King........................................................              X
    Mr. Feeney......................................................              X
    Mr. Franks......................................................              X
    Mr. Gohmert.....................................................              X
    Mr. Conyers.....................................................                              X
    Mr. Berman......................................................                              X
    Mr. Boucher.....................................................
    Mr. Nadler......................................................                              X
    Mr. Scott.......................................................                              X
    Mr. Watt........................................................                              X
    Ms. Lofgren.....................................................
    Ms. Jackson Lee.................................................
    Ms. Waters......................................................                              X
    Mr. Meehan......................................................                              X
    Mr. Delahunt....................................................
    Mr. Wexler......................................................
    Mr. Weiner......................................................                              X
    Mr. Schiff......................................................                              X
    Ms. Sanchez.....................................................                              X
    Mr. Smith (Washington)..........................................
    Mr. Van Hollen..................................................                              X
    Mr. Sensenbrenner, Chairman.....................................              X
                                                                     -----------------------------------------------
        Total.......................................................             19              11
    ----------------------------------------------------------------------------------------------------------------

                          Committee Oversight Findings

        In compliance with clause 3(c)(1) of Rule XIII of the Rules
    of the House of Representatives, the Committee reports that the
    findings and recommendations of the Committee, based on
    oversight activities under clause 2(b)(1) of Rule X of the
    Rules of the House of Representatives, are incorporated in the
    descriptive portions of this report.

                   New Budget Authority and Tax Expenditures

        Clause 3(c)(2) of Rule XIII of the Rules of the House of
    Representatives is inapplicable because this legislation does
    not provide new budgetary authority or increased tax
    expenditures.

                   Congressional Budget Office Cost Estimate

        In compliance with clause 3(c)(3) of Rule XIII of the Rules
    of the House of Representatives, the Committee sets forth, with
    respect to the bill, H.R. 420, the following estimate and
    comparison prepared by the Director of the Congressional Budget
    Office under section 402 of the Congressional Budget Act of
    1974:

                                         U.S. Congress,
                                   Congressional Budget Office,
                                          Washington, DC, June 3, 2005.
    Hon. F. James Sensenbrenner, Jr., Chairman,
    Committee on the Judiciary,
    House of Representatives, Washington, DC.
        Dear Mr. Chairman: The Congressional Budget Office has
    prepared the enclosed cost estimate for H.R. 420, the ``Lawsuit
    Abuse Reduction Act of 2005.''
        If you wish further details on this estimate, we will be
    pleased to provide them. The CBO staff contacts are Gregory
    Waring (for Federal costs), who can be reached at 226-2860, and
    Melissa Merrell (for the State and local impact), who can be
    reached at 225-3220.
                Sincerely,
                                           Douglas Holtz-Eakin.

    Enclosure

    cc:
            Honorable John Conyers, Jr.
            Ranking Member
    H.R. 420--Lawsuit Abuse Reduction Act of 2005.
        H.R. 420 would amend Rule 11 of the Federal Rules of Civil
    Procedure to require courts to impose appropriate sanctions on
    attorneys, law firms, or parties who file frivolous lawsuits
    and to require them to compensate parties injured by such
    conduct. (Courts currently may, but are not required to, impose
    such sanctions.) In addition, the bill would require certain
    personal injury claims to be filed in a court where the person
    bringing the claim lives, where the alleged injury occurred, or
    where the defendant's business is located.
        Under the legislation, any monetary sanction imposed under
    Rule 11 would be between the parties to the suit. Thus, CBO
    estimates that enacting the legislation would result in no cost
    or savings to the Federal Government. H.R. 420 would not affect
    direct spending or revenues.
        H.R. 420 contains an intergovernmental mandate as defined
    in the Unfunded Mandates Reform Act (UMRA) because it would
    preempt certain State laws governing court procedures.
    Specifically, it would require State judges to determine
    whether certain liability lawsuits affect interstate commerce
    and apply Federal civil procedures for frivolous lawsuits to
    those cases. CBO estimates that the cost of complying with that
    mandate would be minimal and well below the threshold
    established in that act ($62 million in 2005, adjusted annually
    for inflation). The bill contains no new private-sector
    mandates as defined in UMRA.
        The CBO staff contacts for this estimate are Gregory Waring
    (for Federal costs), who can be reached at 226-2860, and
    Melissa Merrell (for the State and local impact), who can be
    reached at 225-3220. This estimate was approved by Peter H.
    Fontaine, Deputy Assistant Director for Budget Analysis.

                        Performance Goals and Objectives

        The Committee states that pursuant to clause 3(c)(4) of
    Rule XIII of the Rules of the House of Representatives, H.R.
    420 would: (1) restore mandatory sanctions for filing frivolous
    lawsuits in violation of Rule 11 of the Federal Rules of Civil
    Procedure; (2) remove Rule 11's ``safe harbor'' provision that
    currently allows parties and their attorneys to avoid sanctions
    for making frivolous claims by withdrawing frivolous claims
    after a motion for sanctions has been filed; (3) allow monetary
    sanctions, including attorneys' fees and compensatory costs,
    against any party making a frivolous claim; (4) apply Rule 11's
    provisions to state cases a state judge finds substantially
    affects interstate commerce; (5) require that personal injury
    cases be brought only where the plaintiff resides, where the
    plaintiff was allegedly injured, where the defendant's
    principal place of business is located, or where the defendant
    resides; (6) apply a ``three strikes and you're out'' rule to
    attorneys who commit Rule 11 violations in Federal district
    court; (7) impose mandatory civil sanctions for document
    destruction intended to obstruct a pending court proceeding;
    and (8) provide that if a party attempts to relitigate a losing
    claim more than three consecutive times, there shall be a
    rebuttable presumption that Rule 11 has been violated.

                       Constitutional Authority Statement

        Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the
    House of Representatives, the Committee finds the authority for
    this legislation in article I, section 8, clause 3 of the
    Constitution.

                   Section-by-Section Analysis and Discussion

        The following discussion describes the bill as reported by
    the Committee.
        Sec. 1. Short title. This section provides that the Act may
    be cited as the ``Lawsuit Abuse Reduction Act of 2004.''
        Sec. 2. Attorney Accountability. This section would restore
    mandatory sanctions for filing frivolous lawsuits in violation
    of Rule 11; remove Rule 11's ``safe harbor'' provision that
    currently allows parties and their attorneys to avoid sanctions
    for making frivolous claims by withdrawing frivolous claims
    after a motion for sanctions has been filed; and require
    monetary sanctions, including attorneys' fees and compensatory
    costs, against any party making a frivolous claim and causing
    economic harm to the victim of a frivolous lawsuit.
        Sec. 3. Applicability of Rule 11 to State Cases Affecting
    Interstate Commerce. This section applies Rule 11's provisions
    to state cases a state judge finds substantially affect
    interstate commerce, including by costing jobs in other states.
        Sec. 4. Prevention of Forum-Shopping. Subsection (a) of
    this section requires that personal injury cases be brought
    only where the plaintiff resides, where the plaintiff was
    allegedly injured (or where the circumstances giving rise to
    the injury allegedly occurred) or where the defendant's
    principal place of business is located, or where the defendant
    resides. Subsection (b) of this section provides that if a
    person alleges that the injury or circumstances giving rise to
    the personal injury claim occurred in more than one county (or
    Federal district), the trial court shall determine which State
    and county (or Federal district) is the most appropriate forum
    for the claim. If the court determines that another forum would
    be the most appropriate forum for a claim, the court shall
    dismiss the claim. Any otherwise applicable statute of
    limitations shall be tolled beginning on the date the claim was
    filed and ending on the date the claim is dismissed under this
    subsection. Subsection (c) of this section provides the
    definition of terms used in section 4.
        Sec. 5. Rule of Construction. This section provides that
    nothing in section 3 or in the amendments made by section 2
    shall be construed to bar or impede the assertion or
    development of new claims or remedies under Federal, State, or
    local civil rights law.
        Sec. 6. Three-Strikes Rule for Suspending Attorneys Who
    Commit Multiple Rule 11 Violations. This section provides that
    whenever a Federal district judge determines an attorney has
    violated Rule 11 of the Federal Rules of Civil Procedure three
    or more times within that Federal district court, the court
    shall suspend that attorney from practice of law in that
    Federal district court for 1 year, and may suspend that
    attorney from practice of law in that Federal district court
    for any additional period the court considers appropriate.
    Under such provision, an attorney has the right to appeal any
    such suspension, and such suspension shall not take place
    pending such appeal. Further, to be reinstated to the practice
    of law in a Federal district court after completion of such
    suspension, the attorney must first petition the court for
    reinstatement under such procedures and conditions as the court
    may prescribe.
        Sec. 7. Presumption of Rule 11 Violation for Repeatedly
    Relitigating Same Issue. This section provides that whenever a
    party presents to a Federal court, or to a State court in a
    proceeding that substantially affects interstate commerce, a
    pleading, written motion, or other paper, that includes a
    claim, defense, or other legal contention that the party has
    already litigated and lost on the merits in any forum in final
    decisions not subject to appeal on 3 consecutive occasions,
    there shall be a rebuttable presumption that the presentation
    of such paper is in violation of Rule 11 of the Federal Rules
    of Civil Procedure.
        Sec. 8. Enhanced Sanctions for Document Destruction. This
    section provides that provides for mandatory civil sanctions
    that are commensurate with those available under Rule 11 of the
    Federal Rules of Civil Procedure, in addition to other civil
    sanctions otherwise applicable, for the intentional destruction
    of documents sought in a pending civil court proceeding, and
    highly relevant to such proceeding, with the intent to obstruct
    such proceeding. The amendment applies to proceedings in
    Federal court, and in state courts when the proceedings
    substantially affect interstate commerce.

             Changes in Existing Law Made by the Bill, as Reported

      In compliance with clause 3(e) of Rule XIII of the Rules of
    the House of Representatives, changes in existing law made by
    the bill, as reported, are shown as follows (existing law
    proposed to be omitted is enclosed in black brackets, new
    matter is printed in italics, existing law in which no change
    is proposed is shown in roman):

                RULE 11 OF THE FEDERAL RULES OF CIVIL PROCEDURE

    Rule 11. Signing of Pleadings, Motions, and Other Papers;
                        Representations to Court; Sanctions

        (a) * * *

               *       *       *       *       *       *       *

        (c) Sanctions.--[If, after notice and a reasonable
    opportunity to respond, the court determines that subdivision
    (b) has been violated, the court may, subject to the conditions
    stated below, impose an appropriate sanction upon the
    attorneys, law firms, or parties that have violated subdivision
    (b) or are responsible for the violation.] If a pleading,
    motion, or other paper is signed in violation of this rule, the
    court, upon motion or upon its own initiative, shall impose
    upon the attorney, law firm, or parties that have violated this
    subdivision or are responsible for the violation, an
    appropriate sanction, which may include an order to pay the
    other party or parties for the reasonable expenses incurred as
    a direct result of the filing of the pleading, motion, or other
    paper, that is the subject of the violation, including a
    reasonable attorney's fee.
                (1) How initiated.--
                        (A) By motion.--A motion for sanctions
                    under this rule shall be made separately from
                    other motions or requests and shall describe
                    the specific conduct alleged to violate
                    subdivision (b). It shall be served as provided
                    in Rule 5[, but shall not be filed with or
                    presented to the court unless, within 21 days
                    after service of the motion (or such other
                    period as the court may prescribe), the
                    challenged paper, claim, defense, contention,
                    allegation, or denial is not withdrawn or
                    appropriately corrected]. If warranted, the
                    court [may] shall award to the party prevailing
                    on the motion the reasonable expenses and
                    attorney's fees incurred in presenting or
                    opposing the motion. Absent exceptional
                    circumstances, a law firm shall be held jointly
                    responsible for violations committed by its
                    partners, associates, and employees.

               *       *       *       *       *       *       *

                (2) Nature of sanction; limitations.--A sanction
            imposed for violation of this rule [shall be limited to
            what is sufficient to deter repetition of such conduct
            or comparable conduct by others similarly situated.
            Subject to the limitations in subparagraphs (A) and
            (B), the sanction may consist of, or include,
            directives of a nonmonetary nature, an order to pay a
            penalty into court, or, if imposed on motion and
            warranted for effective deterrence, an order directing
            payment to the movant of some or all of the reasonable
            attorneys' fees and other expenses incurred as a direct
            result of the violation.
                        [(A) Monetary sanctions may not be awarded
                    against a represented party for a violation of
                    subdivision (b)(2).
                        [(B) Monetary sanctions may not be awarded
                    on the court's initiative unless the court
                    issues its order to show cause before a
                    voluntary dismissal or settlement of the claims
                    made by or against the party which is, or whose
                    attorneys are, to be sanctioned.] shall be
                    sufficient to deter repetition of such conduct
                    or comparable conduct by others similarly
                    situated, and to compensate the parties that
                    were injured by such conduct. The sanction may
                    consist of an order to pay to the party or
                    parties the amount of the reasonable expenses
                    incurred as a direct result of the filing of
                    the pleading, motion, or other paper that is
                    the subject of the violation, including a
                    reasonable attorney's fee.

                               Markup Transcript

                                BUSINESS MEETING

                            WEDNESDAY, MAY 25, 2005

                      House of Representatives,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:02 a.m., in
    Room 2138, Rayburn House Office Building, Hon. F. James
    Sensenbrenner, Jr. [Chairman of the Committee] presiding.
        Chairman Sensenbrenner. The Committee will come to order. A
    working quorum is present.
        [Intervening business.]
        Chairman Sensenbrenner. Pursuant to notice, I now call up
    the bill H.R. 420, the ``Lawsuit Abuse Reduction Act of 2005,''
    for purposes of markup and move its favorable recommendation to
    the House. Without objection, the bill will be considered as
    read and open for amendment at any point.
        [The bill, H.R. 420, follows:]

        Chairman Sensenbrenner. The chair recognizes the gentleman
    from Texas, Mr. Smith, the sponsor of the legislation, to
    explain the bill.
        Mr. Smith. Thank you, Mr. Chairman.
        Mr. Chairman, H.R. 420 will deter frivolous litigation. Our
    country's values and its economy are under attack from
    unnecessary lawsuits. Americans sue over the slightest offense.
    Schoolteachers, doctors, Little League coaches, Girl Scout
    troop leaders often fear that the slightest offense to an angry
    parent or patient will result in years of litigation. In
    addition to intimidating members of our Nation's communities,
    frivolous lawsuits harm our economy and threaten to bankrupt
    business owners as well. The alarming spread of frivolous
    lawsuits has made a mockery of our legal system. Frivolous
    suits are brought despite no evidence that shows negligence on
    the part of the defendant. These are nuisance lawsuits, but
    costly to the defendants.
        Many Americans have legitimate legal grievances and deserve
    their day in court. Justice should not be denied to those who
    deserve it. However, some lawyers game the system, which drives
    up the cost of doing business and drives down the integrity of
    the judicial system.
        For example, the CEO of San Antonio's Methodist Children's
    Hospital was sued after he stepped into a patient's hospital
    room and asked how the patient was doing. A jury cleared him of
    any wrongdoing.
        In a New Jersey Little League game, a player lost sight of
    a flyball because of the sun. He was injured when the ball hit
    him in the eye. The coach was forced to hire a lawyer after the
    boy's parents sued, and the coach was forced to settle the case
    for $25,000.
        A Pennsylvania man sued the Frito-Lay Company claiming that
    Doritos chips were inherently dangerous after one stuck in his
    throat. After 8 years of costly litigation, the Pennsylvania
    Supreme Court finally threw out the case, writing that there is
    ``a common-sense notion that it is necessary to properly chew
    hard foodstuffs prior to swallowing.''
        Today almost any party can bring any suit in practically
    any jurisdiction because plaintiffs and their attorneys have
    nothing to lose. All they want is for the defendant to settle.
    This is legalized extortion. It is lawsuit lottery.
        Some Americans file lawsuits for reasons that can only be
    described as absurd. They sue a theme park because its haunted
    houses are too scary, they sue the weather channel for an
    inaccurate forecast, and they sue McDonald's claiming a hot
    pickle dropped from a hamburger caused a burn and mental
    injury. Our national motto might as well be, When in doubt,
    file a lawsuit. While plaintiffs have nothing to lose and
    everything to gain by working the system this way, defendants,
    on the other hand, often stand to lose everything. They can
    unfairly lose their careers, their businesses, and their
    reputations. This is not justice.
        But the good news is that there is a remedy. Change Federal
    Rule of Civil Procedure 11. The Lawsuits Abuse Reduction Act
    does just that. It requires judges to sanction plaintiffs who
    file frivolous lawsuits merely to extort financial settlements,
    as well as defendants who unnecessarily prolong the process.
    Under H.R. 420, if either party feels they have been subject to
    a frivolous claim or pleading, they can file a motion with the
    court for sanctions. If the judge determines that the claim was
    frivolous, then the sanctions imposed can include an order to
    pay the attorneys fees of the party who was the victim of the
    frivolous claim.
        Also, if a State judge determines that a frivolous lawsuit
    has a significant impact on interstate commerce, the judge
    could sanction the litigants by using rule 11.
        Finally, Mr. Chairman, this legislation prevents forum-
    shopping. It requires that personal injury claims only be filed
    in the State, county, or Federal district where the plaintiff
    resides, where the injury occurred, or in the State or county
    where the defendant's principal place of business is located.
    This provision addresses the growing problem of attorneys who
    shop around the country for judges who routinely award
    plaintiffs excessive amounts.
        Mr. Chairman, the Lawsuit Abuse Reduction Act is sensible
    reform that will help restore confidence in our economy, our
    communities, and in our justice system as well.
        And Mr. Chairman, I will yield back the balance of my time.
        Chairman Sensenbrenner. The gentleman from Michigan, Mr.
    Conyers.
        Mr. Conyers. Thank you very much.
        The reason I ask what are the reasons that so many
    organizations oppose this bill, including the United States
    Judicial Conference, the National Association for the
    Advancement of Colored People, the Alliance for Justice, Public
    Citizen, People for the American Way, the American Association
    of People with Disabilities, the Lawyers Committee for Civil
    Rights in Law, the American Bar Association, the National
    Conference on State Legislatures, National Partnership for
    Women, the National Women's Law Center, the Center for Justice
    and Democracy, Consumers Union, the National Association of
    Consumer Advocates, and the NAACP Legal Defense Fund--well,
    it's because this legislation would have an adverse impact on
    the ability of civil rights plaintiffs to seek recourse in the
    courts. And by requiring a mandatory sanctions regime that
    would apply in these kinds of cases, H.R. 420 will chill many
    legitimate and important civil rights actions.
        This is due to the fact that much, if not most, of the
    impetus for the 1993 changes stem from abuses by defendants in
    civil rights cases, namely, civil rights defendants were
    choosing to harass civil rights plaintiffs by filing a series
    of rule 11 motions intended to slow down and impede cases that
    clearly had merit.
        Now, although the bill states that the proposed rule 11
    changes shall not be construed to bar or impede the assertion
    or development of new claims or remedies under Federal, State,
    and local civil rights law, the language does not clearly and
    simply exempt civil rights and discrimination cases, as should
    be the case. Determining what a new claim or remedy is could be
    a daunting and complex issue for most of the courts and clearly
    does not cover all civil rights cases in any event.
        Section 4. The forum-shopping provision would operate to
    provide a litigation and financial windfall to foreign
    corporations at the expense of their domestic competitors.
        This is because instead of permitting claims to be filed
    wherever a corporation does business or has some contact, as
    most State long-arm statutes, so called, provide, the bill only
    permits the suit to be brought where the defendant's principal
    business is located. In the case of a foreign corporation that
    obviously wouldn't exist inside the United States.
        So if a United States citizen is harmed by a product
    produced or manufactured by a foreign competitor, under this
    measure proposed, the harmed citizen would likely have no
    recourse against a foreign corporation, whereas he or she would
    have recourse against a comparable United States company.
        This is unfair to both our citizens and to our corporations
    that are in competition, and so that's why we have this long
    list--and I didn't mention them all--or organizations who don't
    have an ax to grind, who are not being partisan, who are trying
    to give us their point of view, and I'm happy to have had this
    chance to let you know how many people are hoping that the
    majority of us will turn back the Lawsuit Abuse Reduction Act
    of 2005.
        Thank you, Mr. Chairman.
        Chairman Sensenbrenner. Without objection, all Members'
    opening statements will appear in the record at this point.
        Are there amendments? Gentleman from Florida.
        Mr. Keller. Mr. Chairman, I have an amendment at the desk.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 420 offered by Mr. Keller of
    Florida. At the end of the bill add the following new section.
        Mr. Keller. Mr. Chairman, I ask unanimous consent that the
    amendment be considered as read.
        Chairman Sensenbrenner. Without objection, so ordered, and
    the gentleman from Florida is recognized for 5 minutes.
        [The amendment follows:]

        Mr. Keller. Thank you, Mr. Chairman. This is a three-
    strikes-and-you're-out amendment. I'd like to explain it, give
    a brief history of it, and talk about why it's needed.
        The three-strikes-and-you're-out amendment, essentially
    says this. If a Federal judge determines that an attorney has
    violated rule 11 in that Federal District Court three times,
    the attorney shall be suspended from practicing law in that
    Federal District Court for 1 year. It is the identical language
    that was used in the last Congress. At Mr. Berman's request
    during the last markup, we added language to this provision
    that says the attorney may appeal the suspension and that the
    suspension shall be stayed during the appeal. This is the
    identical language that I'm offering today, the same language
    that passed this Committee by a 20 to 6 vote, and passed the
    House as part of the Lawsuit Abuse Reduction Act.
        Let me walk through just a brief history of the three-
    strikes-and-you're-out concept, and I have a chart over to my
    right that some of you will be able to see, others on the TV.
    Let me tell you who supports it. First, George W. Bush. On
    February 9, 2000 he issued a campaign press release where he
    said, quote, ``As President I will bring common sense to our
    courts and curb frivolous lawsuits. If a lawyer files three
    junk lawsuits he'll lose the right to appear in Federal Court
    for 3 years, three strikes and you're out.''
        The Austin American Statesman, the local newspaper, the
    next day on February 10, 2000 said, quote, ``Bush's plan
    includes stiffer penalties for lawsuits determined by judges to
    be frivolous, including a three strikes you're out rule for
    lawyers who repeatedly file such claims.''
        This enjoys bipartisan support. Former Senator John
    Edwards, himself a personal injury attorney for many years
    before of course becoming a U.S. Senator and Democratic nominee
    for Vice President, said to Newsweek on December 15, 2003:
    Frivolous lawsuits waste good people's time and hurt the real
    victims. Lawyers who bring frivolous cases should face tough
    mandatory sanctions with a three strikes penalty.
        Senator John Kerry, the Democrat nominee for President,
    told the Associated Press 1 month before the election on
    October 10, 2004: Lawyers who file frivolous cases would face
    tough mandatory sanctions including a three-strikes-and-you're-
    out provision that forbids lawyers who file three frivolous
    cases from bringing another suit for the next 10 years.
        Yesterday, Tuesday, May 24 at approximately 3:00 p.m., I
    personally met with the President of the United States in his
    residence at the White House. And I handed him this quote that
    you see on the chart, and asked him, ``Mr. President, do you
    still stand by this and support three-strikes-and-you're-out?''
    He told me, yes, he stands by the three-strikes-and-you're-out
    concept, yes, he supports three-strikes-and-you're-out, and
    yes, that language of three-strikes-and-you're-out will not be
    vetoed.
        Action by Congress on this identical amendment was as
    follows last time. This Committee on September 8 approved it 20
    to 6; 100 percent of Republicans present voted for it, several
    Democrats voted for it including Mr. Berman, Ms. Lofgren and
    Mr. Schiff. It then comfortably passed the U.S. House of
    Representatives, a part of the underlying Lawsuit Abuse
    Reduction Act, with 16 Democrats voting for it.
        In a nutshell let me explain why it's needed. Under
    existing rule 11 law, if a court determines that there's a rule
    11 violation, the court may impose a sanction and may determine
    the type of sanction. Under Chairman Lamar Smith's base bill,
    there is a good improvement. Under this bill the judge shall
    impose a sanction if there's a violation, but he may determine
    what those sanctions are. He may award expenses which could be
    50 cents sanction for postage and photocopying expenses. He may
    award attorneys' fees which is substantially more, or he may
    determine that a verbal reprimand is sufficient to deter
    repetition of the bad conduct and no compensation is needed.
        The base bill needs additional teeth. 50 cents or a verbal
    reprimand won't get some attorneys' attention. A three-strikes-
    and-you're-out penalty will. The goal of the three-strikes-and-
    you're-out legislation is to prevent frivolous lawsuits from
    being filed in the first place. The three-strikes-and-you're-
    out concept to crack down on frivolous lawsuits is a common
    sense bipartisan idea that deserves our support again today.
    It's supported by President Bush, Senator Edwards, Senator
    Kerry, this Committee and the U.S. House, and I ask my
    colleagues once again to vote yes on the three-strikes-and-
    you're-out amendment.
        Mr. Chairman, before yielding back I ask unanimous consent
    to include in the record the articles and press release I
    referenced earlier from President Bush, Senator John Edwards
    and Senator Kerry regarding three-strikes-and-you're-out.
        Chairman Sensenbrenner. Without objection.
        [The information follows:]

        Chairman Sensenbrenner. The gentleman from Virginia, Mr.
    Scott.
        Mr. Scott. Thank you. Move to strike the last word, Mr.
    Chairman.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes.
        Mr. Scott. Mr. Chairman, this is one of the--this mandatory
    provision on line 11 is the troubling part. The change in
    present law is simply that if a 1-year suspension in practice
    is the appropriate sanction, the judge can issue whatever
    sanction he wants under a contempt of court citation. If a 1-
    year suspension doesn't make any sense, then this mandatory
    minimum requires it. The judge has great latitude, Mr.
    Chairman, on what he can do to someone who is in contempt of
    court. He doesn't need a mandatory suspension as part of that.
        I would hope that we would defeat this amendment, allow the
    judge to use common sense and not force the judge to impose
    sanctions when the sanctions in fact violate common sense. This
    amendment would force the judge to violate common sense if it's
    an inappropriate punishment, and therefore it's inappropriate
    and I yield back the balance of my time.
        Ms. Jackson Lee. Mr. Chairman--would you yield?
        Mr. Scott. I yield to the gentlelady from Texas.
        Ms. Jackson Lee. I thank the distinguished gentleman.
        Let me just say that I take issue. I'd like to read in full
    context the statements of Senator Kerry and Senator Edwards,
    but I think that--I'm not sure where the 6 votes came from, but
    I think that this is a slap in the face of justice, and I'd
    hope my colleagues would consider opposing this amendment.
        I agree with my colleague from Virginia that the judges
    already have the discretion, and frankly, that anyone who has
    practiced in Federal courts will now, that judges don't
    tolerate frivolous cases and have their own ways of sanction.
    This added extra burden simply closes the door of the
    courthouse to people who are the least empowered.
        I would ask the gentleman rhetorically, and I'd be
    delighted--it's not my time--is whether or not we have
    frivolous defenses. I frankly believe that we should have equal
    time. Frivolous plaintiffs and petitioners, frivolous defenses,
    and they occur on many occasion.
        So I'd ask my colleagues to consider the devastating aspect
    of this as it relates to an equal access to the courthouse and
    as well that this is redundant and repetitive because judges
    already have the authority. I yield back.
        Mr. Scott. Reclaiming my time, and I would like to take the
    opportunity, Mr. Chairman, to offer into the record a
    resolution from the Conference of Chief Justices and a letter
    from the Judicial Conference of the United States, which says--
    which refers to a report that they did that makes it clear that
    the vast majority of Federal judges believe that the proposed
    changes to rule 11 will not help deter litigation abuses but
    will increase satellite litigation costs and delays. They point
    out that the bill will amend rule 11 to restore the 1983
    version of the rule 11 by removing a court's discretion to
    impose sanctions on a frivolous filing, and by eliminating rule
    11's--the present rule's safe harbor provisions.
        The Judicial Conference opposed the Lawsuit Abuse Reduction
    Act of 2004, the predecessor to H.R. 420. The Conference based
    its position on the problems caused by the 1983 version of rule
    11, which H.R. 420 would restore. The Conference noted these
    problems: one, the problems were creating a significant
    incentive to file unmeritorious rule 11 motions by providing a
    possibility of monetary penalty, endangering potential--
    engendering potential conflict of interest between clients and
    their lawyers who advised withdrawal of particular claims, but
    despite the client's preferences; exacerbation of tensions
    between lawyers; and providing little incentive and perhaps a
    distinct disincentive to abandon or withdrawal and thereby
    admit error on pleadings or a claim after determining that it
    was no longer supported by the facts.
        Finally, the judges' experience of the 1993 version of the
    rule 11, which would point to marked decline in rule 11
    satellite litigation without any noticeable increase in the
    number of frivolous filings, H.R. 420 would effectively
    reinstate the 1983 version of the rule proved so contentious
    and wasted so much time and energy of the bench and bar.
        I'd ask unanimous consent that these two letters, Mr.
    Chairman, be entered into the record.
        Chairman Sensenbrenner. Without objection.
        [The information follows:]

        Mr. Scott. And I yield back the balance of my time.
        Mr. Weiner. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from New York, Mr.
    Weiner.
        Mr. Weiner. Mr. Chairman, I'd be inclined to support Mr.
    Keller's thrust, except I'm concerned that--I'm not quite sure
    I understand why this isn't going to lead to a whole spate of
    additional litigation around these rule 11 proceedings. If all
    of these things now have a mandatory penalty and the base bill
    takes away discretion from a judge, you are going to have--and
    this was described briefly by Mr. Scott--it seems to me that
    you're going to have all kinds of litigation within litigation
    over rule 11 proceedings. Whereas now that a judge can
    essentially say what Ms. Jackson Lee suggested, ``This is
    baloney, I'm dismissing this claim because it's frivolous.
    Let's move on.'' Or allow a safe harbor where a lawyer could
    withdraw a claim if they had second thoughts about it.
        It seems we are taking mandatory sanctions and then making
    them even more final with Mr. Keller's proposed amendment, and
    I think it's just going to lead people just to dig in and
    litigate to the Nth degree every one of these rule 11
    proceedings. And I'm not sure that that's going to do anything
    other than just clog up the courts with a whole different set
    of litigation.
        Now, if we didn't have H.R. 420 in front of us and Mr.
    Keller said, ``I want to follow the quotes that are on that
    board from some other famous people,'' and say, ``Listen, let's
    have a three-strikes-and-you're-out,'' I would be inclined to
    say, you know what? That's not a bad idea. If you have
    discretion, and when people are showing that discretion, they
    continually rule that at a particular attorney is operating
    outside of rule 11, that seems like okay. But if you have a
    scenario like this, I think what's going to wind up happening
    with the bill, even without Mr. Keller's amendment, is you are
    going to have all kinds of litigation based on rule 11
    proceedings.
        And you know what? We have a certain level of experience
    with this in the pre-1993 rules, where we kind of experimented
    with this ethos to see how it would work, and I think the
    country decided, you know what, this isn't working so great;
    let's go back to the idea of giving some discretion to judges.
        The irony is just too sweet for me. You know, here it is
    the Republicans in the Senate and the President of the United
    States are putting in all of these judges that suit their
    political ideology, and now they're saying, we don't trust them
    at all to make any of these decisions. We're going to put in
    guys that we like. We're going to say how great they are, their
    great jurisprudence they've demonstrated, what great
    temperament they have, and at every possibility we, with
    mandatory minimums or provisions like this that take away any
    discretion from a judge to run his or her courtroom, we seem to
    be saying we don't trust them to do a very good job.
        Why don't we create good judges? Why don't we have good
    laws as best we can, and then let's let these judges kind of
    figure out the way to deal with the sanctions within their
    courtroom, because they might know much better than we, and I
    tell you something, I think that the Keller amendment is going
    to reinforce what is a defect in this bill, which is that we
    take away discretion from the people that should have it, and
    we take away the right of someone sitting on the bench to have
    an expeditious proceeding, and that doesn't even--we're not
    even touching on the whole idea of like, you know, everything
    is novel to begin with, every new case creates a certain level
    of novelty to begin with.
        And if people were afraid to bring novel claims, then we
    wouldn't--perhaps no one would have thought to sue for civil
    rights violations, no one would have thought to sue for the
    tobacco lobby or others that turned out to be ground-breaking
    proceedings that now everyone believes are not frivolous at
    all, but actually make some sense.
        So let's give back the responsibility for the courts to the
    judges and----
        Mr. Cannon. Would the gentleman yield?
        Mr. Weiner. Yeah. Let me just make one rhetorical flourish
    if you don't mind.
        I also think that we should acknowledge as elected
    officials that a couple of hundred thousand people vote for us,
    that we think they're smart enough to figure out. Why is it
    that we assume they're too dumb to figure anything else out?
    Why is the only decision we think they're right about is the
    one that put us in Congress, and we don't trust the idea that
    you can have a jury that knows what they're doing or a judge
    that knows what they're doing?
        And I'll be glad to yield to my friend from Utah.
        Mr. Cannon. I thank the gentleman. Three quick points. In
    the first place, in response to Ms. Jackson Lee's question, as
    I understand this bill, it does deal with defenses, frivolous
    defenses as well as other things.
        Mr. Weiner, I'm deeply concerned about the same kinds of
    things you're concerned about, and suspect that this will
    actually lead to a great deal of litigation, I think you said
    litigation to the Nth degree, and that is--that's a
    possibility. The problem is that judges have had the discretion
    to do fines under rule 11 for a very long time, and almost none
    have happened. And so I'm concerned about getting to a point
    where we motivate them to be thinking about this and then
    rethink the rule at some time in the future. But there are many
    frivolous lawsuits that don't have a response.
        And then finally, I would just point out to the gentleman
    that we're actually not worried about the new judges that this
    Administration would appoint, but the judges that have been
    appointed in the past, some by both Administrations of both
    parties. Thank you.
        Mr. Weiner. If I can have unanimous consent of an
    additional minute just to respond?
        Chairman Sensenbrenner. Without objection.
        Mr. Weiner. Let me just say it's--I guess so then it was
    last year's citizens that weren't smart enough to figure out,
    but this year's have finally sorted it out in electing all of
    us.
        But let me just say this. You know, there is a couple of
    ways that you can look at the idea that there aren't a lot of
    sanctions under rule 11. Call me crazy. One of the ways might
    be that a judge in a courtroom decided, you know what, this
    wasn't a frivolous case? You have different interpretations of
    the outcome. You have different interpretations of the
    evidence. But you do have judges that might say there aren't
    that many frivolous cases.
        Now it could just be--call me crazy--that there aren't as
    many frivolous lawsuits as you and the President and some would
    have us believe, and that's further argument for why we don't
    need this bill, and I'll be glad to----
        Chairman Sensenbrenner. The time of the gentleman has once
    again expired.
        The gentleman from California, Mr. Berman.
        Mr. Berman. Thank you, Mr. Chairman. If I could try to put
    a different kind of garnish on this rhetorical flourish.
        I actually think strengthening rule 11 is the right way to
    go. The majority party wants to go every which way in the name
    of dealing with, quote, ``frivolous lawsuit.'' They want to
    remove State causes of action. They want to put arbitrary
    limits on damages. They want to preempt courts from
    jurisdiction. It seems to me the concept of rule 11 and
    strengthening it is the right way to deal with what I am sure
    are frivolous lawsuits, frivolous defenses, frivolous motions.
    The Keller amendment makes sense to me in the form that it's
    written now because in the end of the day it may be a mandatory
    three strikes, but it is the judge who in his or her discretion
    will decide whether or not rule 11 has been violated, and
    consequences will only flow from those judicial findings.
        And by the way, for the people who file frivolous rule 11
    motions, they are subject to a rule 11 motion. So there is a
    deterrent to frivolous rule 11 motions.
        What I disagree with and what I think the majority party
    and my friend the gentleman from Texas are doing here, is they
    are--instead of focusing on strengthening rule 11 and creating
    a system of sanctions for violations of rule 11, all of a
    sudden they're grabbing all kinds of other things. We should be
    regulating conduct in the Federal courts. To go into State
    cases that happen to affect interstate commerce, which is--and
    the only reason you have that limitation is because
    constitutionally the bill would be presumably flawed
    constitutionally if you didn't put such a limit in. And to get
    into every single State legislature's, State judicial council's
    effort to regulate the filing of frivolous State actions and
    frivolous State motions makes no sense to me whatsoever.
        And to regulate what the sanction should be and how many
    sanctions there are at the State level makes no sense to me at
    all, that that's an appropriate area for the States. Once again
    the party of State's rights is federalizing everything they can
    think of for no reason.
        And then getting into what State venue rules for personal
    injury cases, why in heaven's name are we doing that? What is
    the purpose. I came in late. Maybe in the original arguments
    there was a series of fact-based justifications for the Federal
    Congress intruding on State venue rules, but I don't think so.
        I'll vote for the Keller amendment because I think it makes
    sense, but I'm sure thinking this bill as a whole is a massive
    intrusion on historic State court prerogatives, and I also will
    predict that this bill in this form will never survive in the
    other body, and secondly, that you'll have missed an
    opportunity to deal with strengthening rule 11 as the logical
    deterrent to frivolous action instead of all these efforts to
    wipe away jurisdiction and preempt--provide Federal preemption,
    all the other overreaches that the majority party seems to make
    on these issue, and you're going to lose the opportunity to
    deal with what to me makes the most sense, which is providing a
    meaningful rule 11 for Federal actions.
        I yield back.
        Chairman Sensenbrenner. The question is on the amendment--
    the gentleman from Florida, Mr. Wexler?
        Mr. Wexler. Just seems to be a little bit of a discrepancy
    and I was wondering if I could ask Mr. Keller if he could clear
    it up. The gentleman from Utah indicated that it was his belief
    that the amendment does apply equally--I don't want to
    paraphrase him, but I believe he said he believes the amendment
    does apply equally to three frivolous defenses as it would to
    three frivolous claims by plaintiffs.
        Mr. Keller. Would the gentleman yield?
        Mr. Wexler. Yes.
        Mr. Keller. Yes. Rule 11, section (b)(2) is unchanged by my
    amendment, and yes, it applies to defenses as well, so a
    defense attorney who repeatedly files frivolous defenses would
    also be subject to the same suspension.
        Mr. Wexler. Under the same set of rules?
        Mr. Keller. Same set, identical.
        Mr. Wexler. Okay. Thank you.
        Mr. Gohmert. Mr. Chairman, if I could move to strike the
    last word very----
        Chairman Sensenbrenner. The gentleman from Texas recognized
    for 5 minutes.
        Mr. Gohmert. This will be very brief. Rule 11 says if a
    pleading, motion or other paper is signed in violation of this
    rule, it applies to pleadings filed in the lawsuit, to motions.
    I appreciate the gentleman from New York's repeated invitation
    to call him crazy, but---- [Laughter.]
        But if one looks at this, you realize it applies to defense
    motions. He had a concern that it would create more litigation
    when someone was sanctioned for filing a frivolous suit the
    third time or frivolous pleading the third time, and the fact
    is that anybody that files one of those in a case that's
    clearly frivolous will subject themselves to further sanction.
        And I can tell you from State court discovery rules, where
    it took me three times of sanctioning people for discovery
    abuse to where people didn't do it any more. And it cut out
    tremendous amount of frivolous motions, and they were from both
    plaintiff and defense side. This will help cut out unnecessary
    filings from both sides. And I support this amendment and
    original motion.
        Chairman Sensenbrenner. The question is on the amendment
    offered by the gentleman from Florida, Mr. Keller. All those in
    favor will say aye.
        Opposed no?
        The ayes appear to have it. The ayes have it. The amendment
    is agreed to.
        For what purpose does the gentleman from Texas, Mr. Smith,
    seek recognition?
        Mr. Smith of Texas. Mr. Chairman, I have an amendment at
    the desk.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 420 offered by Mr. Smith of
    Texas. Page 2, strike line 2 and all that follows through line
    12 on page 3, and insert the following. Section 2----
        Chairman Sensenbrenner. Without objection, the amendment is
    considered as read, and the gentleman from Texas is recognized
    for 5 minutes.
        [The amendment follows:]

        Mr. Smith of Texas. Mr. Chairman, this amendment will
    improve the bill in several ways. First, it makes a technical
    fix in the wording of section 2 to clarify that appropriate
    sanctions against the filer of a frivolous lawsuit may include
    an order to pay the other party or parties for their reasonable
    expenses incurred as a direct result of the filing of their
    frivolous lawsuit.
        Second, the amendment excludes discovery requests and
    responses from being sanctioned under rule 11. Some sanctions
    for discovery abuse are already available under current law in
    Federal Rule 37. To include discovery abuse under rule 11
    sanctions would be duplicative in many instances and cause
    unnecessary confusion.
        Third, it will amend section 3 of the bill so that
    mandatory sanctions will apply to frivolous lawsuits that a
    State judge determines, quote, ``substantially affects,'' end
    quote, interstate commerce. This change was made to track the
    language used in the most recent Supreme Court decisions
    regarding Congress's interstate commerce powers.
        Last, section 4 is amended to clarify that if a defendant
    is an individual person rather than a corporation, that
    defendant may be sued where they reside among the other
    appropriate sites for a lawsuit as provided in the underlying
    bill.
        Mr. Chairman, I would also like to have unanimous consent
    to add the names of over 120 organizations that have endorsed
    this underlying bill, most recently the American Medical
    Association.
        [The information follows:]

        Chairman Sensenbrenner. Without objection.
        Mr. Smith of Texas. Mr. Chairman, finally, just to
    alleviate the concerns of some of my colleagues and also to set
    the record straight, I'd like to just read a short finding of a
    1990 poll that was taken by the Federal Judicial Center. This
    was a survey of 751 Federal judges, and it found that an
    overwhelming majority of Federal judges believed, based on
    their experience under both a weaker and a stronger rule 11,
    that a stronger rule 11 did not impede development of the law,
    95 percent; the benefits of the rule outweighed any additional
    requirement of judicial time, 72 percent; the stronger version
    of rule 11 had a positive effect on litigation in the Federal
    courts, 81 percent; and the rule should be retained in its then
    current form, 80 percent. Note that of the 751 judges surveyed
    in 1990, 583 responded in this very positive way.
        Mr. Scott. Would the gentleman yield? What year was that?
        Mr. Smith of Texas. That was 1990. And if I can anticipate
    maybe the next question that's coming, Mr. Chairman, and as
    long as I have time remaining, let me say that the Federal
    Judicial Center's recent 2005 survey of U.S. district court
    judges will be misused by opponents of legal reform as the
    evidence of frivolous lawsuits are not a problem. However, the
    survey of the Federal Judicial Center shows nothing of the
    sort, and let me give a little bit of historical background
    here.
        The Lawsuit Abuse Reduction Act would largely restore
    Federal Rule of Civil Procedure 11 to what it was before 1993.
    Prior to the adoption of weakening amendments in that year,
    which eliminated mandatory and serious sanctions against those
    who file frivolous lawsuits, rule 11 was widely popular among
    Federal judges, and it served to significantly limit lawsuit
    abuse. And in regard to the 2005 survey, the most recent one,
    only 278 judges responded to that Federal Judicial Center's
    latest survey. Half of the judges surveyed and over half of the
    judges that responded to the survey had no experience with the
    stronger version of rule 11. They had nothing to compare it to.
        I would also say that that survey--and this skewed the
    results--included specifically a sample of over 200 district
    judges who were appointed to the bench after January 1, 1992.
    So that skewed the results as well.
        Mr. Chairman, I will yield back----
        Mr. Berman. Would the gentleman yield?
        Mr. Smith of Texas.--the balance of my time.
        Mr. Berman. Would the gentleman yield?
        Mr. Smith of Texas. Mr. Chairman, I will yield to the
    gentleman from California, Mr. Berman.
        Mr. Berman. Did either the 1990 survey or the 2005 survey
    indicate that the Federal judges believed that Federal Rule 11,
    which only applied to Federal cases, should be mandated on
    every State in the country and all State courts involving any
    lawsuit----
        Mr. Smith of Texas. I'll reclaim my time----
        Mr. Berman.--affecting interstate commerce?
        Mr. Smith of Texas.--and say to the gentleman from
    California, the survey questions were pretty clear and the
    results of the judges' feelings were pretty clear, too. There
    was no question that resulted in less than about an 80 percent
    positive reaction to rule 11----
        Mr. Berman. I'll take that as an answer that they did not--
    --
        Mr. Smith of Texas. I don't know whether they polled on
    that specific question or not.
        Mr. Scott. Will the gentleman yield? Will the gentleman
    yield?
        Mr. Smith of Texas. I'll be happy to yield to the gentleman
    from Virginia, yes.
        Mr. Scott. Maybe I missed something. You said the 1990
    survey--if it was taken in 1990, they wouldn't have had an
    opportunity to compare the 1983 version to the 1993 version.
    The 2005 survey presumably allows them to compare both the 1983
    and '93. The overwhelming preference was to leave----
        Chairman Sensenbrenner. The time of the gentleman has
    expired. Without objection, he will be given an additional
    minute.
        Mr. Scott. Thank you. The overwhelming preference is to
    leave things as they are, having been improved in 1993.
    Wouldn't the 1995 survey, with a lot of judges presumably
    having experience with both rules, be more valuable?
        Mr. Smith of Texas. Let me reclaim my time. That's exactly
    the point I was making a while ago. In the 1995 survey, by
    specific direction, there were 200 judges that had no
    experience whatsoever with the former strong interpretation of
    rule 11, and that's why that result was totally skewed, and
    that's why the earlier survey was much more accurate. And I
    yield back the balance of my time.
        Chairman Sensenbrenner. The question is on the amendment
    offered by the gentleman from Texas, Mr. Smith. Those in favor
    will say aye? Opposed, no?
        The ayes appear to have it. The ayes have it. The amendment
    is agreed to.
        Are there further amendments? The gentleman from New York,
    Mr. Nadler.
        Mr. Nadler. Thank you. Mr. Chairman, I have an amendment at
    the desk.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        Mr. Nadler. This is the one that says ``ban on
    concealment.''
        The Clerk. Amendment to H.R. 420, offered by Mr. Nadler of
    New York. At the end of the bill, add the following new
    section: Section-Ban on Concealment of Unlawful Conduct. (1) In
    General.--In any case concerning rule 11----
        Chairman Sensenbrenner. Without objection, the amendment is
    considered as read, and the gentleman from New York will be
    recognized for 5 minutes.
        [The amendment follows:]

        Mr. Nadler. Thank you. Mr. Chairman, this is--this is
    similar to--it's a modified version of the amendment I've
    offered the last few years, which the Chairman supported not
    last year but the year before last. Very often in civil
    litigation, the company may have an unsafe product or an unsafe
    procedure, and rather than go to trial, the company settles
    with the plaintiff. The company usually pays the plaintiff a
    certain amount of money because the plaintiff was injured by
    this unsafe product. Many times the condition of the settlement
    is that the records will be sealed and no one will ever talk
    about it. So both the plaintiff and the defendant go to the
    judge and say, Your Honor, we have a settlement to the case,
    and we both ask that you seal the record, and the judge will
    order the record sealed because both cases have asked--both
    sides have asked for it.
        Unfortunately, this often perpetuates a situation where the
    unsafe product is continued to be marketed and nothing changes
    because the company making the unsafe profit--product has, in
    effect, bought into a cover-up. This type of settlement in
    secrecy often keeps vital health and safety information out of
    the public's reach. It leads to more needless injuries and
    deaths caused by defective products.
        Secrecy orders should not be enforced unless they meet
    stringent standards to protect the public interest. This
    amendment is tailored to address the problem.
        Now, it is different from last year's amendment. Last
    year's amendment required that a judge in the case concerning
    rule 11 must make a finding of fact where a gag order is
    requested, and if he finds that the privacy interests
    outweigh--that the privacy interest outweighs the public
    interest, then the judge must allow the gag order and the
    secrecy.
        Here it says--in this amendment we've said that the court
    may not order that a court record be sealed or subjected to a
    protective order unless the court makes a finding of fact that
    identifies the interest that justifies the order and determines
    that that interest outweighs any interest in the public health
    and safety that the court determines would be served by not
    sealing or restricting the court record.
        So we've made the amendment somewhat more restrictive than
    last year's amendment after some discussions with Mr. Smith.
    This does not prohibit the sealing of the record. This simply
    says that if you want the record sealed, the judge takes a look
    at the interest why you say the record should be sealed, and at
    any public interest for public health and safety, limited to
    public health and safety, and he makes a determination which
    outweighs the other. And I think it's in the public interest,
    and I would hope that the amendment could be supported.
        Mr. Smith of Texas. Would the gentleman yield?
        Mr. Nadler. I will.
        Mr. Smith of Texas. Mr. Chairman, I just want to say that I
    think the gentleman from New York makes a number of good
    points, or at least a sufficiently number of good points so
    that he and I can come to an agreement on an amendment that
    might be acceptable to the Chairman between now and the floor.
    And so I appreciate the gentleman withdrawing the amendment and
    look forward to working him--with him in good faith to a good
    resolution.
        Mr. Nadler. Well, thank you. Reclaiming my time, Mr. Smith
    makes the assumption that I will withdraw the amendment. It is
    indeed a good assumption. On that understanding that we'll work
    on it between now and the floor, I will withdraw the amendment,
    and I thank the gentleman.
        Chairman Sensenbrenner. And before the amendment is
    withdrawn, let the Chair state that he's amenable to helping
    the two gentlemen work it out.
        Mr. Nadler. I appreciate that, sir.
        Chairman Sensenbrenner. The amendment is withdrawn.
        Are there further amendments? The gentleman from Virginia,
    Mr. Scott.
        Mr. Scott. Mr. Chairman, I have an amendment at the desk.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 420, offered by Mr. Scott of
    Virginia. At the end of the bill, add the following new
    section: Section-presumption of Rule 11 Violation for
    Repeatedly Relitigating Same Issue. Whenever a party attempts
    to----
        Chairman Sensenbrenner. Without objection, the amendment is
    considered as read, and the gentleman from Virginia is
    recognized for 5 minutes.
        [The amendment follows:]

        Mr. Scott. Mr. Chairman, a lot has been said about the
    increase in frivolous lawsuits. I offer this amendment to
    ensure that we truly rein in frivolous lawsuits without harming
    the ability of legitimate cases to be brought and to actually
    ascertain whether we're serious about frivolous lawsuits.
        A few months ago, a national spotlight was focused on a
    case in which the defendant had successfully defended himself--
    his case 19 separate times and survived multiple court reviews,
    all with judgments in his favor. However, the plaintiffs
    continued to retry the same case, forcing the defendant to
    repeatedly defend himself and expend huge amounts of time and
    money for his defense.
        Mr. Chairman, that case is perhaps the best example of why
    this amendment should be adopted. When a case has been decided
    on the merits numerous times and each time the plaintiff
    receives an adverse decision, at some point the decision should
    be taken as conclusive. Bringing the case yet another time in
    another court is simply an abuse. It is a waste of the court's
    time and resources, and it is unfair to the person who has
    repeatedly won the case, and yet is again required to defend
    it, expending even more time and money.
        Therefore, I propose that after three consecutive adverse
    decisions on the merits, a person attempting to file yet
    another claim on the same issue be saddled with a rebuttable
    presumption of a rule 11 violation.
        Now, it's important to note that this presumption is
    rebuttable because we want to allow common sense in appropriate
    circumstances. But if we are going to prevent lawsuit abuse, we
    ought not allow an innocent victim to be subjected to
    unnecessary and repeat litigation time and time again.
        I urge my colleagues to support this amendment.
        Chairman Sensenbrenner. Does the gentleman yield back?
        Mr. Scott. I yield back.
        Chairman Sensenbrenner. The gentleman from Texas, Mr.
    Smith.
        Mr. Smith of Texas. Mr. Chairman, first of all, let me
    compliment the gentleman from Virginia for a particularly
    creative amendment. It is so creative, in fact, that it has
    caught the Chairman's attention, and he recommends that we
    accept the amendment, and I will go along with his
    recommendation.
        Mr. Chairman, I yield back the balance of my time.
        Chairman Sensenbrenner. The question is on the amendment
    offered by the gentleman from Virginia, Mr. Scott. Those in
    favor will say aye? Those opposed, no?
        The ayes appear to have it. The ayes have it, and the
    amendment is agreed to.
        Are there further amendments? If there are--the gentleman
    from New York, Mr. Nadler.
        Mr. Nadler. Yes, I have an amendment at the desk.
        Chairman Sensenbrenner. The clerk will report the other
    amendment at the desk.
        The Clerk. Amendment to H.R. 420, offered by Mr. Nadler. At
    the end of the bill, add the following new section: Section-
    Enhanced Sanctions for Document Destruction. (a) In General.--
    Whoever influences, obstructs, or impedes, or endeavors to
    influence, obstruct, or impede, a pending court proceeding
    through the intentional destruction of documents sought in, and
    high relevant to, that proceeding--(1) shall be punished with
    mandatory civil sanctions of a degree commensurate with the
    civil sanctions available under rule 37 of the Federal Rules of
    Civil Procedure, in addition to any other civil sanctions that
    otherwise apply; and (2) shall be held in----
        Mr. Smith of Texas. Mr. Chairman, I'll reserve a point of
    order.
        Chairman Sensenbrenner. Okay. A point of order is reserved.
    Without objection, the amendment is considered as read and
    subject to the reservation.
        [The amendment follows:]

        Chairman Sensenbrenner. The gentleman from New York is
    recognized for 5 minutes.
        Mr. Nadler. Thank you, Mr. Chairman.
        Mr. Chairman, in this bill that deals with lawsuit abuse,
    this is a type of abuse in lawsuits that can be very
    destructive. When corporations knowingly destroy documents and
    take actions to hide evidence of their wrongful conduct, they
    must be held accountable. Delays during litigation provide
    ample opportunities for wrongdoers to destroy documents that
    are essential to proving the claims against them. Because this
    conduct can result in the complete inability to hold these
    defendants accountable for their wrongful acts, parties that
    engage in such flagrantly bad conduct, destroying relevant and
    incriminating documents, must be severely sanctioned.
        The document destruction amendment to H.R. 420 would
    provide mandatory sanctions to anyone who hinders a court
    proceeding by intentionally destroying documents relating to
    that proceeding.
        Consider some of the examples where, once a corporation
    became aware of the claims against it and the information
    sought by the claimant, they knowingly destroyed documents, for
    example, Enron. Enron allowed corporate executives to sell
    stock options at huge profit while prohibiting employees from
    diversifying their 401(k) investments and conspired to hide
    financial information. This resulted in the $1.3 billion loss
    to thousands of employees. Despite engaging in this conduct,
    company executives shredded documents and destroyed evidence of
    their actions in an attempt to avoid culpability.
        Arthur Andersen. The accounting company Arthur Andersen was
    caught destroying documents in a class action case filed in
    Texas against Enron by retirees of Enron who were losing their
    pensions. Retirees had to endure a discovery delay of near one
    and a half years because of the special rules that apply to
    securities lawsuits. It was during this delay that Arthur
    Andersen deliberately destroyed key documents necessary for the
    employees to prove their case.
        WorldCom. In the case of WorldCom, the Securities and
    Exchange Commission learned from their experiences with the
    Enron case and hired a corporate monitor in order to reduce the
    chance that key documents would be destroyed. ```On day one, we
    filed the lawsuit against WorldCom, and on day two, we forged
    an agreement for a corporate monitor,' Mr. Breslin said. We
    wanted to react to some of our experiences at Enron. We wanted
    to make sure there was no document destruction in WorldCom and
    no excessive compensation paid to executives at the same
    time.'' That's a quote from the New York Law Journal of October
    7 of last year.
        So in all these cases we see deliberate destruction of
    documents while the SEC's spending a lot of money because they
    expect deliberate destruction of documents, and we ought to--
    obviously deliberate destruction of relevant documents in a
    lawsuit is subversive of justice, subversive of the rights of
    the other party, whether they be plaintiff or defendant. It can
    go either way. And so this amendment to increase the sanctions,
    to put real teeth into the sanctions against the destruction of
    relevant court documents would seem to be indicated and would
    seem to fit squarely within this bill on frivolous lawsuits.
        I therefore urge my colleagues to adopt the amendment. I
    yield back.
        Chairman Sensenbrenner. Does the gentleman from Texas
    insist upon his point of order?
        Mr. Smith of Texas. Mr. Chairman, I do.
        Chairman Sensenbrenner. The gentleman will state his point
    of order.
        Mr. Smith of Texas. Thank you, Mr. Chairman.
        Mr. Chairman, this amendment is too broad because it simply
    goes beyond rule 11. Therefore, it's not germane, and I insist
    on my point of order despite the fact that the amendment is
    well intended.
        Chairman Sensenbrenner. Will the gentleman repeat what he
    just said?
        Mr. Smith of Texas. The mike is on. Mr. Chairman, I want to
    make the point again that this amendment is non-germane because
    the substance of the amendment goes beyond rule 11. It deals
    with rule 37 and, therefore, it's too broad, therefore, it's
    not germane, and for that reason I insist on my point of order,
    as well intended as the amendment might be.
        Chairman Sensenbrenner. The gentleman from New York.
        Mr. Nadler. I seem to recall that there are aspects of this
    bill that go beyond rule 11.
        Mr. Berman. Would the gentleman yield?
        Mr. Nadler. Certainly.
        Mr. Berman. How could any amendment to a bill that takes
    every State court action and subjects it to Federal rules about
    rule 11 be--how could any amendment be too broad for that bill?
        Mr. Smith of Texas. If the gentleman will yield, once
    again, there is nothing in the underlying bill that deals with
    rule 37. But to answer the gentleman's question, his own point
    was way too broad. It doesn't deal with every State court. It
    only deals with State courts that had that substantial
    connection to interstate commerce. So just as the gentleman's
    statement was too broad, so is the amendment too broad, and for
    that reason non-germane.
        Chairman Sensenbrenner. The Chair is prepared to rule. In
    the opinion of the Chair, the amendment offered by the
    gentleman from New York is not germane for two reasons:
        First of all, the bill proposes to amend rule 11 of the
    Federal Rules of Civil Procedure. The amendment offered by the
    gentleman from New York makes no reference to rule 11 of the
    Federal Rules of Civil Procedure; rather, it makes reference to
    rule 37 of the Federal Rules of Civil Procedure.
        Secondly, the underlying bill is applicable to Federal
    court actions and State court actions that affect interstate
    commerce. The amendment offered by the gentleman from New York
    does not have the restriction on State court actions that apply
    to interstate commerce, but all State court actions.
        For the reasons the Chair has stated, the point of order is
    sustained.
        Are there further amendments?
        Mr. Conyers. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from Michigan.
        Mr. Nadler. Mr. Chairman?
        Mr. Conyers. I yield.
        Mr. Nadler. Mr. Chairman, I ask for--I appeal the ruling of
    the Chair.
        Chairman Sensenbrenner. The question is----
        Mr. Smith of Texas. Mr. Chairman I'll----
        Chairman Sensenbrenner. The gentleman from Texas.
        Mr. Smith of Texas. I'll move to table the motion, Mr.
    Chairman.
        Chairman Sensenbrenner. The question is on tabling the
    motion to appeal the decision of the Chair. Those in favor of
    tabling will say aye? Opposed, no?
        The ayes appear to have it. The ayes have it. The appeal is
    tabled.
        Mr. Conyers. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from Michigan.
        Mr. Conyers. I have an amendment at the desk.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 420, offered by Mr. Conyers.
    Page 6, after line 5, insert the following new section (and
    redesignate succeeding sections accordingly). Section 5.
    Limitation. The provisions of this act do not apply----
        Chairman Sensenbrenner. Without objection, the amendment is
    considered as read.
        [The amendment follows:]

        Chairman Sensenbrenner. The gentleman from Michigan will be
    recognized for 5 minutes.
        Mr. Conyers. Thank you, Mr. Chairman.
        This amendment provides that the provisions of this act
    will not apply to an action against a manufacturer, seller, or
    trade association that, after this measure is passed, shifts or
    transfers employment positions or facilities to a location
    outside of the United States. It's an anti-outsourcing
    amendment to the measure. I offer this to prevent companies
    that outsource American jobs overseas from benefiting from the
    liability protections in the legislation. And this provision
    would send a clear, unambiguous signal that if one is selling a
    product or service made in the U.S.A. and wanted to continue to
    receive the extralegal liability protections in this country,
    then the company cannot continue to outsource jobs. And I think
    we at least owe this much to American workers everywhere.
        This amendment allows ourselves to state that we can't
    continue to reward those countries that outsource jobs abroad
    with tax benefits, with Government contracts, and with new
    legal benefits. Companies, for example, Travelocity, that close
    their United States-based facilities and outsource jobs abroad
    cause workers their jobs and their livelihood and contribute to
    the ever-rising unemployment rate.
        Furthermore, these actions perpetrate a fraud on our
    citizens. They think they're buying products made in the United
    States, but the product is really frequently made overseas.
        Do we really want to reward those companies by increasing
    their liability protections? And so we, in order to get a grip
    on the subject of outsourcing, before our economy is
    permanently damaged, which it already has been--we've lost
    approximately $4 billion in American wages, and this is
    expected to increase to a staggering $136 billion over the next
    15 years.
        And so I urge my colleagues to join me in protecting
    Americans and American jobs and not reward outsourcing
    companies with increased liability protections. Please accept
    this amendment, and I return my time.
        Chairman Sensenbrenner. The question is on the amendment
    offered by the gentleman from Michigan, Mr. Conyers. Those in
    favor will say aye? Opposed, no?
        The noes appear to have it. The noes have it. The amendment
    is not agreed to.
        Are there----
        Mr. Conyers. Yes, a record vote.
        Chairman Sensenbrenner. A record vote is requested. The
    question is on agreeing to the Conyers amendment. Those in
    favor will, as your names are called, answer aye, those opposed
    no, and the clerk will call the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Coble?
        Mr. Coble. No.
        The Clerk. Mr. Coble, no. Mr. Smith?
        Mr. Smith of Texas. No.
        The Clerk. Mr. Smith, no. Mr. Gallegly?
        Mr. Gallegly. No.
        The Clerk. Mr. Gallegly, no. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        [No response.]
        The Clerk. Mr. Lungren?
        Mr. Lungren. No.
        The Clerk. Mr. Lungren, no. Mr. Jenkins?
        Mr. Jenkins. No.
        The Clerk. Mr. Jenkins, no. Mr. Cannon?
        Mr. Cannon. No.
        The Clerk. Mr. Cannon, no. Mr. Bachus?
        [No response.]
        The Clerk. Mr. Inglis?
        [No response.]
        The Clerk. Mr. Hostettler?
        Mr. Hostettler. No.
        The Clerk. Mr. Hostettler, no. Mr. Green?
        [No response.]
        The Clerk. Mr. Keller?
        Mr. Keller. No.
        The Clerk. Mr. Keller, no. Mr. Issa?
        Mr. Issa. No.
        The Clerk. Mr. Issa, no. Mr. Flake?
        [No response.]
        The Clerk. Mr. Pence?
        Mr. Pence. No.
        The Clerk. Mr. Pence, no. Mr. Forbes?
        Mr. Forbes. No.
        The Clerk. Mr. Forbes, no. Mr. King?
        Mr. King. No.
        The Clerk. Mr. King, no. Mr. Feeney?
        Mr. Feeney. No.
        The Clerk. Mr. Feeney, no. Mr. Franks?
        Mr. Franks. No.
        The Clerk. Mr. Franks, no. Mr. Gohmert?
        Mr. Gohmert. No.
        The Clerk. Mr. Gohmert, no. Mr. Conyers?
        Mr. Conyers. Aye.
        The Clerk. Mr. Conyers, aye. Mr. Berman?
        Mr. Berman. Aye.
        The Clerk. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        Mr. Nadler. Aye.
        The Clerk. Mr. Nadler, aye. Mr. Scott?
        Mr. Scott. Aye.
        The Clerk. Mr. Scott, aye. Mr. Watt?
        [No response.]
        The Clerk. Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        [No response.]
        The Clerk. Ms. Waters?
        [No response.]
        The Clerk. Mr. Meehan?
        [No response.]
        The Clerk. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Mr. Weiner?
        Mr. Weiner. Aye.
        The Clerk. Mr. Weiner, aye. Mr. Schiff?
        Mr. Schiff. Aye.
        The Clerk. Mr. Schiff, aye. Ms. Sanchez?
        Ms. Sanchez. Aye.
        The Clerk. Ms. Sanchez, aye. Mr. Smith?
        [No response.]
        The Clerk. Mr. Van Hollen?
        [No response.]
        The Clerk. Mr. Chairman?
        Chairman Sensenbrenner. No.
        The Clerk. Mr. Chairman, no.
        Chairman Sensenbrenner. Members in the chamber who wish to
    cast or change their votes? The gentleman from South Carolina,
    Mr. Inglis.
        Mr. Inglis. No.
        The Clerk. Mr. Inglis, no.
        Chairman Sensenbrenner. Further Members who wish to cast--
    the gentleman from Massachusetts, Mr. Meehan?
        Mr. Meehan. Aye.
        The Clerk. Mr. Meehan, aye.
        Chairman Sensenbrenner. Further Members who wish to cast or
    change their vote? If not, the clerk will report. The gentleman
    from North Carolina, Mr. Watt.
        Mr. Watt. Aye.
        The Clerk. Mr. Watt, aye.
        Chairman Sensenbrenner. The gentlewoman from California,
    Ms. Waters?
        Ms. Waters. Aye.
        The Clerk. Ms. Waters, aye.
        Chairman Sensenbrenner. The gentleman from Maryland, Mr.
    Van Hollen.
        Mr. Van Hollen. Aye.
        The Clerk. Mr. Van Hollen, aye.
        Chairman Sensenbrenner. Further Members who wish to cast or
    change their vote?
        Mr. Nadler. Mr. Chairman?
        Chairman Sensenbrenner. The gentleman from New York, Mr.
    Nadler.
        Mr. Nadler. How am I recorded?
        The Clerk. Mr. Chairman, Mr. Nadler is an aye.
        Mr. Nadler. I'm recorded in the affirmative?
        The Clerk. Yes, sir.
        Mr. Nadler. Thank you.
        The Clerk. Mr. Chairman.
        Chairman Sensenbrenner. The clerk will report.
        The Clerk. Mr. Chairman, there are 11 ayes and 17 noes.
        Chairman Sensenbrenner. And the amendment is not agreed to.
        Are there further amendments? If there are no further
    amendments--the gentleman from New York.
        Mr. Nadler. I will have in about a minute, as soon as it
    comes back from the typist, an amendment.
        Well, I can--Mr. Chairman, I can move to strike the last
    word in the meantime.
        Chairman Sensenbrenner. The gentleman is recognized for 5
    minutes. Maybe he can tell us about his amendment before----
        Mr. Nadler. Yes, the amendment is identical to the
    amendment I introduced a few moments ago on draft--on
    prohibiting--on sanctioning destruction of relevant court
    documents, with two changes. One, in accordance with the ruling
    of the Chair, it limits its application to Federal courts and
    State courts that substantially affect interstate commerce, the
    exact language of Mr. Smith's amendment, and, therefore, would
    not be out of order on that count. And, secondly, it talks
    about sanctions in rule 11 rather than rule 37. Rule 11
    sanctions are not as broad as rule 37 sanctions, but they're
    sufficient for the job, we think. So that would eliminate the
    other grounds for ruling the amendment out of order.
        Substantively, it's the same amendment and we'll now have
    to address the substance of the amendment. This amendment says
    that we will apply sanctions to a party in a lawsuit--and I see
    the amendment has just arrived.
        Chairman Sensenbrenner. Does the gentleman yield back?
        Mr. Nadler. Yes, I will.
        Chairman Sensenbrenner. Are there further amendments? The
    gentleman from New York.
        Mr. Nadler. Thank you. This amendment----
        Chairman Sensenbrenner. Does the gentleman from New York
    have an amendment at the desk?
        Mr. Nadler. I have an amendment at the desk.
        Chairman Sensenbrenner. The clerk will report the
    amendment.
        The Clerk. Amendment to H.R. 420, offered by Mr. Nadler. At
    the end of the bill, add the following new section: Section-
    Enhanced Sanctions for Document Destruction. (a) In General----
        Chairman Sensenbrenner. Without objection, the amendment is
    considered as read.
        [The amendment follows:]

        Chairman Sensenbrenner. The gentleman from New York will be
    recognized for 5 minutes.
        Mr. Nadler. Thank you, Mr. Chairman. As you can see, it
    makes two changes in the previous amendment, rule 11 sanctions
    instead of rule 37 sanctions, and limits it to State courts
    that substantially affect interstate commerce.
        So we should now debate the substance of the bill, since
    the two grounds ruling it--of the amendment, the two grounds
    ruling it out of order are no longer applicable.
        The substance is very simple. Someone who is sued or for
    that matter is a plaintiff in a lawsuit should not deliberately
    and knowingly destroy relevant documents that the other party
    will have a right to see in order to frustrate proof.
        This was done, as I said, in the Enron situation, in
    WorldCom, Arthur Anderson, and we've all read of situations.
    This is a fraud on the court. It's a fraud on the other side.
    It's against justice. I can't imagine why anyone would support
    deliberate destruction of relevant court documents by people
    who knowingly destroy them because they know that they are
    relevant. And this simply says that they should be sanctioned
    under rule 11 and in addition to whatever obviously not quite
    effective enough sanctions we have under current law.
        Chairman Sensenbrenner. Does the gentleman yield back?
        Mr. Nadler. I yield back.
        Chairman Sensenbrenner. The gentleman from Texas.
        Mr. Smith of Texas. Mr. Chairman, on your recommendation,
    which is to accept the amendment, I will do so as well, but I
    wouldn't want to encourage individuals from the other side to
    think this is going to be a habit any time soon.
        Chairman Sensenbrenner. Will the gentleman yield?
        Mr. Smith of Texas. Yes. I'll be happy to yield.
        Chairman Sensenbrenner. Well, if the gentleman will yield,
    I will concur that this is not a habit-forming amendment.
        Mr. Nadler. We appreciate that, sir.
        Chairman Sensenbrenner. Does the gentleman yield back?
        Mr. Smith of Texas. Yes, I yield back.
        Chairman Sensenbrenner. The question is on agreeing to the
    amendment offered by the gentleman from New York, Mr. Nadler.
    Those in favor will say aye.
        Opposed no.
        The ayes appear to have it. The ayes have it. The amendment
    is agreed to.
        Are there further amendments? If there are no further
    amendments, a reporting quorum is present.
        The question occurs on the motion to report the bill H.R.
    420 favorably as amended. All in favor will say aye.
        Opposed no.
        The ayes appear to have it. The ayes have it, and the
    motion to report favorably is agreed to. Without objection, the
    bill will be reported favorably to the House in the form of a
    single amendment in the nature of a substitute----
        Mr. Conyers. Record vote, sir.
        Chairman Sensenbrenner. Oh. Okay. Those in favor of
    reporting the bill favorably as amended will as your names are
    called answer aye. Those opposed no, and the Clerk will call
    the roll.
        The Clerk. Mr. Hyde?
        [No response.]
        The Clerk. Mr. Coble?
        Mr. Coble. Aye.
        The Clerk. Mr. Coble, aye. Mr. Smith?
        Mr. Smith of Texas. Aye.
        The Clerk. Mr. Smith, aye. Mr. Gallegly?
        Mr. Gallegly. Aye.
        The Clerk. Mr. Gallegly, aye. Mr. Goodlatte?
        [No response.]
        The Clerk. Mr. Chabot?
        Mr. Chabot. Aye.
        The Clerk. Mr. Chabot, aye. Mr. Lungren?
        Mr. Lungren. Aye.
        The Clerk. Mr. Lungren, aye. Mr. Jenkins?
        Mr. Jenkins. Aye.
        The Clerk. Mr. Jenkins, aye. Mr. Cannon?
        Mr. Cannon. Aye.
        The Clerk. Mr. Cannon, aye. Mr. Bachus?
        [No response.]
        The Clerk. Mr. Inglis?
        Mr. Inglis. Aye.
        The Clerk. Mr. Inglis, aye. Mr. Hostettler?
        Mr. Hostettler. Aye.
        The Clerk. Mr. Hostettler, aye. Mr. Green?
        [No response.]
        The Clerk. Mr. Keller?
        Mr. Keller. Aye.
        The Clerk. Mr. Keller, aye. Mr. Issa?
        Mr. Issa. Aye.
        The Clerk. Mr. Issa, aye. Mr. Flake?
        [No response.]
        The Clerk. Mr. Pence?
        Mr. Pence. Aye.
        The Clerk. Mr. Pence, aye. Mr. Forbes?
        Mr. Forbes. Aye.
        The Clerk. Mr. Forbes, aye. Mr. King?
        Mr. King. Aye.
        The Clerk. Mr. King, aye. Mr. Feeney?
        [No response.]
        The Clerk. Mr. Franks?
        Mr. Franks. Aye.
        The Clerk. Mr. Franks, aye. Mr. Gohmert?
        Mr. Gohmert. Aye.
        The Clerk. Mr. Gohmert, aye. Mr. Conyers?
        Mr. Conyers. No.
        The Clerk. Mr. Conyers, no. Mr. Berman?
        Mr. Berman. No.
        The Clerk. Mr. Berman, no. Mr. Boucher?
        [No response.]
        The Clerk. Mr. Nadler?
        Mr. Nadler. No.
        The Clerk. Mr. Nadler, no. Mr. Scott?
        Mr. Scott. No.
        The Clerk. Mr. Scott, aye. Mr. Watt?
        Mr. Watt. No.
        The Clerk. Mr. Watt, no. Ms. Lofgren?
        [No response.]
        The Clerk. Ms. Jackson Lee?
        [No response.]
        The Clerk. Ms. Waters?
        Ms. Waters. No.
        The Clerk. Ms. Waters, no. Mr. Meehan?
        Mr. Meehan. No.
        The Clerk. Mr. Meehan, no. Mr. Delahunt?
        [No response.]
        The Clerk. Mr. Wexler?
        [No response.]
        The Clerk. Mr. Weiner?
        [No response.]
        The Clerk. Mr. Schiff?
        Mr. Schiff. No.
        The Clerk. Mr. Schiff, no. Ms. Sanchez?
        Ms. Sanchez. No.
        The Clerk. Ms. Sanchez, no. Mr. Smith?
        [No response.]
        The Clerk. Mr. Van Hollen?
        Mr. Van Hollen. No.
        The Clerk. Mr. Van Hollen, no.
        The Clerk. Mr. Chairman?
        Chairman Sensenbrenner. Aye.
        The Clerk. Mr. Chairman, aye.
        Chairman Sensenbrenner. Members in the chamber who wish to
    cast or change their vote. The gentleman from Florida, Mr.
    Feeney?
        Mr. Feeney. Aye.
        The Clerk. Mr. Feeney, aye.
        Chairman Sensenbrenner. Further Members who wish to cast
    or--the gentleman from Alabama, Mr. Bachus.
        Mr. Bachus. Aye.
        The Clerk. Mr. Bachus, aye.
        Chairman Sensenbrenner. Further Members who wish to cast or
    change their vote. If not the Clerk will report.
        The Clerk. Mr. Chairman, there are 19 ayes and 10 noes.
        Chairman Sensenbrenner. And the motion to--the gentleman
    from New York, Mr. Weiner.
        Mr. Weiner. How am I recorded?
        The Clerk. Mr. Chairman, Mr. Weiner is not recorded.
        Mr. Weiner. No, Mr. Chairman.
        The Clerk. Mr. Weiner, no.
        Chairman Sensenbrenner. The Clerk will report again.
        The Clerk. Mr. Chairman, there are 19 ayes and 11 noes.
        Chairman Sensenbrenner. And the motion to report favorably
    as amended is agreed to. Without objection, the bill will be
    reported favorably to the House in the form of a single
    amendment in the nature of a substitute incorporating the
    amendments adopted here today. Without objection, the staff is
    directed to make any technical and conforming changes and all
    Members will be given 2 days as provided by the House rules in
    which to submit additional dissenting supplemental or minority
    views.
        [Intervening business.]
        Chairman Sensenbrenner. The Chair would like to thank the
    Members and staff for their patience. We have completed a very
    ambitious agenda today. There will be no markup tomorrow
    because the agenda has been completed, and the Committee stands
    adjourned.
        [Whereupon, at 3:43 p.m., the Committee was adjourned.]
                                Additional Views

        Mr. Chairman, I would like to submit for the record the
    votes I would have made had I not been unavoidably absent from
    the markup proceeding on H.R. 420, May 25, 2005.
        On rollcall #10, the Conyers Amendment #010 to H.R. 420 I
    would have voted no.
        On rollcall #11 the Motion to Report H.R. 420 I would have
    voted aye.

                                       Mark Green.
                                Dissenting Views

        We oppose H.R. 420 because it will not reduce frivolous
    lawsuits but will increase the costs of litigation at the state
    and Federal level, significantly increase the complexity of all
    cases, set back the cause of civil rights, and confuse entirely
    Federal and state law concerning personal jurisdiction and
    venue. This sweeping overhaul of our civil justice system
    predicated on the thinnest conceivable record, with no hearing
    and on the basis of a few anecdotes and hypothetical concerns.
        The legislation is opposed by numerous civil rights,
    consumer and judicial groups, including the United States
    Judicial Conference, the NAACP, Public Citizen, the Alliance
    for Justice, People for the American Way, the American
    Association of People with Disabilities, the Lawyers' Committee
    for Civil Rights Under Law, the Conference of Chief Justices,
    the American Bar Association, the National Conference on State
    Legislatures, National Partnership for Women, National Women's
    Law Center, the Center for Justice & Democracy, Consumers
    Union, National Association of Consumer Advocates, USAction,
    U.S. PIRG, and the Legal Defense Fund. The legislation is also
    opposed by several law professors who specialize in civil
    procedure, including Thomas Rowe of Duke Law School,
    Christopher Fairman at Ohio State University, Moritz College of
    Law, and Jonathan Siegel at George Washington University Law
    School.
        For the reasons set forth herein, we respectfully dissent.

                           DESCRIPTION OF LEGISLATION

        Section 2 of the bill makes a number of changes to Rule 11
    of the Federal Rules of Civil Procedure concerning attorney
    sanctions for improper pleadings and motions.\1\ First, it
    would revert to the pre-1993 rules by removing a court's
    discretion to impose sanctions on improper and frivolous
    pleadings (e.g., it makes the sanctions mandatory, rather than
    discretionary). Second, it would eliminate the current ``safe
    harbor'' provision permitting attorneys to withdraw improper or
    frivolous motions 21 days after they are challenged by opposing
    counsel.\2\ Third, it would eliminate the provision providing
    that the sanction rules do not apply to discovery
    violations.\3\
    ---------------------------------------------------------------------------
        \1\ Since these changes amend the Federal Rules of Civil Procedure,
    they are all subject to modification or revision by the Federal
    judiciary pursuant to the Rules Enabling Act. See 28 U.S.C.
    Sec. Sec. 2071-2077 (2004).
        \2\ Currently, no withdrawal right exists for court-initiated
    sanctions.
        \3\ Such violations are already subject to mandatory sanctions
    under Rule 26 (g) of the Federal Rules.
    ---------------------------------------------------------------------------
        Section 3 of the bill applies this new Federal Rule 11 to
    state cases that affect interstate commerce and requires the
    judges to make this determination within 30 days after the
    filing of the motion for sanctions.
        Section 4 of the bill alters both Federal and state
    jurisdiction and venue rules. It provides that suits may
    ``only'' be filed in the state and county (or Federal district)
    where the plaintiff resides, where the injury took place, or
    where the defendant's principal place of business is located.
    As such, it eliminates the possibility of a harmed victim
    pursing a corporate defendant where it is incorporated and in
    many states where it is found to be doing business. It also
    contains a ``most appropriate forum'' provision, which mandates
    dismissal of the lawsuit (rather than transfer) if the court
    determines another forum ``would be the most appropriate
    forum.''
        Section 5 of the bill is a rule of construction, stating
    that the proposed Rule 11 modifications are not to be construed
    to bar or impede the assertion or development of ``new claims
    or remedies under the civil rights laws.''

             I. MANDATORY SANCTIONS WILL HARM CIVIL RIGHTS ACTIONS:

        By requiring a mandatory sanctions regime that would apply
    to civil rights cases, H.R. 420 will chill many legitimate and
    important civil rights actions. This is due to the fact that
    much, if not most, of the impetus for the 1993 changes stemmed
    from abuses by defendants in civil rights cases--namely that
    civil rights defendants were choosing to harass civil rights
    plaintiffs by filing a series of rule 11 motions intended to
    slow down and impede meritorious cases.
        For example, a 1991 Federal Judicial Study: The Federal
    Judicial Center's Study of Rule 11 found that ``The incidence
    of Rule 11 motions or sua sponte orders is higher in civil
    rights cases than in some other types of cases.'' \4\ Another
    study showed that ``civil rights case made up 11.4% of Federal
    cases filed, [and] that 22.7% of the cases in which sanctions
    had been imposed were civil rights cases.'' \5\
    ---------------------------------------------------------------------------
        \4\ John Shepard et al., Fed. Jud. Ctr., Report of a Survey
    Concerning Rule 11, Federal Rules of Civil Procedure 11 (1995). The
    Federal Judicial Center is the educational and research arm of the
    Federal judiciary. See 28. U.S.C. Sec. 620 (2004).
        \5\ Lawrence C. Marshall et al., The Use and Impact of Rule 11, 86
    Nw. U. L. Rev. 943 (1992).
    ---------------------------------------------------------------------------
        Another recent study found that ``revisions to Rule 11 (the
    1993 amendments) alleviate what was perceived as the rule's
    disproportionate impact on civil rights plaintiffs. Under the
    1983 version, both the fact that sanctions were mandatory and
    that there was a significant risk that a large attorney fee
    award would be the sanction of choice were believed to have had
    a stifling effect on the filing of legitimate civil rights
    claims. . . . Furthermore, there is ample evidence to suggest
    that plaintiffs and civil rights plaintiffs in particular, were
    far more likely than defendants to be the targets of Rule 11
    motions and the recipients of sanctions.'' \6\
    ---------------------------------------------------------------------------
        \6\ Ending Illegitimate Advocacy: Reinvigorating Rule 11 Through
    Enhancement of the Ethical Duty to Report, 62 OHSLJ 1555, 1568 (2001).
    ---------------------------------------------------------------------------
        As Professor Theodore Eisenberg, Professor Law, Cornell
    University testified before the House Judiciary Committee
    during the hearing on H.R. 4571 in the 108th Congress, ``A
    Congress considering reinstating the fee-shifting aspect of
    Rule 11 in the name of tort reform should understand what it
    will be doing. It will be discouraging the civil rights cases
    disproportionately affected by old Rule 11 in the name of
    addressing purported abuse in an area of law, personal injury
    tort, found to have less abuse than other areas.'' \7\
    ---------------------------------------------------------------------------
        \7\ Uncertain and Certain Litigation Abuses, 2004: Hearings on
    Safeguarding Americans from a Legal Culture of Fear: Approaches to
    Limiting Lawsuit Abuse, Before the House Comm. on the Judiciary, 108th
    Cong. (2004) (statement of Theodore Eisenberg, Professor, Cornell
    University).
    ---------------------------------------------------------------------------
        A good example of the effect of this rule on civil rights
    cases was cited by the Honorable Robert L. Carter, United
    States District Court Judge for the Southern District of New
    York, when he stated: ``I have no doubt that the Supreme
    Court's opportunity to pronounce separate schools inherently
    unequal [in Brown v. Board of Education] would have been
    delayed for a decade had my colleagues and I been required,
    upon pain of potential sanctions, to plead our legal theory
    explicitly from the start.'' \8\
    ---------------------------------------------------------------------------
        \8\ Symposium, The 50th Anniversary of the Federal Rules of Civil
    Procedure, 1938-1988, The Federal Rules of Civil Procedure as a
    Vindicator of Civil Rights, 137 U. Pa. L. Rev. 2179, 2193 (June 1989).
    ---------------------------------------------------------------------------
        The language in the bill that purports to mitigate the
    damage to civil rights cases is not sufficient to alleviate our
    concerns. Section 5 of the bill states that the proposed Rule
    11 changes shall not be construed to ``bar or impede the
    assertion or development of new claims or remedies under
    Federal, State, or local civil rights law.'' The problem is the
    language does not clearly and simply exempt civil rights and
    discrimination cases, as should be the case. Determining what a
    ``new claim or remedy'' is will be a daunting and complex issue
    for most courts and clearly does not cover all civil rights
    cases in any event.
        Finally, H.R. 420 does not provide an attorney with the
    ability to appeal a Rule 11 sanction. History has demonstrated
    that civil rights lawsuits are extremely unpopular,
    particularly in certain parts of the country where some judges
    almost automatically consider civil rights cases frivolous. In
    such courts, plaintiffs' attorneys would unreasonably be
    subject to sanctions, and even suspension, without appeal
    contrary to the purpose of Rule 11.

              II. FEDERAL JUDGES OPPOSE THESE CHANGES TO RULE 11:

        The Federal judiciary--the individuals most affected by
    these changes to Rule 11--oppose changes to Rule 11 that would
    make sanctions mandatory rather than discretionary. On May 17,
    2005, the Judicial Conference of the United States wrote a
    letter to Chairman Sensenbrenner stating, in no uncertain
    terms, that ``the proposed changes to Rule 11 will not help
    deter litigation abuses, but will increase satellite
    litigation, costs, and delays.'' \9\ The letter includes a
    report by the Federal Judicial Center: ``Report of a Survey of
    United States District Judges' Experiences and Views Concerning
    Rule 11, Federal Rules of Civil Procedure.'' The report,
    prepared at the request of the Judicial Conference's Advisory
    Committee on Civil Rules, surveyed trial judges who apply the
    rules. The survey included judges who have had experience under
    both the 1983 version and the 1993 version, as well as judges
    with experience under the 1993 version only.\10\ As the letter
    states, the report ``shows a remarkable consensus among Federal
    district judges supporting existing Rule 11 and opposing its
    amendment.'' \11\
    ---------------------------------------------------------------------------
        \9\ Letter from Leonidas Ralph Mecham, Secretary, U.S. Judicial
    Conference, to Honorable F. James Sensenbrenner, Jr., Chairman, House
    Committee on the Judiciary, May 17, 2005.
        \10\ Id. at 2.
        \11\ Id. (emphasis added).
    ---------------------------------------------------------------------------
        Specifically, ``the survey's findings include the following
    highlights:

             More than 80 percent of the 278 district
            judges surveyed indicate that ``Rule 11 is needed and
            it is just right as it now stands'';

             87 percent prefer the existing Rule 11 to the
            1983 version or the version proposed by legislation
            (e.g., H.R. 4571 or H.R. 420);

             85 percent strongly or moderately support
            Rule 11's safe harbor provisions;

             91 percent oppose the proposed requirement
            that sanctions be imposed for every Rule 11 violation;

             84 percent disagree with the proposition that
            an award of attorney fees should be mandatory for every
            Rule 11 violation;

             85 percent believe that the amount of
            groundless civil litigation has not grown since the
            promulgation of the 1993 rule, with 12 percent noting
            that such litigation has not been a problem, 19 percent
            noting that such litigation decreased during their
            tenure on the Federal bench, and 54 percent noting that
            such litigation has remained relatively constant; and

             72 percent believe that addressing sanctions
            for discovery abuse in rule 26(g) and 37 is better than
            in Rule 11.'' \12\
    ---------------------------------------------------------------------------
        \12\ Id. at 3.

        As the Federal Judicial Center's study shows, ``federal
    district judges [are] united [in] opposition to amending Rule
    11.'' \13\
    ---------------------------------------------------------------------------
        \13\ Id.
    ---------------------------------------------------------------------------

        III. THE FORUM SHOPPING PROVISION WILL UNFAIRLY BENEFIT FOREIGN
          CORPORATIONS TO THE DISADVANTAGE OF THEIR U.S. COMPETITORS:

        Section 4 of the bill would recast state and Federal court
    jurisdiction and venue in personal injury cases. The provision
    would operate to provide a litigation and financial windfall to
    foreign corporations at the expense of their domestic
    competitors. This is because, instead of permitting claims to
    be filed wherever a corporation does business or has minimum
    contacts, as most state long-arm statutes provide, Section 4
    only permits the suit to be brought where the defendant's
    principal place of business is located.\14\ This means that it
    will be far more difficult to pursue a personal injury or
    product liability action against a foreign corporation in the
    United States.
    ---------------------------------------------------------------------------
        \14\ As a threshold, it is quite problematic even determining how
    the forum shopping provision would apply. Depending upon the meaning of
    the term ``only'' in the phrase ``may be filed only in the state . . .
    ,'' the provision could be read as (1) creating a new grant of
    jurisdiction and venue, or (2) merely limiting the current rules to the
    specified new rules. If it is a new grant of jurisdiction and venue,
    the section would serve to authorize suits wherever plaintiffs reside
    or were injured, even if there are no minimum contacts with the
    defendant. This would lead to an explosion in cases, and would decimate
    years of Supreme Court decisions holding that defendants may only be
    sued where jurisdiction lies (Pennoyer v. Neff, 20 A.L.R. 3d (1201)) or
    where the defendant has minimum contacts (International Shoe Co. v
    Washington, 326 U.S. 310 (1945)). If the provision operates as a limit
    on the current rules, it would represent a significant Federal
    usurpation of state court rules, possibly in violation of the Commerce
    Clause and the Tenth Amendment. See, e.g., United States v. Morrison,
    529 U.S. 598 (2000) and United States v. Lopez, 514 U.S. 549 (1995),
    striking down the Violence Against Women Act and the Gun Free School
    Zone Act as unconstitutional, holding that Congress lacked the
    authority to pass laws that have only an attenuated affect on
    interstate commerce. This point is highlighted in a letter analyzing
    the bill from Professor Christopher Fairman of the Ohio State
    University, Moritz College of Law. In his letter, Professor Fairman
    states that ``the venue provision of section 4 has absolutely no
    constitutional anchor. Quite simply, Congress does not have the
    authority under the Constitution to impose a venue statute on personal
    injury litigants who file their claims in state court.''
    ---------------------------------------------------------------------------
        Consider the case of a U.S. citizen that is harmed by a
    product produced or manufactured by a foreign competitor. If
    that foreign company transacts business or has minimum contacts
    in a state other than the state of the plaintiff's residence or
    where the injury occurred, as is often the case, any suit
    against the foreign company would be banned by H.R. 420. In
    other words, the harmed U.S. citizen would have no recourse
    against a foreign corporation, whereas he or she would have
    recourse against a comparable U.S. corporation. This is unfair
    to both the U.S. citizen and all U.S. companies that compete
    against the foreign firm. It is hard for us to understand why
    the Congress would want to pass a law that grants foreign
    companies such a financial windfall at the expense of U.S.
    firms.

         IV. SECTION 4 WILL PLACE VICTIMS AT A SIGNIFICANT LITIGATION
                DISADVANTAGE COMPARED WITH CORPORATE DEFENDANTS:

        It is difficult to consider H.R. 420 as even-handed
    litigation reform, when it is drafted to so obviously benefit
    corporate defendants. Consider the operation of subsection (b),
    requiring a court to dismiss properly filed legal claims if it
    determines another forum would be ``the most appropriate.''
    There is no legal precedent for a court having such open-ended
    authority to dismiss lawful actions. The problems and
    unfairness with this provision are many. First, of course, is
    the ambiguous, open-ended wording. The legislation gives
    absolutely no guidance as to what a court is to take into
    account in determining which court is ``most appropriate.'' Is
    it nexus to the injury, the plaintiff, the defendant or the
    bulk of other claims? Until this issue is worked out,
    significant hardships will no doubt result. While defendants do
    not mind waiting, the confusion would work a significant
    disadvantage to harmed victims in immediate need of
    compensation. Moreover, beyond this ambiguity, mandating
    dismissal would seem to be an extreme and costly remedy as
    compared to simply transferring the case to another court.
        Section 4 suffers from an overall ambiguity in drafting.
    First, it is unclear whether the finding of the first court
    that a second court is most appropriate binds the second court
    under general rules of preclusion. If it is binding, the first
    court might make an egregious error that would inappropriately
    transfer a case to a second court a case, leaving that the
    parties no recourse. However, if the decision is not binding,
    then plaintiffs' lawsuits could get bounced around by a string
    of courts, all asserting that another court is most
    appropriate. Further adding to confusion, it is also unclear
    whether a dismissal is appealable, which could cause huge
    delays. Even more problematic, the provision is unclear as to
    whether the statute of limitations would be tolled during such
    appeal (the statute is tolled until the claim is dismissed
    under the bill, but what about afterwards until a new claim is
    filed?). The provision will also cause delay because it
    requires the state court to make another time consuming and
    costly determination before accepting or dismissing the case.
    Again, while these delays may not burden a defendant,
    plaintiffs, who may be in drastic need of medical attention and
    expenses, are deprived of timely adjudication of their claims.
        Moreover, it seems fundamentally unfair for Section 4 to
    apply only to personal injury lawsuits when studies show that
    business lawsuits are far more prevalent and costly. In fact, a
    study by Public Citizen shows that businesses file four times
    as many lawsuits as do individuals represented by trial
    lawyers.\15\ Another paper, reported by the National Law
    Journal in November 2003, showed that of the top ten jury
    verdicts rendered thus far that year, 8 of the 10 involved
    businesses suing other businesses--accounting for $3.12 billion
    of the total $3.54 billion awarded by the ten juries. Only two
    of the ten cases were brought by individuals for personal
    injuries.\16\ If the Majority believes so strongly in the
    efficacy of this forum shopping provision, they should be
    willing to apply it across the board.
    ---------------------------------------------------------------------------
        \15\ America's Litigious Businesses, September 2004, study on file
    with Judiciary Committee.
        \16\ It is worth noting that Public Citizen's survey of the 100
    most recent decisions by Federal judges finding Rule 11 violations
    found that businesses were almost twice as likely as personal injury
    plaintiffs to be sanctioned for engaging in frivolous litigation.
    ---------------------------------------------------------------------------

                                   CONCLUSION

        Says one briefing book for House Republicans: ``attacking
    trial lawyers is admittedly a cheap applause line, but it
    works. It's almost impossible to go too far when it comes to
    demonizing lawyers.'' \17\ H.R. 420, The ``Lawsuit Abuse
    Reduction Act of 2005,'' is single-mindedly obsessed with a
    litigation crisis that simply does not exist. All empirical
    evidence suggests that the number of lawsuits are declining,
    that jury awards are shrinking, and that the costs of
    litigation to small businesses and to the overall American
    economy are slight if at all significant. H.R. 420 would
    confuse Federal jurisdiction jurisprudence, have a chilling
    effect on civil rights litigation, and enact sweeping changes
    to the Federal judiciary with little discussion or
    deliberation. For these reasons, we respectfully dissent.
    ---------------------------------------------------------------------------
        \17\ Frank Lutz, Language of the Twenty-First Century (1997)
    ---------------------------------------------------------------------------

                  DESCRIPTION OF AMENDMENTS OFFERED AT MARKUP

        During the markup four amendments were offered by
    Democratic Members:
    1. Nadler Amendment
        Description of Amendment: The amendment would prohibit a
    court from ordering a court record sealed or subjected to a
    protective order, or otherwise to restrict access to taht
    record, unless the court makes a finding of fact that
    identifies the interest that justifies the order and determines
    that the interest outweighs any interest in the public health
    and safety that the court determines would be served by not
    sealing or restricting the court record.
        Vote on Amendment: The amendment was withdrawn after
    Representative Nadler and Representative Smith agreed to work
    on the language before the bill comes up before the full House.
    2. Scott Amendment
        Description of Amendment: The amendment would rein in
    frivolous lawsuits without harming the ability of legitimate
    cases to be brought. The amendment proposed that after three
    consecutive adverse decisions on the merits, a person
    attempting to file yet another claim on the same issue be
    saddled with a rebuttable presumption of a Rule 11 violation.
    The amendment would have applied to the Terri Schiavo case, in
    which multiple courts ruled against the plaintiffs.
        Vote on Amendment: The amendment was agreed to by voice
    vote.
    3. Nadler Amendment
        Description of Amendment: The amendment provides that
    whoever influences, obstructs or impedes, or endeavors to
    influence, obstruct or impede, a pending court proceeding
    through the intentional destruction of documents sought in and
    highly relevant to that proceeding shall (1) be punished with
    mandatory civil sanctions and (2) be held in contempt of court
    and, if an attorney, referred to one or more appropriate State
    bar associations for disciplinary proceedings. The amendment
    applies to any court proceeding in Federal or State court.
        Vote on Amendment: The amendment was agreed to by voice
    vote.
    4. Conyers Amendment
        Description of Amendment: The amendment would exempt from
    the provisions of the Act actions against a manufacturer,
    seller, or trade association that, on or after the date of
    enactment, shifts or transfers employment positions of
    facilities to a location outside the United States. The
    amendment was designed to ensure that companies that relocate
    offshore do not receive the benefit of the liability
    limitations in the Act.
        Vote on Amendment: The amendment was defeated by a party-
    line vote of 17-11. Ayes: Representatives Conyers, Berman,
    Nadler, Scott, Watt, Waters, Meehan, Weiner, Schiff, Sanchez,
    Van Hollen. Nays: Representatives Sensenbrenner, Coble, Smith,
    Gallegly, Lungren, Jenkins, Cannon, Inglis, Hostettler, Keller,
    Issa, Pence, Forbes, King, Feeney, Franks, Gohmert.

                                       John Conyers, Jr.
                                       Howard L. Berman.
                                       Jerrold Nadler.
                                       Robert C. Scott.
                                       Melvin L. Watt.
                                       Sheila Jackson Lee.
                                       Maxine Waters.
                                       Martin T. Meehan.
                                       William D. Delahunt.
                                       Robert Wexler.
                                       Anthony D. Weiner.
                                       Linda T. Sanchez.
                                       Chris Van Hollen.