[House Report 109-253]
[From the U.S. Government Publishing Office]




109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    109-253

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


 
PROVIDING FOR CONSIDERATION OF H.R. 420, LAWSUIT ABUSE REDUCTION ACT OF 
                                  2005

                                _______
                                

  October 25, 2005.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

   Mr. Gingrey, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 508]

    The Committee on Rules, having had under consideration 
House Resolution 508, by a non-record vote, reports the same to 
the House with the recommendation that the resolution be 
adopted.

                SUMMARY OF PROVISIONS OF THE RESOLUTION

    The resolution provides for consideration of H.R. 420, the 
Lawsuit Abuse Reduction Act of 2005, under a structured rule. 
The rule provides one hour of general debate equally divided 
and controlled by the chairman and ranking minority member of 
the Committee on the Judiciary.
    The rule waives all points of order against consideration 
of the bill. The rule provides that the amendment in the nature 
of a substitute recommended by the Committee on the Judiciary 
now printed in the bill shall be considered as an original bill 
for the purpose of amendment and shall be considered as read.
    The rule makes in order only those amendments printed in 
this report. The rule provides that the amendments printed in 
this report may be offered only in the order printed in this 
report, may be offered only by a Member designated in this 
report, shall be considered as read, shall be debatable for the 
time specified in this report equally divided and controlled by 
the proponent and an opponent, shall not be subject to 
amendment, and shall not be subject to a demand for division of 
the question in the House or in the Committee of the Whole. The 
rule waives all points of order against the amendments printed 
in this report.
    Finally, the rule provides one motion to recommit with or 
without instructions.

                         EXPLANATION OF WAIVERS

    The Committee is not aware of any points of order against 
consideration of the bill. The waiver of all points of against 
consideration of the bill is prophylactic in nature.

                  SUMMARY OF AMENDMENTS MADE IN ORDER

    (Summaries derived from information provided by the 
amendment sponsor.)
    1. Sensenbrenner: Manager's Amendment. Includes provisions 
imposing sanctions for the destruction of relevant documents in 
a pending Federal court proceeding; provisions for setting 
standards for a court's determination that certain court 
records should be sealed; and provisions providing for a 
presumption of a Rule 11 violation when the same issue is 
repeatedly relitigated. It also includes a clarification that 
makes clear that, in the antiforum shopping provisions, if 
there is no State court in the county in which the injury 
occurred, the case can be brought in the nearest county where a 
court of general jurisdiction is located. The manager's 
amendment also makes clear that it does not affect personal 
injury claims that Federal bankruptcy law requires be heard in 
a Federal bankruptcy court. (10 minutes).
    2. Schiff/Kind: Amendment in the nature of a substitute. 
Provides strong ``three strikes and you're out'' mandatory 
sanctions for attorneys who file frivolous lawsuits or engage 
in frivolous conduct during discovery. Enhances sanctions for 
document destruction, ensures that corporations can be sued in 
the U.S., cracks down on parties attempting to relitigate the 
same issue on consecutive occasions, bans the concealment of 
unlawful conduct, and protects civil rights claims. (40 
minutes).

                    TEXT OF AMENDMENTS MADE IN ORDER

   1. An Amendment To Be Offered by Representative Sensenbrenner of 
          Wisconsin, or His Designee, Debatable for 10 Minutes

  Page 4, strike lines 8 through 11 and insert the following:
  (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 if there is no 
State court in the county, the nearest county where a court of 
general jurisdiction is located) or Federal district in which--
  Page 5, line 23, strike ``and''.
  Page 5, line 25, strike the period at the end and insert ``; 
and''.
  Page 5, after line 25, insert the following:
                  (C) does not include a claim against a debtor 
                in a case pending under title 11 of the United 
                States Code that is a personal injury tort or 
                wrongful death claim within the meaning of 
                section 157(b)(5) of title 28, United States 
                Code.
  Page, 7, strike line 16 and all that follows through the end 
of the bill and insert the following new sections:

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

  Whenever a party presents to a Federal court a pleading, 
written motion, or other paper, that includes a claim or 
defense 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, and the claim or defense involves the 
same plaintiff and the same defendant, 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 IN PENDING FEDERAL 
                    COURT PROCEEDINGS.

  Whoever willfully and intentionally influences, obstructs, or 
impedes, or attempts to influence, or obstruct, or impede, a 
pending Federal court proceeding through the willful and 
intentional destruction of documents sought pursuant to the 
rules of such Federal court proceeding 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.

SEC. 9. BAN ON CONCEALMENT OF UNLAWFUL CONDUCT.

  (a) In General.--In any Rule 11 of the Federal Rules of Civil 
Procedure proceeding, a court may not order that a court record 
not be disclosed 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 
disclosing the court record.
  (b) Applicability.--This section applies to any record 
formally filed with the court, but shall not include any 
records subject to--
          (1) the attorney-client privilege or any other 
        privilege recognized under Federal or State law that 
        grants the right to prevent disclosure of certain 
        information unless the privilege has been waived; or
          (2) applicable State or Federal laws that protect the 
        confidentiality of crime victims, including victims of 
        sexual abuse.
                              ----------                              


 2. An Amendment To Be Offered by Representative Schiff of California, 
               or His Designee, Debatable for 40 Minutes

    Strike all after the enacting clause and insert the 
following:

SECTION 1. ``THREE STRIKES AND YOU'RE OUT'' FOR ATTORNEYS WHO FILE 
                    FRIVOLOUS LAWSUITS.

  (a) Signature Required.--Every pleading, written motion, and 
other paper in any action shall be signed by at least 1 
attorney of record in the attorney's individual name, or, if 
the party is not represented by an attorney, shall be signed by 
the party. Each paper shall state the signer's address and 
telephone number, if any. An unsigned paper shall be stricken 
unless omission of the signature is corrected promptly after 
being called to the attention of the attorney or party.
  (b) Certificate of Merit.--By presenting to the court 
(whether by signing, filing, submitting, or later advocating) a 
pleading, written motion, or other paper, an attorney or 
unrepresented party is certifying that to the best of the 
person's knowledge, information and belief, formed after an 
inquiry reasonable under the circumstances--
          (1) it is not being presented for any improper 
        purpose, such as to harass or to cause unnecessary 
        delay or needless increase in the cost of litigation;
          (2) the claims, defenses, and other legal contentions 
        therein are warranted by existing law or by a non 
        frivolous argument for the extension, modification, or 
        reversal of existing law or the establishment of new 
        law; and
          (3) the allegations and other factual contentions 
        have evidentiary support or, if specifically so 
        identified, are reasonable based on a lack of 
        information or belief.
  (c) Mandatory Sanctions.--
          (1) First violation.--If, after notice and a 
        reasonable opportunity to respond, a court, upon motion 
        or upon its own initiative, determines that subsection 
        (b) has been violated, the court shall find each 
        attorney or party in violation in contempt of court and 
        shall require the payment of costs and attorneys fees. 
        The court may also impose additional appropriate 
        sanctions, such as striking the pleadings, dismissing 
        the suit, and sanctions plus interest, upon the person 
        in violation, or upon both such person and such 
        person's attorney or client (as the case may be).
          (2) Second violation.--If, after notice and a 
        reasonable opportunity to respond, a court, upon motion 
        or upon its own initiative, determines that subsection 
        (b) has been violated and that the attorney or party 
        with respect to which the determination was made has 
        committed one previous violation of subsection (b) 
        before this or any other court, the court shall find 
        each such attorney or party in contempt of court and 
        shall require the payment of costs and attorneys fees, 
        and require such person in violation (or both such 
        person and such person's attorney or client (as the 
        case may be)) to pay a monetary fine. The court may 
        also impose additional appropriate sanctions, such as 
        striking the pleadings, dismissing the suit and 
        sanctions plus interest, upon such person in violation, 
        or upon both such person and such person's attorney or 
        client (as the case may be).
          (3) Third and subsequent violations.--If, after 
        notice and a reasonable opportunity to respond, a 
        court, upon motion or upon its own initiative, 
        determines that subsection (b) has been violated and 
        that the attorney or party with respect to which the 
        determination was made has committed more than one 
        previous violation of subsection (b) before this or any 
        other court, the court shall find each such attorney or 
        party in contempt of court, refer each such attorney to 
        one or more appropriate State bar associations for 
        disciplinary proceedings (including suspension of that 
        attorney from the practice of law for one year or 
        disbarment), require the payment of costs and attorneys 
        fees, and require such person in violation (or both 
        such person and such person's attorney, or client (as 
        the case may be)) to pay a monetary fine. The court may 
        also impose additional appropriate sanctions, such as 
        striking the pleadings, dismissing the suit, and 
        sanctions plus interest, upon such person in violation, 
        or upon both such person and such person's attorney or 
        client (as the case may be).
          (4) Appeal; stay.--An attorney has the right to 
        appeal a sanction under this subsection. While such an 
        appeal is pending, the sanction shall be stayed.
          (5) Not applicable to civil rights claims.--
        Notwithstanding subsection (d), this subsection does 
        not apply to an action or claim arising out of Federal, 
        State, or local civil rights law or any other Federal, 
        State, or local law providing protection from 
        discrimination.
  (d) Applicability.--Except as provided in subsection (c)(5), 
this section applies to any paper filed on or after the date of 
the enactment of this Act in--
          (1) any action in Federal court; and
          (2) any action in State court, if the court, upon 
        motion or upon its own initiative, determines that the 
        action affects interstate commerce.

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

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

SEC. 3. BAN ON CONCEALMENT OF UNLAWFUL CONDUCT.

  (a) In General.--In any Rule 11 of the Federal Rules of Civil 
Procedure proceeding, a court may not order that a court record 
not be disclosed 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 
disclosing the court record.
  (b) Applicability.--This section applies to any record 
formally filed with the court, but shall not include any 
records subject to--
          (1) the attorney-client privilege or any other 
        privilege recognized under Federal or State law that 
        grants the right to prevent disclosure of certain 
        information unless the privilege has been waived; or
          (2) applicable State or Federal laws that protect the 
        confidentiality of crime victims, including victims of 
        sexual abuse.

SEC. 4. ENHANCED SANCTIONS FOR DOCUMENT DESTRUCTION.

   Whoever willfully and intentionally influences, obstructs, 
or impedes, or attempts to influence, or obstruct, or impede, a 
pending Federal court proceeding through the willful and 
intentional destruction of documents sought pursuant to the 
rules of such Federal court proceeding 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.

SEC. 5. ABILITY TO SUE CORPORATE FINANCIAL TRAITORS AND FOREIGN 
                    CORPORATIONS.

  (a) General Rule.--In any civil action for injury that was 
sustained in the United States and that relates to the acts of 
a foreign business, the Federal court or State court in which 
such action is brought shall have jurisdiction over the foreign 
business if--
          (1) the business purposefully availed itself of the 
        privilege of doing business in the United States or 
        that State;
          (2) the cause of action arises from the business's 
        activities in the United States or that State; and
          (3) the exercise of jurisdiction would be fair and 
        reasonable.
  (b) Admission.--If in any civil action a foreign business 
involved in such action fails to furnish any testimony, 
document, or other thing upon a duly issued discovery order by 
the court in such action, such failure shall be deemed an 
admission of any fact with respect to which the discovery order 
relates.
  (c) Process.--Process in an action described in subsection 
(a) may be served wherever the foreign business is located, has 
an agent, or transacts business.
  (d) Definition.--In this section, the term ``foreign 
business'' means a business that has its principal place of 
business, and substantial business operations, outside the 
United States and its Territories.

SEC. 6. PRESUMPTION OF RULE 11 VIOLATION FOR REPEATEDLY RELITIGATING 
                    SAME ISSUE.

  (a) In General.--Whenever a party presents to a Federal court 
a pleading, written motion, or other paper, that includes a 
claim or defense 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, and the claim or defense 
involves the same plaintiff and the same defendant, 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.
  (b) Exception.--Subsection (a) does not apply to a claim 
arising under the Constitution of the United States.

                                  
