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May 2, 1995 CONGRESSIONAL RECORD — SENATE S5945
Thereupon, at 1:41 p.m., the Senate tracting firm while he earned a civil engi- AMENDMENT NO. 617
recessed until 2:15 p.m.; whereupon, the neering degree from Texas A&M. He stayed
with the firm after he graduated in 1978, ad- (Purpose: To provide for certain limitations
Senate reassembled when called to on punitive damages, and for other purposes)
vancing to become project manager by 1989.
order by the Presiding Officer (Mr.
He hasn’t forgotten how difficult it can be
KYL). for others, and J.L. Steel has an aggressive
Mr. DOLE. Mr. President, I send an
Mrs. HUTCHISON addressed the equal-opportunity policy. amendment to the desk and ask for its
Chair. Oscar supports fledgling companies by immediate consideration.
The PRESIDING OFFICER. The Sen- helping them with marketing, construction The PRESIDING OFFICER. The
ator from Texas. practices and subcontracting opportunities.
clerk will report.
Mrs. HUTCHISON. Mr. President, I His tireless advocacy work on behalf of
ask unanimous consent that I be al- minority- and women-owned businesses in- The legislative clerk read as follows:
lowed to proceed as if in morning busi- cludes work on various boards and commit-
tees, including the Dallas Minority Business The Senator from Kansas [Mr. DOLE], for
ness. himself, Mr. EXON, Mr. HATCH, Mr. MCCON-
Enterprise Advisory Committee and the Dis-
The PRESIDING OFFICER. Without NELL, Mr. ABRAHAM, Mr. KYL, Mr. THOMAS,
advantaged Business Enterprise Support
objection, it is so ordered. The Senator Services program of the Texas Engineering Mrs. HUTCHISON, and Mr. GRAMM, proposes an
is recognized. Extension Service. He also helped the Asso- amendment numbered 617.
f ciation of General Contractors of Texas de-
Mr. DOLE. Mr. President, I ask unan-
velop and promote fair and equitable goals,
T. OSCAR TREVINO, JR., 1995 and training and apprenticeship programs imous consent that reading of the
TEXAS SMALL BUSINESS PER- for minorities and women. amendment be dispensed with.
SON OF THE YEAR (The remarks of Mrs. HUTCHISON per- The PRESIDING OFFICER. Without
Mrs. HUTCHISON. Mr. President, I taining to the introduction of S. 743 are objection, it is so ordered.
want to recognize the leadership of a located in today’s RECORD under The amendment is as follows:
small business person in my State who ‘‘Statements on Introduced Bills and
is being honored today by the Small Joint Resolutions.’’) On page 19, strike line 12 through line 5 on
Business Administration as the Small Mrs. HUTCHISON. Mr. President, I page 21, and insert the following:
Business Person of the Year in Texas. yield the floor and I suggest the ab- SEC. 107. PUNITIVE DAMAGES IN CIVIL ACTIONS.
Mr. Oscar Trevino, Jr. is president of sence of a quorum. (a) FINDINGS.—The Congress finds that—
J.L. Steel, Inc. He is what America is The PRESIDING OFFICER. The (1) punitive damages are imposed pursuant
all about, Mr. President. He took a clerk will call the roll. to vague, subjective, and often retrospective
company, J.L. Steel, from $400,000 in The legislative clerk proceeded to standards of liability, and these standards
revenues in the first year, in 1989, and call the roll. vary from State to State;
built that company to over $13 million Mr. GORTON. Mr. President, I ask (2) the magnitude and unpredictability of
in revenues last year. It is the fifth unanimous consent that the order for punitive damage awards in civil actions have
fastest growing Hispanic-owned com- the quorum call be rescinded. increased dramatically over the last 40
pany in the United States. The PRESIDING OFFICER. Without years, unreasonably inflating the cost of set-
I am really proud of this Texan. He objection, it is so ordered. tling litigation, and discouraging socially
useful and productive activity;
has really added to the economic vital- f (3) excessive, arbitrary, and unpredictable
ity of our community in that he now COMMONSENSE PRODUCT LIABIL- punitive damage awards impair and burden
has 140 employees that are working and ITY AND LEGAL REFORM ACT commerce, imposing unreasonable and un-
paying taxes and are good citizens of justified costs on consumers, taxpayers, gov-
our State. I am very pleased to honor The Senate continued with the con- ernmental entities, large and small busi-
him today. sideration of the bill. nesses, volunteer organizations, and non-
Mr. President, I ask unanimous con- Mr. GORTON. Mr. President, having profit entities;
sent that his biography be printed in completed work on all of the amend- (4) products and services originating in a
the RECORD. ments relating to medical malpractice, State with reasonable punitive damage pro-
the floor of the Senate is now open for visions are still subject to excessive punitive
There being no objection, the mate-
other amendments to the product li- damage awards because claimants have an
rial was ordered to be printed in the economic incentive to bring suit in States in
RECORD, as follows: ability legislation. I understand that
which punitive damage awards are arbitrary
BIOGRAPHY OF T. OSCAR TREVINO, JR. serious amendments are to be proposed and inadequately controlled;
It was 1989, and Oscar Trevino was com- extending the punitive damages provi- (5) because of the national scope of the
fortable with his company care and steady sions of this bill to all litigation and problems created by excessive, arbitrary, and
paycheck. He and neighbor Jan La Point extending the rules related to joint li- unpredictable punitive damage awards, it is
were chatting on the lawn after dinner, while ability to all litigation. At the same not possible for the several States to enact
the kids played out front. It seems that Jan time, there are a number of other laws that fully and effectively respond to the
was having trouble expanding her two-year- amendments, both those which would national economic and constitutional prob-
old company, and Oscar was interested. lems created by punitive damages; and
Before he realized it, he had worked out a
broaden the legislation and those
(6) the Supreme Court of the United States
business plan on his computer, and they were which would narrow it, which is appro- has recognized that punitive damages can
in business as J.L. Steel. Oscar borrowed priate and is relative to be discussed in produce grossly excessive, wholly unreason-
against his retirement account, his credit connection with this bill. able, and often arbitrary punishment, and
cards and from family to become 51 percent I do hope at this point, after more therefore raise serious constitutional due
owner of the firm. From $400,000 in revenues than a week of debate, that proponents process concerns.
that first year, J.L. Steel has grown to near- and opponents to these amendments (b) GENERAL RULE.—Notwithstanding any
ly $13.6 million in revenues last year, making will be willing to consider adequate, other provision of this Act, in any civil ac-
it the fifth fastest-growing Hispanic-owned but relatively brief, time agreements, tion whose subject matter affects commerce
company in the United States, with an an- brought in any Federal or State court on any
nual growth rate of 235 percent.
so that we can move the legislation
forward. As Members come to the floor theory, punitive damages may, to the extent
J.L. Steel installs reinforced steel in high-
to present their amendments, I intend permitted by applicable State law, be award-
ways, bridges and buildings. The firm com-
ed against a defendant only if the claimant
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
petes for government and private contracts to make that suggestion to them, and
establishes by clear and convincing evidence
in Texas, Oklahoma and Louisiana, and sat- we can have first-rate debate and votes that the harm that is the subject of the ac-
isfies its customers with reliable estimates, and perhaps fewer quorum calls than tion was the result of conduct by the defend-
quality workmanship and attention to detail we have had for some time. ant that was either—
in the reams of accompanying paperwork. Mr. DOLE addressed the Chair. (1) specifically intended to cause harm; or
The firm has called on the SBA twice: in 1992
The PRESIDING OFFICER. The ma- (2) carried out with conscious, flagrant dis-
for a loan guarantee to finance growth and
again in 1993, when it was certified as an 8(a) jority leader is recognized. regard to the rights or safety of others.
contractor, allowing it to compete for jobs Mr. DOLE. Mr. President, what is the (c) PROPORTIONAL AWARDS.—The amount of
from the federal government. pending business? punitive damages that may be awarded to a
Oscar himself started out as a laborer, The PRESIDING OFFICER. It is claimant in any civil action subject to this
working summers for a major general-con- amendment No. 596 to H.R. 956. section shall not exceed 2 times the sum of—
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S5946 CONGRESSIONAL RECORD — SENATE May 2, 1995
(1) the amount awarded to the claimant for (B) The term ‘‘economic loss’’ shall not in- than half ends up with those who are
economic loss; and clude noneconomic loss. suing. Most goes to trial expenses and
(2) the amount awarded to the claimant for (5) The term ‘‘harm’’ means any legally particularly to lawyers.
noneconomic loss. cognizable wrong or injury for which dam-
This subsection shall be applied by the court ages may be imposed.
In other words, the litigation tax
and the application of this subsection shall (6)(A) The term ‘‘noneconomic loss’’ means takes income right out of the middle-
not be disclosed to the jury. subjective, nonmonetary loss resulting from class family’s pocket and puts it into
(d) BIFURCATION.—At the request of any harm, including pain, suffering, inconven- the pockets of one of the wealthiest
party, the trier of fact shall consider in a ience, mental suffering, emotional distress, groups in America—personal injury
separate proceeding whether punitive dam- loss of society and companionship, loss of
ages are to be awarded and the amount of
lawyers.
consortium, injury to reputation, and humil- Even worse, just the fear of litigation
such an award. If a separate proceeding is re- iation.
quested— has led to the canceling of life-saving
(B) The term ‘‘noneconomic loss’’ shall not
(1) evidence relevant only to the claim of include economic loss or punitive damages. research and product improvements in
punitive damages, as determined by applica- (7) The term ‘‘punitive damages’’ means many fields. Companies are afraid of
ble State law, shall be inadmissible in any damages awarded against any person or enti- being sued over anything that is new
proceeding to determine whether compen- ty to punish such person or entity or to deter and this has made America less safe.
satory damages are to be awarded; and such person or entity, or others, from engag-
(2) evidence admissible in the punitive
In other words, the biggest cost of
ing in similar behavior in the future. the litigation tax may be measured,
damages proceeding may include evidence of (8) The term ‘‘State’’ means any State of
the defendant’s profits, if any, from its al- not in dollars, but in lives.
the United States, the District of Columbia,
leged wrongdoing. the Commonwealth of Puerto Rico, the The underlying bill goes a long way
(e) APPLICABILITY.—Nothing in this section toward reducing the abuses we cur-
Northern Mariana Islands, the Virgin Is-
shall be construed to— rently suffer. But, in my view, it leaves
lands, Guam, American Samoa, and any
(1) waive or affect any defense of sovereign
other territory or possession of the United many deserving organizations and
immunity asserted by the United States, or
States, or any political subdivision of any of small businesses outside its protective
by any State, under any law;
the foregoing. scope.
(2) create any cause of action or any right
(h) EFFECTIVE DATE.—This section shall
to punitive damages; The litigation tax is paid, not just by
apply to any civil action in which trial has
(3) supersede or alter any Federal law;
not commenced before the date of enactment consumers who buy products, but by
(4) preempt, supersede, or alter any State every nonprofit organization, every
of this Act.
law to the extent that such law would fur- small business, every municipality in
ther limit the availability or amount of pu- Mr. DOLE. Mr. President, this is a bi-
the Nation—and those who depend on
nitive damages; partisan amendment—Senator EXON is
the services they provide.
(5) affect the applicability of any provision a cosponsor, as are Senators HATCH,
of chapter 97 of title 28, United States Code; MCCONNELL, ABRAHAM, KYL, THOMAS, This amendment will free our non-
(6) preempt State choice-of-law rules with HUTCHISON, and GRAMM. profit organizations, small businesses,
respect to claims brought by a foreign nation This is an amendment that offers and local governments to serve Amer-
or a citizen of a foreign nation; or
needed protections from lawsuit abuse ica without first serving up a tribute to
(7) affect the right of any court to transfer personal injury lawyers.
venue or to apply the law of a foreign nation to every American—small business or
large; volunteer or charitable organiza- We do not have to look far to count
or to dismiss a claim of a foreign nation or
tions. The spectre of lawsuit abuse the costs of the litigation tax to non-
of a citizen of a foreign nation on the ground
of inconvenient forum. hangs over us all, and our amendment profits, small businesses, and
(f) FEDERAL CAUSE OF ACTION PRECLUDED.— would expand the protections in the municipalties—and to the rest of
Nothing in this section shall confer jurisdic- Gorton substitute to ensure that every America.
tion on the Federal district courts of the For example, the head of the Girls
United States under section 1331 or 1337 of
American is covered.
The bill as it now stands calls for Scout Council of the Nation’s Capital
title 28, United States Code, over any civil
limiting punitive damages in product Area wrote this to House leaders dur-
action covered under this section.
(g) DEFINITIONS.—For purposes of this sec- liability cases to three times economic ing the debate over there:
tion: damages, or $250,000, whichever is Locally, we must sell 87,000 boxes of cook-
(1) The term ‘‘claimant’’ means any person greater. ies each year to pay for liability insurance.
who brings a civil action and any person on This amendment makes two changes: We have no diving boards at our camps. We
whose behalf such an action is brought. If will never own horses. And, many local
It would extend the limits on punitive
such action is brought through or on behalf schools will no longer provide meeting space
of an estate, the term includes the decedent. damages beyond product liability to all for our volunteers.
If such action is brought through or on be- civil cases; and it would provide a rule
of proportionality that limits punitive The chief executive officer of Little
half of a minor or incompetent, the term in-
cludes the legal guardian of the minor or in- damages to two times compensatory League Baseball, Dr. Creighton Hale,
competent. damages; that is, any economic and has issued a similar plea.
(2) The term ‘‘clear and convincing evi- noneconomic damages combined. Writing in the Wall Street Journal
dence’’ means that measure or degree of This amendment is needed because recently, Dr. Hale reported that, as he
proof that will produce in the mind of the put it:
our Nation desperately needs broadly
trier of fact a firm belief or conviction as to In recent years, litigation has been the end
the truth of the allegations sought to be es- based relief from lawsuit abuse.
America’s litigation tax—the tort result of two boys colliding in the outfield
tablished. The level of proof required to sat- [the two picked themselves up and sued the
isfy such standard shall be more than that tax—hurts every American; at least
coach]. * * * In still another case—
required under preponderance of the evi- every American who is not a personal
dence, and less than that required for proof injury lawyer. He continued:
beyond a reasonable doubt. Anyone who cares about middle-class A man and woman won a cash settlement
(3) The term ‘‘commerce’’ means commerce American families, consumers, and when the woman was hit by a ball a player
between or among the several States, or with workers would want that litigation tax failed to catch. The player was her daughter.
foreign nations. Dr. Hale says:
(4)(A) The term ‘‘economic loss’’ means
reduced.
any objectively verifiable monetary losses We all know the numbers: $20 in the The costs of this litigation lunacy score
out * * * in bewildered dads calling our of-
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
resulting from the harm suffered, including cost of an ordinary $100 step ladder
past and future medical expenses, loss of goes to the litigation tax, as does one- fices asking about personal liability, and
past and future earnings, burial costs, costs sixth of the price of an $18,000 pace- volunteer coaches waking up to the fact that
of repair or replacement, costs of replace- they’re taking major league risks.
maker and $8 of an $11.50 DPT child-
ment services in the home, including child hood vaccine. And he added:
care, transportation, food preparation, and The litigation tax is a national It’s a problem common to all nonprofit or-
household care, costs of making reasonable ganizations and the volunteers they depend
accommodations to a personal residence,
‘‘value subtracted’’ tax—$1,200 on every
American, rich or poor, with nothing on.
loss of employment, and loss of business or
employment opportunities, to the extent re- received in return. This is not even close to being in the
covery for such losses is allowed under appli- And where does that money go? Ac- ballpark of what most people think of
cable State law. cording to a 1986 Rand Corp. study, less when we think of justice in America.
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May 2, 1995 CONGRESSIONAL RECORD — SENATE S5947
Mr. President, legal speculators have to protect against abuse in the form of On appeal to the State Supreme
declared war on American vol- punitive damages. Court, the punitive damages award was
unteerism, entrepreneurship, and local In a 1994 opinion authored by Justice reduced to $2 million, applicable only
government—the institutions that Stevens, the Supreme Court noted that to the North American distributor. The
make for strong communities and a punitive damages pose an acute danger U.S. Supreme Court has accepted this
better America. of arbitrary deprivation of property. case for review of the constitutionality
Expanding the limits on punitive That was the Honda Motor Co. case. of the $2 million punitive damage
damages to all civil suits will help end More than that, our current punitive award.
the legal speculators’ war on these in- damage system harms consumers. I
There is some indication that the
stitutions. It will help return justice to wish all of my colleagues could have
law, though, did not permit that type
the law. It will reach into every home heard the testimony of George L.
of an award but the court decided any-
and school and town board and small Priest, who appeared before the Judici-
way that they would halve the award
business and community group in the ary Committee on April 4 of this year.
from $4 million to $2 million.
Nation. Mr. Priest is a professor of law and eco-
nomics at the Yale Law School and has My colleagues want to know why
It will tell them that they need not
taught in the area of tort law, product Americans are fed up with the civil jus-
fear for their financial security when
liability and damages for 21 years, for tice system? I defy any Member of this
they venture outside their home to
the last 15 years at Yale. body to read the opinion in this case
help a neighbor or open a small busi-
Since 1982, he has been the director of and tell the American people that jus-
ness.
the Yale Law School program in civil tice was done.
It will tell them the siege is over.
Mr. President, it seems to me that liability. He has studied jury verdicts Why does it matter? In this case, it is
this is a very, very important amend- extensively, and he did not appear be- not the purchasers of $40,000 auto-
ment to the substitute. It is one that I fore the committee on behalf of any mobiles that I am so concerned about,
hope my colleagues will look at very, client, interest, or group. although they are consumers too. But
Professor Priest testified, ‘‘The re- the North American distributor of this
very carefully.
I would certainly be willing to enter form of punitive damages alone, even automobile, spending tens of thousands
into a time agreement on this amend- reforms that would cap punitive dam- of dollars in fees to defend a lawsuit
ages or introduce a proportionality over a $601 paint refinishing, and sub-
ment. We would like to finish action on
cap, will help consumers.’’ ject to a ridiculous $2 million punitive
the punitive damage amendment
I note that the amendment before damage award, employs our constitu-
today, as well as a joint and several li-
Members embodies a proportionality ents. Many of those employees cannot
ability amendment. I hope we can principle for punitive damages. I will
reach some time agreement. I state afford such expensive cars—nor can
return to Professor Priest’s remarks they afford such ridiculous results
that now so that my colleagues on the later in my remarks and to this point
other side of this issue, perhaps we can from our legal system. If the cost of
later. business goes up, that cost will get
negotiate a time agreement later this Let me give examples of what is
afternoon. passed on, and a business can only
wrong. This past September, an Ala-
I yield the floor. raise prices so far before its product be-
bama Supreme Court upheld a multi-
Mr. HATCH addressed the Chair. comes uncompetitive. At some point,
million dollar punitive damage award
The PRESIDING OFFICER (Mr. that business will have to reduce its
against an automobile distributor who
KYL). The Senator from Utah. payroll. Who makes out like bandits
failed to inform a buyer that his new
Mr. HATCH. Mr. President, I am from this case? The purchaser of a car
vehicle had been refinished to cure su-
pleased to be a cosponsor of the amend- with a $601 refinished paint job and, of
perficial paint damage. The amount ex-
ment to S. 565. course, his lawyer. I mean, punitive
pended to refinish this automobile,
This amendment would, in effect, ex- $601, was less than 3 percent of the ve- damages, for this case? And 2 million
tend the punitive damage provision of hicle’s suggested price. A number of dollars’ worth?
S. 565 for product liability actions to States do not require disclosure of re- I should also note that this same de-
all civil actions. The subject matter af- pairs costing below a 3 percent thresh- fendant can be sued again and again for
fects interstate commerce brought in old. Indeed, Alabama later adopted punitive damages by every owner of a
State or Federal courts. such a minimum threshold statute partially refinished vehicle. In fact, ac-
Our system of civil justice is broken, after the events which occurred in this cording to defense counsel, the same
in the eyes of many people. The Amer- case. plaintiff’s attorney has filed 24 other
ican people do deserve better. They de- The victim was a purchaser of a similar lawsuits. No surprise there.
serve change. They deserve some com- $40,000 automobile. Nine months after As a further note about this fiasco, in
mon sense in our legal system. his purchase, he took his vehicle to one of those other cases, the jury
I hope we can pass this amendment, Slick Finish, an independent auto- awarded no punitive damages. The very
along with some others, and send S. 565 mobile detailing shop, to make the car same conduct by the defendant and in
to the President for his signature. look ‘‘snazzier’’ than it normally one case, it is socked with $2 million in
Let me be clear: The pending amend- does—to use his terms. He was not then punitive damages and in another case
ment helps volunteer organizations, dissatisfied with the vehicle’s look and zero punitive damages. Who knows
towns, cities, counties, States, farmers, had not previously noticed any prob- what the litigation lottery will bring
small businesses, transportation com- lems with the car’s finish. It was then in the other, similar cases.
panies, convenience stores, blood that he was told by the detailer of the
banks, school boards, as well as prod- Let us look at another example. The
partial refinishing. September 26, 1994, National Law Jour-
uct manufacturers. This amendment is As a result of the discovery, he sued
proconsumer. nal, has a headline reading: ‘‘Block-
the automobile dealer, the North
The pending amendment focuses on buster Busted for $123.6 Million.’’
American distributor, and the manu-
one aspect of our civil justice system: facturer for fraud and breach of con- A Dallas, TX, judge ordered Block-
buster Entertainment Corp., Video
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
Punitive damages. Punitive damages tract. He also sought an award for pu-
are not awarded to compensate a vic- nitive damages. He won and he did hit Superstores Master LP, and an indi-
tim of wrongdoing. These damages con- the jackpot. vidual to pay $14.7 million in damages
stitute punishment in an effort to At trial, the jury was allowed to as- and interest and $108.9 million in puni-
deter future egregious misconduct. sess damages for each of the partially tive damages to an individual investor.
Punitive damage reform is not about refinished vehicles that had been sold Why?
shielding wrongdoers from liability, throughout the United States for a pe- In 1986, the investor invested in the
nor does such reform prevent victims riod of 10 years. The jury returned a first Blockbuster franchises, and ac-
of wrongdoing from being rightfully verdict of $4,000 in compensatory dam- cording to his attorney, ‘‘he was sup-
compensated for their injuries or for ages. It also returned a verdict of $4 posed to be included in the sale when
their damages. Safeguards are needed million in punitive damages. the general partner sold.’’ But the
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S5948 CONGRESSIONAL RECORD — SENATE May 2, 1995
plaintiff-investor was not informed Gallants testified that, between the time necessary deterrent effect? In his closing ar-
when such a sale was made. He charged that they discovered the misinformation and gument, the . . . attorney for the Gallants
the three defendants with breach of fi- Prudential called them to offer a remedy asked the jury to determine a level of dam-
(Prudential offered to return their premiums ages that would send a message to the giant
duciary duty and fraud. Aside from the Prudential Life Insurance Company that
or to discuss adjusting the policy), they had
$14.7 million in damages and interest, suffered roughly two weeks of sleepless fraudulent behavior on the part of an agent
as mentioned earlier, the judge as- nights and substantial anger at having been will not be tolerated. What kind of damages
sessed just over $36 million in punitive misled. That was the extent of their ‘‘mental message is necessary to achieve that effect?
damages to each of the three defend- anguish’’. Obviously, if the insurer stood to gain no
ants, or an astonishing $108.9 million in Twenty years ago, I taught cases of this more than $46 over the life of the policy, any
nature in a course entitled Restitution, in damages judgment greater than $46 sends the
punitive damages assessed against the insurer a message by making the policy un-
defendants. which the appropriate remedy was restitu-
tion of all paid premiums or out-of-pocket profitable. (Of course, I ignore entirely
If the defendants in this case did Prudential’s defense costs plus the
costs. On very rare occasions such as espe-
breach their fiduciary duty and com- cially egregious actions by a defendant, some reputational harm from the lawsuit.) The
mit fraud, the plaintiff should be made courts considered awarding plaintiffs the jury in the Gallant case went substantially
whole. The pending amendment would benefit of the bargains, say, by increasing beyond that amount, however, in awarding
not alter anyone’s right to such a re- their annuity benefits. compensatory damages of $30,000 for eco-
Our modern world has changed: After a one nomic loss and $400,000 for the mental an-
covery.
and one-half day trial, an Alabama jury guish of the two weeks’ lost sleep and anger.
But is this a case where punitive It certainly cannot be argued that the jury
damages should also be imposed for the awarded the Gallants damages equal to
$30,000 in economic loss; $400,000 in mental has undervalued the Gallant’s compensatory
wrong? Moreover, after over $10 million loss—indeed, the $400,000 for the mental an-
anguish; and $25 million in punitive dam-
in actual damages and nearly $4 mil- ages. guish award is extreme. Furthermore, there
lion in interest, is there a further de- is no reason to think that the agent’s behav-
Again the face value of the policy ior in other contexts would go undetected.
terrent effect by imposing punitive
was only $25,000, and they had not yet (Prudential later settled other cases brought
damages? I do not have all of the facts,
qualified to receive that. Think about by the agent’s clients.) As a consequence,
and I understand the case is under ap- there is no justification for a punitive dam-
it. A $25,000 policy, the agent made a
peal. But even if punitive damages are ages award whatsoever.
mistake, they have 2 weeks of alleged
appropriate, is it sensible to impose What will be the effect of punitive damages
sleepless nights, they were angry for
nearly 109 million dollars’ worth, or verdicts such as that in the Gallant case? In
much of that time, and they got $30,000 the face of such a verdict, what is the ration-
over 7 times the award of damages and
in economic loss, $400,000 for their 2 al response of an insurer like Prudential or
interest? I might add, if this plaintiff
weeks of sleepless nights and anger, other insurers selling similar policies? Re-
could meet the substantive standard of
and $25 million in punitive damages. grettably, but necessarily in a competitive
the pending amendment, the amend- industry, the rational response is to quit
Professor Priest said:
ment itself would allow over $30 mil- selling such low value policies altogether. It
I do not wish to minimize the harm to the
lion in punitive damages. Frankly, Gallants, especially the indignity of the mis- makes little sense to expose the company
that is an astronomical award itself, representation, nor to condone the fraudu- and its policyholders to the risk of such a
yet critics of this amendment argue lent actions of the agent, apparently per- damages verdict given the very small gain
that it is penurious. petrated on several other Alabama citizens from the sale of such a policy.
My colleagues should understand, as Is this the type of product that our civil li-
who recovered separately. Nevertheless,
ability system should drive from the mar-
the American people do, such awards there is not a single person to whom I have
ket? Obviously, not, and low-income con-
impose costs. Prices on goods and serv- described this case—not an attorney, wheth-
sumers in Alabama are directly harmed as a
ices can be affected, wages and benefits er plaintiff or defendant; not a liberal or a
result. Here, the dramatically differential ef-
conservative; not even a radical or idealist
paid to employees and the level of em- fects of such verdicts on high-income versus
Yale Law student (or faculty member)—who
ployment itself can be affected. The low-income consumers are made clear. In my
has not been shocked by the outcome or who
availability of goods and services can own view, it is far more important to our so-
could defend it as a rational or sensible ver-
be affected. ciety to have our insurance industry provide
dict in the context of the harm. Again, many life insurance coverage to low-income citi-
Let me go back to Alabama, for yet defenders of punitive damages argue that ex- zens, since the relatively affluent of our soci-
another case, demonstrating the lack ceptionally large verdicts are usually over- ety have other means of providing financial
of common sense in our current civil turned on appeal. Alabama provides a review security for their families. The availability
justice system giving rise to this procedure for punitive damages verdicts that of financial protection and security at rel-
amendment. Indeed, this example is so the U.S. Supreme Court has approved. In the atively low cost will be substantially dimin-
Gallant case, however, the judge conducting ished if such low premium policies, as here,
outrageous, I will simply quote, at
the review affirmed the $25 million award in are no longer available.
some length, the well-considered testi- its entirety, though directing part of the More generally, where expected punitive
mony of Professor Priest, at our April amount to be paid to the State. damages verdicts are added to the price of
4, 1995, hearing. This is from his writ- What will be the effect of a punitive dam- products and services, the first to feel the ef-
ten statement: ages verdict of this nature? The Gallants ap- fect will be low-income consumers. And
In the case Gallant v. Prudential, decided pear to be persons of modest means (before where the magnitude of punitive damages
this past April 1994, Iran and Leslie Gallant the verdict). Does a verdict of this nature verdicts rise, imperiling the continued provi-
sued Prudential Life Insurance Company help middle- or low-income consumers? To- sion of the product or service, the first to be
based on the actions of a Prudential agent. tally, the opposite. The insurance policy in affected will be those products and services
The Gallant’s had purchased a combination question—face value, $25,000—was the cheap- with the lowest profit margins, most attrac-
life insurance-annuity policy with a $25,000 est form of life insurance annuity available tive to the low-income. The Gallant case pro-
face value at a monthly premium of roughly on the market; again, its monthly premium vides a dramatic example of the effect. Fol-
$39.00. At the time of sale, the agent had told was only $39.00. Obviously, at such a pre- lowing Gallant and other large punitive dam-
them that the value of the annuity was mium, the insurance carrier could not be ex- ages verdicts, several insurers have quit of-
roughly twice what in fact it was; the agent pecting to make a substantial profit on the fering coverage in Alabama altogether.
had added together the table indicating policy. Indeed, an expert in the case esti- I understand this case settled for an
‘‘Projected Return’’ with the table indi- mated that over the entire life of the policy,
the premiums net of payouts paid by the
undisclosed sum. I urge my colleagues
cating the lower ‘‘Guaranteed Return.’’ A to take a close look at the concerns
jury found this action fraudulent and held Gallants would increase Prudential’s assets
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
the agent liable and Prudential separately by only $46.00. Prudential, like most other raised by Professor Priest.
liable for failing to better supervise the life insurance companies, profits more sub- The consequences of our current civil
agent. stantially from large dollar, rather than justice system can be felt in many
small dollar policies. The expert estimated ways.
Professor Priest goes on to say: that the verdict reduced dividends to every The July 17, 1992, Science magazine
Fortunately, the problem was discovered Alabama policyholder . . . by $323. reported that Abbot Laboratories put
before either the policyholder had died or
had retired to receive the annuity. Thus, to That points out the ridiculousness of off testing for a drug that might pre-
the time of trial, there was no true economic this. vent the spread of AIDS from infected
loss beyond the failed expectation of the Priest goes on to say: pregnant women to their newborns.
larger future return. I have carefully read How do we analyze a case like this in Why? According to the article, ‘‘Abbott
the transcript of the testimony, and the terms of whether punitive damages serve a officials announced that testing its
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May 2, 1995 CONGRESSIONAL RECORD — SENATE S5949
HIV hyperimmune globulin We heard reports on some such studies remedies, it might have been that ever-in-
(HIVIG) * * * would make the com- in the Judiciary Committee. There is creasing civil liability verdicts, including
pany too vulnerable to lawsuits.’’ This no single definitive study. punitive damages verdicts, would serve to re-
duce the number of accidents. That view,
action touched off some controversy. But let me say this: anyone with
however, has been totally discredited today,
The Science article continued: even a passing familiarity with our and I know of no serious tort scholar pub-
In spite of the uproar, National Institute of civil justice system knows that the lishing in a major legal journal who could
Health officials agree with Abbott that li- likelihood of a punitive damages maintain it. Instead, it is widely accepted—
ability is a significant issue in AIDS vaccine award, justified or not, is far greater and it is a routine proposition of a first-year
and therapy research. A recent investigation today than 40 years ago. Moreover, and modern torts course—that compensatory
by Science (April 10, 1992, page 168) revealed this is the crucial point, even beyond damages—economic losses and pain and suf-
that fear of lawsuits has led several HIV vac- fering—serve a complete deterrent purpose
cine developers to delay or even abandon
the increase in the frequency and
in addition to their role in compensating in-
promising projects. amount of actual awards over that
jured parties. Compensatory damages impose
time, the mere threat of punitive dam- costs on defendants who wrongfully fail to
Creighton Hale, chief executive offi-
ages affects volunteers, school boards, prevent accidents, costs equal in amount to
cer of Little League Baseball, wrote
businesses of all sizes. The mere inclu- the injuries suffered * * *.
about lawsuits filed against coaches
sion of a claim for punitive damages in
over the ordinary mishaps of a baseball He also testified that adverse pub-
today’s litigation climate boosts the
game in the February 13, 1995, Wall licity is another powerful deterrent to
settlement value of a case, regardless
Street Journal. He noted, ‘‘from my wrongdoers.
of the case’s merits. Insurance pre-
spot in the bleachers, the costs of this Let me stress that the pending
miums go up, products and services are
litigation lunacy [result in] bewildered amendment, of course, by no means
curtailed, innovation is stifled, con-
dads calling our offices asking about eliminates punitive damages. Indeed, it
sumer prices go up, and payroll costs
personal liability, and volunteer coach- allows punitive damages in an appro-
rise, adversely affecting employment.
es waking up to the fact that they’re priate case, in an amount up to three
Professor Priest states,
taking on major league risks.’’ He went times economic damages or $250,000,
on to say significantly, ‘‘It’s a problem Forty years ago, punitive damages verdicts
were exceptionally rare and were available whichever is greater.
common to all nonprofits and the vol- against only the most extreme and egregious Actually, that was the old rule. Sen-
unteers they depend on. Little League of defendant actions. The world of civil liti- ator SNOWE’s language allows two
Baseball has seen its liability insur- gation is severely different today. Both the times the total of compensatory and
ance skyrocket 1000 percent—from $75 number and, especially, magnitude of puni-
noneconomic damages.
dollars per league annually to $795—in tive damages judgments have increased dra-
a recent five year period. Good Samari- matically, indeed the frequency of claims for CONSUMERS
tans are caught in a suicide squeeze.’’ punitive damages has increased to approach Do punitive damages help con-
Mr. Hale urged Congress to extend the routine. These claims affect the settle-
ment process, both increasing the litigation
sumers? Here, again, is the testimony
common sense legal reform beyond rate and, necessarily, increasing the ulti- of Professor Priest: ‘‘The central prob-
products liability cases to cover volun- mate magnitude of settlements even in cases lem of punitive damages, however, is
teers and others. I note that Ms. Jan A. that are settled out of court. that except in the rare cases of jury
Verhage, executive director of the Girl The terrible, irrational consequences undervaluation of damages or under-
Scouts Council of the Nations Capital, of these developments are easy to see. litigation, punitive damages settle-
which also serves the surrounding Take the $601 paint refinishing case in ments and verdicts affirmatively harm
Maryland and Virginia communities, Alabama that mushroomed into a $2 consumers, ands low-income consumers
wrote to Speaker GINGRICH on Feb- million litigation bonanza. If the plain- most of all.
ruary 13, 1995. She asked that legal re- tiff knew punitive damages were not a Where punitive damages become a com-
form legislation be extended to include real possibility, the case could have monplace of civil litigation as in Alabama,
organizations like the Girl Scouts. settled. How utterly wasteful to the or even where they become a significant risk
Now, she was not speaking for the na- of business operations, consumers are
economy to have such a minor case,
tional organization. But her comments harmed because expected punitive damage
the equivalent of less than a fender-
are very telling: ‘‘Locally we must sell verdicts or settlements must be built into
bender under any rational view, actu- the price of products and services. The effect
87,000 boxes of these Girl Scout cookies
ally proceed through depositions and of the greater frequency and magnitude of
each year to pay for liability insur-
discovery, let alone actually be tried punitive damages recoveries of modern times
ance. We have no diving boards at our
and then go through the appeals proc- has been to increase the price level for all
camps. We will never own horses, and
ess. For heaven’s sake, this paint refin- products and services provided in the U.S.
many local schools will no longer pro- economy.
ishing case is now before the Supreme
vide meeting space for our volunteers.’’
Court of the United States. What a Indeed, Mr. President, as mentioned
Paul A. Crotty, the top lawyer for
waste of the company’s resources earlier, a punitive damage award in a
New York City, wrote to Commerce
which go to its lawyers and to court case like Gallant versus Prudential, in-
Committee Chairman LARRY PRESSLER
costs, and of scarce judicial resources. volving a combination life insurance-
on April 5, 1995, on behalf of New York
Only the plaintiff and his lawyer, if on annuity policy with a $25,000 face value
City and Mayor Guiliani. He urged that
a contingent fee, benefit from this and $39 monthly premium, can only
the punitive damages provision in the
windfall. make insurance less available and
underlying products liability bill be ex-
A civil justice system where all of more costly for middle- and low-in-
tended to all cases. He wrote, ‘‘Al-
this can happen is broken. One of the come people.
though punitive damages generally
problems which needs fixing is the lack
cannot be imposed against cities, they Mr. President, the problems with the
of meaningful control over punitive
generally can be imposed against gov- current punitive damages regime in
damages.
ernmental employees. Excessive this country are national in scope.
DETERRENCE
awards against individuals providing Only Congress can fix these problems.
government services can be as destruc- The cost of our current civil justice
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
The pending amendment would re-
tive as large awards against businesses system might be offset at least some- quire that the claimant establish by
that manufacture or sell products.’’ what if it actually does deter egregious clear and convincing evidence that the
This is all just the tip of the iceberg. wrongdoing. Here again, listen to the harmful conduct was carried out with
STATISTICS
testimony of Professor Priest: conscious, flagrant indifference to the
Let me say a word about the battle of I have never once seen a careful study in a rights or safety of the claimant before
specific case showing that a punitive dam-
statistics that rages over punitive winning an award of punitive damages.
ages judgment of some particular amount
damages. Supporters and opponents of was necessary to deter some particular It would then place a proportional
this amendment can rely on various wrongful behavior. limit on punitive damages of up to two
studies about the number and dollar * * * forty years ago, in a tort law regime times the sum of a plaintiff’s economic
amount of punitive damages awards. that provided little in the way of consumer loss and noneconomic loss.
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S5950 CONGRESSIONAL RECORD — SENATE May 2, 1995
Any party to the action could obtain legs while driving and, unfortunately, Here are some of the horror stories
a separate proceeding for the consider- was burned; and the Alabama case in that the USA Today story cited.
ation of whether punitive damages are which actual damages totaled only The Alabama woman awarded $250,000 in
to be awarded and the amount of such $1,200 but the jury awarded $4 million punitive damages even though she wasn’t in-
award. Our amendment does not super- in punitive damages. jured and wasn’t even present when a gas
sede or later any Federal law. It does I said that punitive damages were water heater malfunctioned.
not deny States the right to enact pu- skyrocketing a moment ago. Those The San Francisco mugger who won a
nitive damages provisions, consistent were not my words. Those were the $24,595 judgment for leg injuries when a cab
with this amendment, or to place fur- words in an opinion of Justice Sandra driver pinned him to a wall with his taxi to
ther limits on such awards. These are Day O’Connor, who said in a 1993 Su- keep the criminal from escaping.
worthy provisions. preme Court opinion that they were The Miami woman awarded $250,000 after
I urge support for the Dole amend- ‘‘skyrocketing.’’ She was addressing a she, having used cocaine and alcohol and
ment. lower court ruling which upheld a $4.3 splashed herself with gasoline, was severely
million award, Mr. President, to a con- burned trying to light a barbecue.
I yield the floor.
Mr. KYL addressed the Chair. victed felon who, in the course of vio- The Florida theme park ordered to pay 86
The PRESIDING OFFICER (Mr. lently robbing a 72-year-old subway percent of a woman’s award for injuries re-
passenger, was shot and paralyzed by a ceived on its ‘‘Grand Prix’’ ride, even though
ABRAHAM). The Senator from Arizona. the jury found the park only 1 percent at
Mr. KYL. I speak in support of the transit authority police officer. The fault and the woman’s husband—who
Dole amendment. The comments of the case was McCummings versus New rammed his car into hers—85 percent at
Senator from Utah just given really York City Transit Authority, 1993. fault.
portray I think in the most thorough This is outrageous, Mr. President. It The tricycle manufacturer who settled out
way the basic thrust of this amend- is the kind of cap that we need to place of court for $7.5 million rather than risk an
ment and the arguments for it. I will into law. These outrageous punitive even more generous jury award over the
very briefly just add at the margins damages create a tort tax paid by con- color of its trikes.
some information which I think helps sumers in the form of higher prices, According to one five-state study, the dol-
to flesh out the arguments that have higher insurance premiums, and re- lar volume of punitive-damage awards
just been made by the Senator from duced market choice and quality. against business alone is up 89-fold over a 20-
Utah. It is a regressive tort tax paid dis- year span.
As he pointed out, this amendment proportionately by citizens on the I want to quote just one other thing
would extend the product liability pu- lower end of the economic spectrum be- from this USA Today article before I
nitive damage limitation in the Gor- cause higher prices, of course, hit them close, Mr. President.
ton-Rockefeller bill to be set at two the hardest.
Do punitive damages serve as a nec- Given the emotional pull of tragic personal
times the economic damages in all injuries or honest businesses driven to bank-
civil actions involving interstate com- essary deterrent? Sadly, Mr. President,
ruptcy, few opportunities to exaggerate have
in many cases, no.
merce. The exception is the civil rights been missed by either side. But there is at
Again, according to Richard Posner, bottom an undeniable sense: The system
and environmental laws. Therefore, at
the best theory is that full compen- doesn’t operate fairly. And that sense of un-
the margin, this amendment makes the satory damages generate exactly the
underlying bill even better than it is. fairness invites opportunists to try to cash
optimal level of deterrent. in—looking for a jackpot on the chance that
Historically, as has been noted, puni- Mr. President, punitive damages are the system’s unfairness will work in their
tive damages were awarded in only the a quasi-criminal remedy. They are the favor:
rarest and most egregious cases in product of a bygone era when the re-
order to punish, to make an example of And then this article goes on to note
sources of public prosecutors were a couple other cases.
the defendant when that defendant’s slim.
conduct fell below a certain standard. Today, public prosecutors are better Like the Michigan man who lost an eye
According to Prof. George Priest of able to serve the public interest in a when a July 4 skyrocket exploded in his face
Yale Law School, who has already been and then sued his parents for letting him set
certain level of punishment. To the
quoted here, 65 to 78 percent of all tort off fireworks when he was drunk.
contrary, plaintiffs and their lawyers
actions over the last fiscal year include Or the 305-pound man who had a stomach-
seeking huge punitive damages awards
punitive damages in the pleadings. So stapling operation and sued the hospital be-
often initiate litigation without con- cause he was allowed near a refrigerator and
what was originally designed to be a sideration of the public interest, but of ate so much he popped his staples.
recovery in the very most narrow situ- their own interest. That is why these
ation has now become part of the damages need to be controlled. Mr. President, these examples would
pleadings in a majority, even exceeding Let me cite just a few of the exam- be humorous if the problem were not so
three-fourths, of the cases. Although ples. The Senator from Utah cited serious. The problem is that we are all
punitive damage awards represent a some egregious examples a moment paying for this, for this jackpot, this
relatively small part of the overall ago. lottery that is called punitive damages.
awards, the amount of the average Another example: A juror in a puni- It is time to rein it in. It is time to put
award continues to increase. tive damages case said that his fellow a modest cap on these punitive dam-
For example, according to Investors jurors discussed a damage award of be- ages.
Business Daily, in an article of April 3 tween $100,000 and $8.5 million before That is all the amendment of the ma-
of this year, a study of jury awards be- deciding on $10 million. Later, when jority leader does. It is time that we
tween 1965 and 1984 shows that the av- asked why $10 million was chosen, this adopt this kind of approach to the li-
erage inflation adjusted damage award juror said, ‘‘Quite honestly, I think it ability reform that is before us today
increased 1,595 percent, Mr. President. had something to do with finding a and, hopefully, that we will be voting
These awards clearly are skyrocketing, round figure. We were given no guide- on later this afternoon. I urge my col-
and they need to be reined in. Punitive lines.’’ leagues to support this amendment.
damage awards have in effect become a There was a recent article in USA I yield the floor.
Today, March 6, 1995, which I think had
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
lottery in which the jackpot is con- Mr. ROCKEFELLER. Mr. President, I
tinuously doubling. The lawyer’s incen- some interesting points to make and
some other examples to cite. I will cite suggest absence of a quorum.
tive to file suit is the 30 percent of the
settlement amount and the 40 percent just a couple quotations from the arti- The PRESIDING OFFICER. The ab-
of most trial judgments that he or she cle. sence of a quorum has been noted. The
realizes. The plaintiff’s incentive is the The court system that’s supposed to assure clerk will call the roll.
often outrageous jury verdict. fair compensation for people harmed through The legislative clerk proceeded to
the fault of others looks at times more like call the roll.
Two well-publicized examples will be
a gambling casino than the house of Justice.
recalled by most people: The nearly $1 Some injured individuals are walking away Mr. ROCKEFELLER. Mr. President, I
million awarded to the McDonald’s cus- with pots of money—far, far beyond any ac- ask unanimous consent that the order
tomer who put hot coffee between her tual losses they’ve suffered. for the quorum call be rescinded.
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May 2, 1995 CONGRESSIONAL RECORD — SENATE S5951
The PRESIDING OFFICER. Without stand it politically, substantively, and mention manufacturers. They say, by
objection, it is so ordered. every other way. the way, manufacturers should be ex-
Mr. ROCKEFELLER. Mr. President, I But it does not help product liability empt from this bill.
rise again to report to my colleagues to pass. I would remind Senators, as I Now, come on. I will read several
on our situation and to make a reflec- have on a number of occasions and I things about punitive damages, and I
tion. will continue, that the underlying will go right to the heart of the issue.
This morning, we conducted a series amendment here is the Product Liabil- It is not saving consumers’ pocket-
of rollcall votes. I believe there were ity Reform Fairness Act of 1995. For books and costs. This crowd knows the
eight. They all had to do with some- both those who oppose it and who favor cost of everything and the value of
thing called malpractice reform, which it and who have invested a lot of time nothing. The truth of the matter is on
is not part of the product liability re- in it, it is this bill which we want to account of product liability in this
form. see acted upon. country of ours, we have the safest
We were able to accept two amend- So I just make this point at the be- products and we are saving our citi-
ments, which means that we did not ginning of the debate. And I am per- zenry from injury, from maiming, from
accept others. Those were on fairly fectly willing to have a time agree- blindness, from being killed over and
minor issues, I might say. ment. I understand the majority leader over again by the millions. Why do you
Of the eight amendments that re- will be very amenable to a time agree- think there were over 19 million car re-
quired votes, the Senate adopted three ment. I think that is being shopped on calls in the last 10 years? We went to
by sort of an interesting variety of both sides. I do not expect this debate the Department of Transportation and
margins. The net result is that the to go on for a very long time. But, we summed up all these automobile re-
product liability bill, which is the sole again, it is an extraneous amendment. calls. And if you think the big auto-
focus of the concern of the Senator I simply point that out. It hurts the mobile companies—not only in the
from West Virginia, as well as the Sen- possibilities of product liability re- United States, but Toyota in Japan,
ator from the State of Washington, form. I think it has almost no chance and others—are recalling defective
now includes the malpractice proposal of passing. Of course, a vote will tell automobiles to save consumers
as offered by the Senator from Ken- that, but I forecast that. Thus, I won- money—they are doing it to save them-
tucky, which prevailed with 53 votes. der what it is in fact we are accom- selves money on account of product li-
So that means we now have a bill plishing by all of this. ability, because they are going to get
which has product liability in it, has I thank the Chair and yield the floor. nailed. And so to save themselves
malpractice reform in it. I have indi- Mr. HOLLINGS addressed the Chair. money, they save lives and injury to
cated before that I think at some point The PRESIDING OFFICER. The Sen- the consuming public. It is not the
Senators are going to have to make a ator from South Carolina. pocketbook that we are involved with
choice. I do not think when it comes Mr. HOLLINGS. I turned on the TV here. On the contrary, it is the safety
right down to it, we are going to be in the office and was amused to see a of products and the safety of our citi-
voting on a bill that has these two ele- series of whining and moaning and zenry.
ments in it. We may be voting on no groaning with respect to punitive dam- So let us quit bringing all of these
bill that has, therefore, nothing in it. ages. This contract crowd is going in cases, one by one, out here, and say,
Or we may be voting on a bill that has two different directions. Under the con- oh, what a terrible punitive damage
both elements in it which causes both tract now, the welfare recipient is to verdict this is and thereby we have a
elements to lose, products and mal- show more responsibility. Under the national problem. Not so.
practice, which is in nobody’s interest. contract, we have a family. They do The States have handled this. And
Now we found another one. I say this not want Government in anything, but rather than going into this case or that
with all respect and without anything they want it in everything. They want case—I do not countenance for a second
but respect. But we are debating an it in the family. I would think that that there are not some mistakes.
amendment by the majority leader, would be the last thing, to get into the There are mistakes everywhere in the
with a number of other Senators as co- family. But the contract crowd wants a administration of the law. That does
sponsors, to limit punitive damages in family bill. And, of course, funda- not call for national legislation. But,
all civil actions, not just product li- mental to the family is that we punish in a general sense, if you take all the
ability. So now this comes from the the child when it misbehaves. We product liability verdicts in the last 30
House. spank the baby and teach it some dis- years—and this is what we asked when
This, again, opens up an entire new cipline when it misbehaves and teach it we saw the witness take the stand in
range of problems and possibilities for how to do right as opposed to doing the Commerce Committee. We asked
product liability and the chances of wrong. Jonathan S. Massey, an expert who had
passage. This is opening the whole But when it comes to large corporate defended punitive damages before the
thing up. It is all civil torts. I recog- America and manufacturers, there U.S. Supreme Court, allegedly the
nize the basis of the amendment. There should be no spanking. All of a sudden, most experienced attorney. I said, yes,
is a very impressive array of organiza- it costs consumers. Mr. President, who- but I still get these anecdotal incidents
tions, including municipalities, small ever thought for a second that this bill of what we would call outrageous puni-
businesses, nonprofit groups—they is in the interests of consumers? It is tive damage findings.
want to curb the costs—and problems the biggest fraud that ever tried to be I said, ‘‘Could you please go and get
associated with punitive damages in perpetrated on this august body. Every into the record exactly all the punitive
our legal system. They have that right consumer organization in the United damage verdicts for the last 30 years,
in a democracy, and they are exer- States of any size, care, or responsi- since 1965, and find out just exactly
cising that right. And now we are see- bility is absolutely opposed to the bill. how many there were, and what were
ing the results of that. And with regard to the better legal the amendments and then add them all
I am not going to get into the sub- minds of the American Bar Associa- up?’’ With respect to that, I ask unani-
stance of the amendment or into the tion, the State supreme court justices mous consent to have this material
printed in the RECORD.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
merits of the amendment. I simply and their Conference of Chief Justices
want to indicate that this is not prod- of the several State supreme courts, There being no objection, the mate-
uct liability as it has been introduced. the Conference of State legislatures, rial was ordered to be printed in the
It is, again, trying to open it up so that the attorneys general, oh, yes, they are RECORD, as follows:
other things can be attached to it. going to look out for them? Uh-uh, no, APRIL 13, 1995.
Some may think that helps it. Some they are looking out for manufactur- Hon. ERNEST F. HOLLINGS,
may think that by adding other extra- ers. Look at the section in here that U.S. Senate Committee on Commerce, Science
and Transportation, Washington, DC.
neous areas it shows that they are exempts the manufacturer. They have DEAR SENATOR HOLLINGS: At the hearing
abreast of everything that is going on all of these great provisions in here be- on April 4, 1995 before the Consumer Affairs,
in the House and fighting with equal cause they say they are so concerned Foreign Commerce, and Tourism Committee
vigor, and I understand that; I under- about consumers, except when you of the Committee on Commerce, Science,
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S5952 CONGRESSIONAL RECORD — SENATE May 2, 1995
and Transportation on S. 565, the Product Li- Louisiana—2 cases—$8,171,885; 0 additional Exxon was sued and they came in with
ability Fairness Act of 1995, you asked me to cases with unknown amounts. a verdict of what in punitive damages?
compare the $3 billion in punitive damages Maine—3 cases—$5,112,500; 0 additional Mr. President, $3 billion.
awarded in the Pennzoil v. Texaco case with cases with unknown amounts.
I cannot find out the amount for
the sum of punitive damage awards in all Maryland—3 cases—$77,200,000; 2 additional
product liability cases since 1965. cases with unknown amounts. businesses, there are so many of them.
The attached pages show that punitive Michigan—2 cases—$400,000; 0 additional But it is up into the billions and bil-
damage awards in products liability cases cases with unknown amounts. lions of dollars. If this Congress was
since 1965 come to a fraction of the $3 billion Minnesota—4 cases—$10,000,000; 1 addi- really interested in lowering the ver-
figure. For products liability cases in which tional case with unknown amounts. dicts in tort cases, they would go right
the punitive damage award is known, the Mississippi—4 cases—$2,790,000; 1 additional to the businesses suing businesses.
total comes to $953,073,079. There are 109 ad- case with unknown amounts. They would go right to the automobile
ditional cases in which the punitive damage Missouri—9 cases—$20,785,000; 1 additional
case with unknown amounts.
accident cases. They would go to all
award was not reported by the court or ei-
ther party, most likely because it was not Montana—2 cases—$1,600,000; 1 additional the other kinds of tort cases.
large. If one were to extrapolate for those 109 case with unknown amounts. The fact is that, of all the civil find-
cases by taking the average award in cases Nevada—1 case—$40,000; 1 additional case ings in the United States of America,
in which the punitive award is known— with unknown amounts. tort filings only amount to 9 percent of
which would err on the side of the inflating New Jersey—4 cases—$900,000; 5 additional the total amount of civil findings; and
punitive damage awards in products liability cases with unknown amounts. of the 9 percent, product liability
cases—the total of punitive damage awards New Mexico—4 cases—$1,715,000; 1 addi- amounts to 4 percent of the 9 percent
in all products liability cases since 1965 tional case with unknown amounts.
New York—7 cases—$6,019,000; 6 additional
or .36 of 1 percent.
would come to only $1,337,832,211—less than
half the award in Pennzoil v. Texaco. cases with unknown amounts. Another problem solved by the
I hope this information is of assistance. North Carolina—2 cases—$4,500,000; 0 addi- States. The Supreme Court Justices
Sincerely, tional cases with unknown amounts. and legislatures say we handle it, and I
JONATHAN S. MASSEY. Ohio—6 cases—$4,393,000; 1 additional case will go right, for example, to my own
with unknown amounts. State of South Carolina with respect to
PRODUCT LIABILITY PUNITIVE AWARDS, 1965– Oklahoma—6 cases—$15,390,000; 1 addi- punitive damages.
PRESENT tional case with unknown amounts. In a recent case of the State versus
Alabama—20 cases—$58,604,000; 9 additional Oregon—3 cases—$62,700,000; 0 additional
cases with unknown amounts.
Rush, but the heading would be Gamble
cases with unknown amounts. versus Stevenson, an appeal of the
Alaska—2 cases—$2,520,000; 1 additional Pennsylvania—5 cases—$16,298,000; 8 addi-
case with unknown amounts. tional cases with unknown amounts. Southern Bell Telephone Telegraph.
Arizona—6 cases—$3,362,500; 3 additional Rhode Island—1 case—$9,700,000; 0 addi- Now, I read from the opinion of the
cases with unknown amounts. tional cases with unknown amounts. Supreme Court as follows: ‘‘In South
Alabama—1 case—$25,000,000; 0 additional South Carolina—5 cases—$2,945,500; 4 addi- Carolina punitive damages are allowed
cases with unknown amounts. tional cases with unknown amounts. in the interest of society.’’ Listen to
Alaska—1 case—$1,000,000; 0 additional Rhode Island—1 case—$100,000; 0 additional that. We would think punitive damages
cases with unknown amounts. cases with unknown amounts.
South Dakota—1 case—$2,500,000; 0 addi-
was the most heinous offense that ever
Arizona—2 cases—$6,000,000; 3 additional
cases with unknown amounts. tional cases with unknown amounts. occurred without any relation in the
California—17 cases—$35,854,000; 9 addi- Tennessee—4 cases—$4,720,000; 3 additional world to the good it has done.
tional cases with unknown amounts. cases with unknown amounts. Why do we fine motorists for speed-
Florida—1 case—$1,000,000; 0 additional Texas—38 cases—$217,098,000; 19 additional ing and disobeying our motor vehicle
cases with unknown amounts. cases with unknown amounts. laws in America? We fine them. Why do
Connecticut—1 case—$688,000; 0 additional Utah—1 case—$300,000; 0 additional cases we fine the others for their various
cases with unknown amounts. with unknown amounts. crimes? To make certain they do not
Florida—1 case—$519,000; 0 additional cases Virginia—2 cases—$340,000; 0 additional
cases with unknown amounts.
commit them again. Similarly, with
with unknown amounts.
California—4 cases—$3,618,653; 0 additional West Virginia—3 cases—$2,433,100; 4 addi- manufacturers.
cases with unknown amounts. tional cases with unknown amounts. Punitive damages—fine them, to
Florida—1 case—$750,000; 0 additional cases Wisconsin—7 cases—$10,622,000; 4 additional make absolutely sure that they do not
with unknown amounts. cases with unknown amounts. repeat their wrong.
California—3 cases—$2,425,000; 0 additional Florida—1 case—$2,500,000; 0 additional They would say we cannot lose, we
cases with unknown amounts. cases with unknown amounts. are making money. So why has Chrys-
Colorado—3 cases—$7,350,000; 1 additional Wisconsin—2 cases—$26,000,000; 0 additional ler recalled 4 million cars to fix the
case with unknown amounts. cases with unknown amounts.
Connecticut—0 cases—$0; 1 additional case back latch on the door? Not on account
District of Columbia—1 case—$2,500,000; 0
with unknown amounts. additional cases with unknown amounts. of the cost. They could get by with
Delaware—2 cases—$75,120,000; 0 additional Grand total—270 cases—$953,073,079; 109 ad- that. They would leave it there, but
cases with unknown amounts. ditional cases with unknown amounts. they know that there are chances now
Florida—26 cases—$40,607,000; 9 additional Average punitive award: $3,529,900. brought to the attention of the public
cases with unknown amounts. Extrapolated total of all awards: that they are not only going to be ver-
California—1 case—$30,000; 0 additional $1,337,832,211. dicts against them in compensatory
cases with unknown amounts. Mr. HOLLINGS. Mr. President, the
Florida—2 case—$3,500,000; 0 additional damages but in punitive damages. No
pages show that punitive damage longer can they factor it in the cost of
cases with unknown amounts.
Georgia—10 cases—$43,378,333; 3 additional awards in product liability cases since product because of punitive damages.
cases with unknown amounts. 1965 come to a fraction of $3 billion. To This is the very element that is
Hawaii—1 case—$11,250,000; 0 additional be exact, they come to $1,337,832,211. bringing about the safety—not taking
cases with unknown amounts. Why does this Senator say ‘‘a frac- care of the parties involved but taking
Idaho—0 cases—$0; 1 additional case with tion’’ of $3 billion? If we go to the care of society, generally—that is the
unknown amounts. Pennzoil versus Texaco case, of busi-
Illinois—16 cases—$44,149,827; 3 additional
point to be made here.
nesses suing businesses, what do we The first sentence:
cases with unknown amounts.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
Minnesota—1 case—$7,000,000; 0 additional get? We get almost a $12 billion verdict In South Carolina, punitive damages are
cases with unknown amounts. that included what? It included a find- allowed in the interest of society in the na-
Illinois—3 cases—$5,000,000; 0 additional ing of punitive damages in the amount ture of punishment and as a warning and ex-
cases with unknown amounts. of 3 billion bucks. ample to deter the wrongdoer and others
Indiana—1 case—$500,000; 0 additional cases In other words, of all the product li- from committing like offenses in the future.
with unknown amounts. ability punitive damage findings in the Moreover, they serve as an indication of pri-
Iowa—1 case—$50,000; 2 additional cases vate rights when it is proved that such have
last 30 years amounting to $1.3 billion,
with unknown amounts. been wantonly, willfully, or maliciously vio-
Kansas—7 cases—$47,521,500; 1 additional we have one business-against-business lated. Lastly, punitive damages may be
case with unknown amounts. case of $3 billion. Or another one, since awarded only upon a finding of actual dam-
Kentucky—2 cases—$6,500,000; 0 additional they are picking out cases, I will pick age. In the instant case the trial judge’s jury
cases with unknown amounts. the Exxon Valdez case, a case where charge concluded the degree of recklessness
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May 2, 1995 CONGRESSIONAL RECORD — SENATE S5953
requisite to punitive damage award, that the matter here. And I sort of get em- from Michigan in his letter with the
such an award was to punish a defendant or barrassed for them. Senator from Kentucky relative to the
deter and stop it and others from similar The reason I get embarrassed for airlines. They had to go and get all the
conduct in the future, that is, to make an ex-
them is just this. I got a letter today airlines together, get law firms all over
ample of the defendant.
from my distinguished colleague and the country, and assemble 2.1 million
That is an affirmative action pro- friend, Drew Lewis, the chairman of clients.
gram, to make an example. Everybody Union Pacific Corp., dated April 27. He In the letter to the colleagues, under
is interested in affirmative action. is a former Secretary of Transpor- the Abraham-McConnell letter, it ap-
Here it is. Make an example of the de- tation. He did an outstanding job. I do peared that, heavens above, quoting
fendant, the wrongdoer. ‘‘That it must not speak in criticism or derision. the Washington Post, the lawyers got
find actual damages before awarding Rather, I speak—and this is the factual $16.1 million in fees and the client got
punitive damages and that in calcu- dismay that I have—because I know he a $25 gift certificate for travel. I knew
lating the amount of such damages, it knows better. It is a short letter and I that the client just getting $25 and the
may consider the defendant’s ability to know why he is writing it. lawyer getting $16 million would not be
pay.’’ Union Pacific urges your support for S. 565, approved by any court. So we went
Now, Mr. President, to ensure that a the Product Liability Fairness Act legisla- back to the record.
punitive damages award is proper, the tion. The U.S. legal system is out of control. Yes, in a class action of that kind,
trial court shall conduct a post trial The high cost of litigation and large damage what was the number of clients? It was
review and consider the following: one, awards translate into higher prices for con- 2.1 million. What was the amount of
the defendant’s degree of culpability; sumers. Typically less than half the money the verdict? It was $438 million. How
two, duration of the conduct. awarded in product liability cases goes to
compensate the claimant. The winner is the
many law firms? They had 37 law firms
Mind you me, Mr. President, this is all over the country, and the average
trial attorney, not the American consumer.
not the jury, the runaway juries, the If American business is going to succeed in fee was not a third, or 331⁄3 percent, or
same people that elected Members in the global marketplace and American jobs 25 percent, or 20 percent, or 10 percent,
Congress, all of a sudden impanelled are to grow, your vote is critical. Please vote or 5 percent, or 1 percent. The average
and with a sworn oath, to find unani- for cloture and final passage of S. 565. fee of the attorneys involved was less—
mously by a preponderance of the evi- Sincerely, Drew. less than 1 percent. Had they not cor-
dence, willful misconduct. And all 12 Let us take that little letter here and related all that, it would not look so
having found such, that same crowd see it exactly. I know this gentleman garish and enormous to us unstudied
that elects and sends Members, all of a knows better. He is the most sophisti- witnesses here.
sudden, they have lost their minds, cated of former public servants and But this is the Fairness Act, they
their judgment. They are runaway and corporate executives and he has been say. Then the next sentence, ‘‘The
now have to be restricted by national around. I know his entities. The Busi- United States legal system is out of
restrictions. For what? For manufac- ness Roundtable and the National As- control.’’
turers, that is for what, and for less sociation of Manufacturers and all got That is sheer nonsense. If it is out of
safety in America. him to write this thing and it was control, it is on account of businesses
Let me read that again: ground out. suing businesses. It certainly is not a
To ensure that punitive damages award is He calls it the ‘‘Fairness Act.’’ He litigation explosion. We have proved
proper, the trial court shall conduct a picked up the title. That is not what that. We have proved time and again
posttrial review that may consider the fol- they called it over on the House side. It that product liability cases, as the Sen-
lowing: started off—if you get the title of the ator from West Virginia, the principal
1, defendant’s degree of culpability; 2, the bill itself on the desk here, you will sponsor of the measure, says—when we
duration of the conduct; 3, the defendant’s
find out—‘‘To establish legal standards engaged in looking at product liability
awareness or concealment; 4, the existence of
similar past conduct; 5, likelihood the award and procedures for product liability cases, we find the entity in the testi-
will deter the defendant or others from like litigation.’’ At least it was straight- mony before the Commerce Com-
conduct; 6, whether the award is reasonably forward in the House. Applesauce in mittee, unquestioned—no one has
related to the harm likely to result from the U.S. Senate. Fairness? Fair to proved otherwise—unquestioned, that
such conduct; 7, defendant’s ability to pay; 8, whom? Not consumers. This crowd does there are less filings and less verdicts
as noted in Haslip case, ‘‘other factors’’ not represent consumers. I have; they and less plaintiffs’ victories all the way
deemed appropriate. have not. across the board. So if the legal system
That is, the court, not only the 12 When I asked the distinguished Chair is out of control, it is out of control for
impaneled jurors, but the court itself, where was the record here whereby other reasons but not product liability.
shall review and study. trial lawyers had done in their clients, ‘‘The high cost of litigation and large
Now, generally, this is a law that ap- under the Abraham amendment, he had damage awards translate into higher
plies in 45 of the 50 States but, of one letter from a constituent in Michi- prices for consumers.’’ I just reread
course, due to the Conference Board, gan. I knew that there were not a big that my way: The high cost of litiga-
due to the Business Advisory Round- wave of clients being done in. In fact, tion and large damage awards translate
table, due to the National Association had it not been for the trial lawyers, into higher safety for the consuming
of Manufacturers’ lobbyists that have they would not have received anything. public of America. That is what it
been going on for years and they come After all, these manufacturers do translates into. And it ought to go into
and report at every election time, have a team of attorneys, investiga- the costs. It is a minimal cost to them
‘‘Now, Senator, we have to do some- tors, adjusters, local attorneys and to put out safe products. And the best
thing about tort reform or product li- otherwise, and they readily, on any of manufacturers want to do that and
ability reform.’’ kind of claim or letter they get, imme- they brag about the quality now of
The average Senator or candidate, diately zoom in and, generally speak- their particular manufacture. They
not aware of the ramifications, not ing, settle the case or claim. It is good brag about their quality of manufac-
having attended any of the hearings or business judgment that they do; it is ture. So it is not high cost translating
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
otherwise, might say, ‘‘Oh? I am trying good business judgment they do. They into high prices but, let us say, a high-
to get votes. Reform?’’ They get do not want to be claimed to have un- er degree of safety.
caught. Words do mean things in our safe products. ‘‘Typically, less than half the money
society. And they say, ‘‘Heavens, I can It is only when they deny an obvious awarded in product liability cases goes
get the support of this strong crowd. I claim that should be compensated that to compensate * * * ’’ We find that is
can even get financial contributions if it comes to the trial lawyers. We do incorrect. There was a study by the Na-
all I have to say is yes, yes, I am for re- not scare up cases—except, of course, tional Insurance Foundation to the ef-
form. Product liability? Put me down.’’ in these class action suits, like asbes- fect that, yes, the claimant did not get
They put them down. Then they tosis. But that is what had to be done. the majority of the money, but the ma-
come here and they get embarrassed That is exactly what was done with re- jority of the money was going to the
because they finally hear the truth of spect to the example of the Senator defendants’ attorneys.
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S5954 CONGRESSIONAL RECORD — SENATE May 2, 1995
You ought to see these billable hours. American jobs are to grow, your vote is other three working on an automobile?
That is why the Senator from South critical.’’ What is the inference there? It would turn it over into a tailspin in
Carolina wanted to limit billable hours The inference regarding the global a minute. They know it. So they are
around this town to $50 an hour. I could marketplace is that product liability super careful in their manufacture.
catch the thrust of the movement ear- costs and the burden on American pro- That goes into the cost of the product.
lier last week, when they came in, duction is a cost and a burden not suf- And, yes, it costs consumers, and con-
about the money going to the claimant fered by foreign production. We will go sumers welcome paying that higher
as compared to the money going to at- right to the heart of that matter. price for the antilock brake and safety.
torneys. And the thrust was that they In addition, working over the years— Mr. President, it goes to the safety,
had given up on Girl Scout cookies and and I have had a delightful experience, not the cost. But what happens in Ger-
they have given up now on Little I have to immodestly acknowledge, many? In Germany, they come with
League baseball and all these other with respect to the attraction of indus- Mercedes Benz down in Alabama where,
things they tried to raise, competitive- try to my own State, and I will be glad incidentally, both Alabama Senators
ness and otherwise. Now they say, to meet with anybody and we will com- are opposed to this bill. Both Alabama
‘‘Well, let us kill all the lawyers.’’ pare the records. We will compare the Senators are opposed to this bill. Mer-
I say, if you want to get rid of half endeavor, and we will compare the re- cedes Benz says, ‘‘We love Alabama,
the 60,000 lawyers in this town, if you sults. I have had the experience of and we are putting our new manufac-
want to get rid of 30,000 lawyers, just working at the local level on the at- turer down there.’’ BMW says, ‘‘We
put not a minimum wage but put a traction not only of the American blue love South Carolina and its product li-
maximum wage, a maximum wage of chip corporations, but those in the ability law,’’ just like Mercedes Benz
$50 an hour which will give them the global marketplace. Admittedly, of likes Alabama’s product liability law,
salary of a U.S. Senator. If they course, many of the blue chips are in and they put a factory there. I have
worked any overtime, like we do work the global marketplace. But let us go over 100 German factories liking the
overtime as Senators, they could easily directly to the ones we know. Let us product liability law in my State. I
make $200,000 a year. But that is where say German industries and Japanese have over 50 Japanese industries liking
the compensation is going. It is just industries. the product liability law in my State.
like the situation, if you had a $100 In our great State of South Carolina, But they are not a member of the Busi-
finding, you would find that $40 would we have over 100 German industries. I ness Roundtable.
go to the defendant’s attorneys, $20 made the first trip over there with the
So what you have here is this mail-
would go to the plaintiff’s attorneys, Governors, to the various communities
ing out of absolutely unfounded conclu-
and $40 to the claimant. in Germany, with an industrial group
sions, which is an embarrassment to
(Mr. THOMPSON assumed the Chair). to attract investment in South Caro-
this Senator. Specifically, you look at
Mr. HOLLINGS. Mr. President, the lina in 1960. So that is 35 years ago. We
what they put out in their advertise-
rationale of this simple statement is just got, of course, BMW. BMW, by the
ments when it comes to punitive dam-
get rid of or kill all of the lawyers; get way, in Spartanburg, stands not for Ba-
ages and product liability. Here is the
rid of the trial lawyers because—the varian Motor Works, but BMW stands
ad they are running in newspapers.
next sentence is—‘‘The winner is the for ‘‘Bubba Makes Wheels.’’ We have a
This is an easy one to carry. It is enti-
trial attorney, not the American con- wonderful system down there.
I was with the Vice President this tled, ‘‘Let’s Put an End to the Lawsuit
sumer.’’ If you think this crowd is in-
last Friday at a luncheon. We put out Lottery.’’
terested in consumers, just get all the
consumer legislation and look at their 20,000 and some BMW automobiles this You know, my conservative friends,
votes on that. year from Spartanburg, SC. Do they when they get this rap music, say,
But going right back to the report, in have a problem with product liability? ‘‘You have to cut out that rap music. It
the 103d Congress, I knew we had this Not at all. I went to Bosch not long teaches violence.’’ There was one that I
when we had the hearings. In a 1977 ago. They came in making fuel remember even President Clinton as a
survey conducted by the Insurance injectors for all automobile manufac- candidate took to task, about ‘‘kill all
Services Office, for every dollar paid to turers, and more particularly now have the cops,’’ the ‘‘cop-killer’’ one. He
claimants, insurers paid an average of become expert in antilock brake manu- complained then. The American public
an additional 42 cents in defense costs; facture. They have a 10-year contract went along with him and voted for can-
while for every dollar awarded to a with General Motors for all the didate Clinton to become President be-
plaintiff, the plaintiff pays an average antilock brakes on their cars. They cause those words mean something.
contingent fee of 33 cents of that dol- have the contract for Toyota and Mer- They want to cut all of that out. Now
lar. Thus, in cases in which the plain- cedes Benz. I turned to that manufac- that they are blowing up buildings in
tiffs prevail, out of each $1.42 spent on turer. I said, ‘‘What about product li- America, and some people say, ‘‘Oh, no.
litigation, half of that goes to attorney ability? How many product liability Words don’t mean anything.’’
fees, with the defendants’ attorneys on claims?’’ He said, ‘‘What is that?’’ I The truth of the matter is, Mr. Presi-
average paid better than the plaintiffs’ said, ‘‘Product liability? You know, dent, my colleagues on the other side
attorneys. where you have a defective antilock?’’ of the aisle have a school where they
That is the national insurance con- ‘‘Oh, no, no, no,’’ he said, ‘‘We will not teach them to use words. I think this is
sumer organization finding that the at- have that.’’ He went right over on the a good time, since this is the thrust of
torney for the insurance companies re- line and he picked up one of the the measure here, if I have it here in
ceived on the average close to one- antilock brake devices. one of these files. With respect to the
third more than the average attorney’s He said, ‘‘See. See that serial num- words, they come in and they hold a
fee paid to plaintiffs’ attorneys. I am ber.’’ He said, ‘‘We have a serial num- school. I know they attend a school,
glad I quoted that for the record, but ber on every antilock brake that comes these newcomers to public office. I will
that is not the way this letter reads. out of this factory. We would know im- see if I cannot find that, generally
‘‘The winner is the trial attorney.’’ We mediately by that number if there was speaking, so that the colleagues can be
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
are not winners or losers. But if you a defect where it occurred. But we educated about what is really going on.
are going to characterize, as my distin- haven’t had any of that occur down But this is a school that the distin-
guished friend, Mr. Drew Lewis, does here, and we are not going to have any guished Speaker has been running for
here in the letter about the winner, he of that occur.’’ And he was proud— years. He tells all the candidates that
says, ‘‘The winner is the trial attorney, proud—not whining and crying through have come in. I know when a new Re-
not the American consumer.’’ Abso- political representation up here in the publican is elected from South Caro-
lutely false. We have all the facts and national Congress about saving con- lina, he has to attend a school to find
all the hearings proving otherwise. sumers money. He was proud of putting out how to talk. And, in fact, if they
Going now to the final two sentences, out an absolutely safe product. can get them ahead of time, they tell
‘‘If American business is going to suc- Can you imagine one of those them how to campaign and how to use
ceed in the global marketplace, and antilock brakes not working and the words that inflame, words that stir up.
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May 2, 1995 CONGRESSIONAL RECORD — SENATE S5955
It was put into the RECORD some ‘‘Oh, no, no, no, we don’t want that. We I never have heard of a South Carolina
time ago; I think back in 1990, if I am don’t want you to see our records.’’ lawyer going over and suing in Ala-
not mistaken. But we had the meaning- We have had hearings upon hearings bama. They act like all we have to do
ful words. I certainly would like to be upon hearings. We never, in the 15-year is go over there and file the case in
able to refer to that, because what hap- period of handling this problem, have Alabama.
pens is that they call this—that is, the been able to get from the casualty in- ‘‘The current product liability sys-
Government here in Washington, and surance companies their costs and prof- tem with its patchwork of local
this is reported in the David Broder its, their records. Even the Senator laws’’—patchwork. Who has given us
column. They reported that the Gov- from West Virginia has put on an patchwork? Read this bill. ‘‘ * * * with
ernment in Washington is the ‘‘cor- amendment, which I am constrained to its patchwork of local laws got its
rupt, liberal, welfare state.’’ submit later on when we get to the ac- start at the turn of the century when
These are the handouts in the schools tual bill itself, to say that they file businesses were all so local, but times
that they give to my Republican col- these reports. They never have. They have changed.’’
leagues and say you ought to all join do not want to. They are trying to give a sense of
in. And they list the word ‘‘corrupt.’’ The reason we asked for these facts history to this. This is absolutely false.
They list the word ‘‘liberal.’’ They list way back almost 15 years ago, they During my 20 years of law practice be-
the word ‘‘welfare.’’ So the revolution, said it was impossible to obtain insur- fore I came to the Senate, I never
according to Speaker Gingrich in his ance, impossible to obtain. They have heard of any of this, ever. And they
courses, is against the corrupt, liberal plenty of insurance. It is easily obtain- continue to do business under different
welfare State. And that is the way they able. And we wanted to find out, as was laws in the 50 different States under
refer to it. later found out in other hearings, if the interstate commerce clause and it
Mr. President, let us go to the words they, like the S&L’s and all, had made is not about times have changed.
here about the lawsuit lottery. There is bad investments in real estate and ‘‘American-made products now travel
not any lottery, I can tell you that where their losses came from—not across State lines’’—well, they have al-
right now. All you have to do, if you from a product liability litigation ex- ways traveled across State lines.
defend a product liability case, is con- plosion but, rather, sorry investments I will never forget Henry Grady and
vince one juror. That is all you have to in real estate and supermarket and the funeral in the days just after the
do, raise a doubt in one juror’s mind shopping center developments. They Civil War. The Senator from Tennessee
because it has to be a unanimous ver- made the same mistake that all of would remember it. I think they said
dict by the greater weight of the pre- these banks and insurance companies that he was a poor man, buried, let us
ponderance of the evidence. and savings and loan institutions had say, in South Carolina. He was buried
But here is the mailout that they put made. with a New Jersey frock and some New
in the advertisements that they have But this says 51 separate laws. If you
York shoes, and the buttons were made
going now for the past several weeks. did not know what you were reading,
in Minnesota, the wood for the shovel
‘‘Let’s Put an End to the Lawsuit Lot- you would say, ‘‘Good golly, Moses;
had come from New Hampshire, the
tery. It’s sad,’’ this article says, the ad- let’s get uniformity.’’ They do not
steel had come from Pennsylvania, and
vertisement, ‘‘but the civil justice sys- want uniformity even under this. If
they went on and on down there about
tem in America has become nothing they wanted uniformity, they would
the caskets and all. They said the only
more than a legal lottery.’’ give you a Federal cause of action.
thing South Carolina furnished was the
That is outrageous nonsense. It is That is why, one of the big reasons, the
hole in the ground.
embarrassing to see things being spon- American Bar Association says this
sored by responsible business entities adds complexity; this is not uni- Now, tell me about traveling in the
that have buddied up together here in formity. You have words of art: re- different States. That is Henry Grady
what they call the Product Liability quirements, findings, measures of evi- 100 years ago. They say no, times have
Coordinating Committee. dence, exemptions of evidence, all to be changed now and all products travel
It goes on to read, ‘‘With juries re- interpreted by 50 separate supreme across State lines. ‘‘Unfortunately, so
turning one outrageous award after an- courts and the circuit court of appeals do plaintiffs and their lawyers seeking
other, it’s not surprising that the num- here in the District of Columbia. the most favorable State for their
ber of product liability suits is sky- Now, try that on for a lawyers’ full claim.’’ Unless you have diversity, you
rocketing.’’ employment act. Come on. Everyone do not run around and seek anything of
Absolutely false. We have had hear- knows that if they really wanted uni- that kind. And you have the client in
ings upon hearings upon hearings, and formity, they would have required a the community where the client is in-
the filings and the suits themselves are Federal cause of action and they would jured. I can tell you now, having tried
less and less each year. The awards have uniformity and that would have these cases, that you go try it in the
given are less and less and the number at least cut down on some of the mul- vicinity of the client where they can
of plaintiff victories are less and less. tiplicities—the appeals, the interpreta- understand and know the injury and we
But this ad says they have sky- tions, the motions and everything else might get a friend on the jury or an ac-
rocketed—no basis in fact. of that kind in the 51 separate laws and quaintance or whatever it is. Some-
‘‘There are 51 separate laws, one for separate jurisdictions governing prod- times the blind hog picks up an acorn.
each State and the District of Colum- uct liability. You might get a break. If I go to an-
bia, governing product liability.’’ ‘‘But today the outcome of a lawsuit other State, that immediately cuts me
There are 51 separate laws, Mr. Presi- can depend more on geography than down to next to nothing with respect
dent, governing insurance companies. the merits of the case.’’ to the fee, if I have to go and get the
Do you see them up here complaining? They know that. Their commercial lawyers who know the local law there,
They have to file every one of their code, the Uniform Commercial Code, is let us say, if I went to Birmingham,
policies they want to sell in any one of anything but uniform. You can sit up AL, I would have to give all the mon-
the States. Get these casualty compa- there in New York. You can sell a prod- eys to the lawyers in Birmingham.
I am not a passthrough for lawyers in
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nies together and ask them when are uct made in Canada and solicit down in
they going to complain about filing all Alabama and deliver it, by gosh, to the Birmingham. I am trying my clients’
of these policies here, 50 to 60 different factory site in North Carolina, and you cases in my own State.
policies that they have now, in each can say, ‘‘Under my interpretation of This is outrageous hogwash here and
one of the 50 States. They are not com- this particular contract, I select the they know it.
plaining about that. In fact, they want New York law.’’ ‘‘Unfortunately, so do plaintiffs and
the McCarran-Ferguson antitrust ex- You have got what they talk about, their lawyers seeking the most favor-
emption so they can get together. They forum shopping. The manufacturers do able state for their claim. This not
want to continue. I have suggested just that. They know about that. But only hurts competitiveness, it stifles
maybe we ought to federalize it be- unless you have diversity of jurisdic- innovation, eliminates jobs and hurts
cause they are in interstate commerce. tion—and I do not go over to Alabama, all Americans.
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S5956 CONGRESSIONAL RECORD — SENATE May 2, 1995
How can we stop the lawsuit lottery? ticularly with respect to punitive dam- punitive damages proposed by the Sen-
We need a uniform, modern national ages. ator from Maine [Ms. SNOWE], and ac-
product liability law. One more time. On punitive damages, cepted earlier here today, would extend
But it’s time for Congress to act. When it go ahead and cite your two or three lit- those limitations from the product li-
comes to the lawsuit lottery no one wins. tle cases that sound outrageous. I do ability sections of this bill and the now
They do not say that for automobile not have the time to run down and medical malpractice sections of this
accident cases, where there is a far, far search out every one of the cases to bill to all actions. In other words, we
higher number of different laws, dif- find out whether the amount of the would have one uniform standard of
ferent highway speed laws, degrees of verdict was cut, whether it was limitations and relatively one uniform
care, comparative negligence, con- changed. definition of the degree of proof re-
tributory negligence, go right on down Just like the McDonald’s coffee case. quired for punitive damages in all
the list, all the automobile accident Once we searched that out, we found States which have fewer limitations at
cases and, in this case, automobile out, yes, there were third-degree burns the present time or no limitations at
product liability cases. over one-sixth of the injured woman’s all.
They do not say that here with re- body, 3 weeks in the hospital. After 700 Mr. President, the majority leader
spect to medical malpractice or the se- calls and an offer to settle for $20,000, has outlined some of the persuasive
curities or anything else. they totally ignored it and said we put reasons for this extension. The primary
Then they have a little thing like this in the cost of the product, because reasons being the impact on small busi-
they are even trying to mimic Oli- the hotter we make the coffee, the nesses which now live under the Damo-
phant: ‘‘Less than half of all money more coffee we produce. cles sword of a punitive damage judg-
awarded in a lawsuit goes to the vic- It is money, money that concerns ment which can literally put them out
tim.’’ Like they are for the victim. these manufacturers on product liabil- of business and the increasing and ad-
It is clever. But it is outrageous blas- ity. That is the one thing, the bottom verse impact of punitive damage
phemy, I can tell you right now, to put line. It is not the safety of the citi- awards or potential punitive damage
this kind of thing out to the unknow- zenry in America, but it is the money awards on nonprofit organizations, in-
ing public and perhaps to the unknow- that they are interested in. cluding charities, including, as the ma-
ing Congressman and Senator. We But of all the product liability cases, jority leader pointed out, the Girl
know better. what we have found, as they sum up Scouts, Little League, and the like.
What we have is a solution looking over the last 30 years, is some $1.333 I find these reasons to be persuasive
for a problem. What we have here is billion. One verdict in business suing reasons. I find it easy to be persuaded
trying to find justification for a lob- business, Pennzoil versus Texaco, a $3 because it has been my view, almost
bying effort that has been going on billion punitive damages finding in just from the time that I began to practice
with the AMA, the Business Round- one case, is twice the number of the law, that the rule with respect to puni-
table, and the Conference Board for 15 consummate sum total of all product tive damages in the State I represent,
years, where they seek out the can- liability punitive findings in the last 30 the State of Washington, which pro-
didates and ask for a commitment and, years. Or take Exxon Valdez, another $3 hibits punitive damages for all prac-
generally speaking, get that commit- billion in punitive damages. tical purposes in all civil litigations, to
ment without any hearing. At the court level, I do not think the be the appropriate rule.
And certainly if they are newcomers courts of this land have gone crazy.
to this particular Senate, they have Punitive damages are just exactly
They have been all the way up to the
not had any hearings in the Commerce that. They are a form of punishment.
Supreme Court to question the con-
Committee. We had 2 days because we In our society and American tradition,
stitutionality of punitive damages.
were told we had to agree to it, because punishment by the Government or at
And each State either avoided it or it
we had to move, we had to catch up the hands of the Government is tradi-
is measured or it is rescinded and sent
with the Contract With America. We tionally reserved for the criminal code.
back with a cut or total elimination.
did not have hearings in depth. We had Look under the steps that I have read The criminal code carries with it privi-
them by reference. I had to include here with respect to the South Caro- leges against self incrimination, a re-
other hearings that we had with re- lina law. I can go down some other quirement that the prosecution prove
spect to the law professors that oppose States laws if they are interested. its case beyond a reasonable doubt and,
this measure, with respect not only to As a matter of punishment, we spank of course, explicit statutory limita-
the American Bar Association now but the baby when the baby misbehaves, tions and definitions of what punish-
the American Bar Association in each that crowd that wants the family bill. ment is appropriate in connection with
one of the five hearings that we had What we are trying to do is spank the a particular crime. None of these pro-
over the 15-year period, and all the manufacturer when the manufacturer jections exist with respect to punitive
other entities that went into depth on misbehaves and tell them, ‘‘Don’t re- damages. Juries decide them on an ad
this matter. peat this. Don’t you do this again.’’ hoc basis, generally speaking, on
And that is what they hope to do And when you tell that manufac- whether or not the same conduct or
here with this fix that is on in the U.S. turer, you have to look at his size, you product resulted in punitive damages.
Senate. And do not come up with, ‘‘Oh, have to look at his income, you have to There is, of course, no self-incrimina-
we are looking out for consumers.’’ look at his culpability, you have to tion. The standard of proof in many
They have the audacity in the same in- look at his willfulness, whether it was States is a preponderance of the evi-
strument here to say they look out for mere neglect or whether it was a will- dence, and even in this bill it is clear
consumers when they exempt the man- ful act, whether they had any warnings and convincing evidence, which falls
ufacturers. The unmitigated gall of or disregarded or heeded the particular short of the beyond a reasonable doubt
that provision is just so offensive it warnings, whether it was a mistake or standard. And most significantly of all,
gets me stirred up. exactly what. And you have to prove there are absolutely no limitations on
How we ever got good, right-thinking all that by the greater weight of the the amount of punitive damages, thus
the degree of punishment which can be
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folks on the floor of the U.S. Senate preponderance of the evidence to all 12
proposing this measure, saying that jurors and to the trial judge. imposed on a given defendant in civil
they are proposing it for the consumer, I yield the floor. litigation.
I do not know. Show me that con- Mr. GORTON addressed the Chair. The Supreme Court of the United
sumer. What is that saying—‘‘Let them The PRESIDING OFFICER. The Sen- States has heard several appeals of
come to Berlin.’’ Well, show me that ator from Washington. large punitive damage judgments, ap-
consumer. Heavens above. Mr. GORTON. Mr. President, nomi- peals based on constitutional protec-
The Consumer Federation, Con- nally, at least, the issue before the tions through the 14th amendment.
sumers Union, Public Citizen, all the Senate at the moment is the Dole The Supreme Court has never come up
consumer groups again appear in oppo- amendment. The Dole amendment, with a standard, with a maxim, by any
sition to this particular measure, par- which incorporates the limitations on means, although there have been hints
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May 2, 1995 CONGRESSIONAL RECORD — SENATE S5957
that punitive damage awards that ex- In the case of product liability, have So we have a system which not only
ceed four times the actual damages we properly balanced it with our desire penalizes volunteers and restricts the
come close to reaching some potential that our companies spend large operation of our health care system
constitutional limitation. amounts on research and then develop and restricts research and development
So from my perspective, I believe new and improved products and then and the production and sale of goods,
that it is both constitutional and ap- market those products or market exist- but one which is extraordinarily ineffi-
propriate for the Congress to deal with ing products—sometimes for dangerous cient in compensating the actual real
these issues and for the Congress to occupations where inevitably someone victims of breakdowns in the system
adopt the rule of the minority of the using the product is going to be in- itself.
States—my own included—that say jured? Or do we have a system which is
To say, as opponents do, that some-
punishment should be reserved for the so unbalanced that perfectly legiti-
how or another this presents no na-
criminal code and that civil litigation mate products are taken off the mar-
ket, not because they are unsafe but tional issue whatever just seems to me
should make a claimant whole, a
because they simply cannot create to beg the question. There is a prob-
wronged claimant whole, but do no
profits enough to run the risk of litiga- lem. In a national economy, it is appro-
more. As a consequence, I find it easy
tion, even of successful litigation. priate that at least there be a partial
to support the relatively mild limita-
Incidentally, Mr. President, very lit- national solution to the problem.
tions which are included in the amend-
ment proposed by Senator DOLE, the tle has been said here on the floor Yes, we have not attempted to move
majority leader of this body. about the impact of unsuccessful liti- all of these cases into Federal courts
My friend from South Carolina, with gation in these areas. The attorney’s with the requirement that we probably
whom I have engaged in debates on this fees, the expert witness fees, the cost double the number of our judges and
subject in the Commerce Committee in time and effort on the part of em- courthouses. We have not made an en-
and here on the floor, is most eloquent ployees is every bit as much when the tirely uniform system.
on the other side of this issue. What- claim is rejected, when there is a ver-
However, we have created in this bill
ever his point about a political organi- dict in litigation for the defendant, as
a considerably greater degree of uni-
zation which trains its candidates in it is when the litigation lottery turns
formity than there is now. We have
rhetoric may have been, it is very clear out exactly the other way. Any intel-
even, in one section, said that the in-
that he does not need any lessons in ligent individual or company is going
terpretation of this statute by circuit
how to present a case forcefully and to say, ‘‘I know I am going to get sued
courts of appeals are going to be strong
well. He does it here on this floor in and even if I am successful, I am going
precedents for all State courts and all
this connection and in many others. to spend more money than I can pos-
sibly make by marketing the product other Federal courts in those given cir-
But I must admit to being puzzled by cuits.
at least some elements of the point or engaging in the activity.’’ That indi-
vidual is going to say, ‘‘Why bother?’’ So the degree of uniformity as a re-
that he makes. He says that because sult of this bill will not by any means
Even if that individual or that com-
certain foreign companies—in this case be 100 percent. It is not designed to be
pany has produced something good for
in the automobile business—are willing 100 percent. However, it will be far
society or is a part of the medical pro-
to locate their factories in Alabama, greater than it is at the present time,
fession that is frequently sued or, for
that must mean they love the Alabama and the predictability of the result will
that matter, is a Little League volun-
laws with respect to product liability. be greater than it is at the present
Well, Mr. President, there is no con- teer or Red Cross volunteer, that vol-
unteer figures he or she has a good time, and the lottery aspects of the
nection between the two. Just because
chance of being sued, and it hardly business will be fewer than they are at
the market for manufactured products
matters whether they calculate that the present time.
is nationwide, the location of a par-
they will lose or win the lawsuit. They If we learn from the experience of
ticular factory is absolutely irrelevant.
are going to say, ‘‘I do not need the ag- this bill that greater uniformity is not
Those automobile companies can be
gravation.’’ necessary, we can go ahead and change
sued, for all practical purposes, in any It seems to me that it is almost be-
State because they sell their auto- it in the future. This is not an un-
yond arguing that we have constricted changeable law, by any stretch of the
mobiles in every State, whether it is the activities, restricted the activities,
the State in which their factory is lo- imagination.
of individual volunteers. We have
cated or some other. In fact, if there caused physicians with many produc- We can at least find out, by this cau-
might be any possible motivation cre- tive years left in their careers to aban- tious and partial experiment, whether
ated by product liability laws, which I don those careers and to retire when or not the evils ascribed in this legisla-
doubt, it would be to locate your fac- they become reasonably financially tion are true, but whether or not there
tory in the most notorious plaintiff- comfortable. We have caused compa- is a cure or a partial cure as a result of
minded State because at least the judg- nies to abandon promising areas of re- this legislation.
ments in that State would not be search and development. We have I come back to one initial point, Mr.
against an out-of-State manufacturer caused the removal from the market of President. We have already tried this
but an in-State one, which might cre- significant products by the threat of solution in one modest area of our Na-
ate the tiniest degree of sympathy for litigation, by the lottery of litigation— tion’s economy: The reforms we made
the manufacturer. But the location of a not just litigation that is going to be just a year ago in connection with the
place at which a manufacturer operates lost, but litigation which, more often manufacture and sale of piston-driven
and the product liability laws of that than not, is won. aircraft. It is now clear beyond any ar-
State simply have no relevance to one We have done this all in the name of gument that that business, that manu-
another at all. a system which produces only a rel- facturing business, was for all practical
The question before this body is atively moderate percentage of the dol- purposes destroyed by product liability
whether we are dealing with product li- lars that go into it for claimants who litigation.
ability or with medical malpractice or, actually establish their claims. A
The production of such aircraft de-
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for that matter, with tort litigation in claimant who loses the case, of course,
general. Do we have a system at the clined 95 percent in the United States
ends up with nothing. But claimants
present time that appropriately bal- taken collectively who win these cases, of America over a 20-year period, as-
ances the interests of claimants, people at least in the fields of product liabil- cribed by the manufacturers to product
who have been injured or claim injury ity and medical malpractice, win less liability litigation.
as a result of the use of products or as than half the cost of the system. Those manufacturers said that there
a result of the quality of health care Sixty percent, roughly, of the dollars would be a recovery if we reformed the
they have received, or as a result of that go into the system go to the law- system. We did reform the system a
any other kind of act; do we properly yers and insurance adjustors and hired year ago, more modestly than the prod-
balance their rights in court with other expert witnesses—all of the transaction uct liability system is reformed here,
undoubted purposes of our society? costs of the system. but in a significant fashion.
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S5958 CONGRESSIONAL RECORD — SENATE May 2, 1995
Already, there has been a significant himself from his GOPAC movement, I ran into this in my campaign for re-
recovery, including the planning and because here is a GOPAC movement election in 1992. I never heard such ex-
construction of new plants and an in- that I will read out, and I will say how pressions before, and I wondered where
crease in the production and sale of it has had an effect in my State with in the world my opponent was getting
U.S.-built piston-driven aircraft. respect to the Government being the all these blase references and words
This side in the debate is able to enemy. that really, in my judgment, were out
argue not from theory but from experi- This is a GOPAC letter, signed by of order.
ence. That experience would, it seems NEWT GINGRICH, and it is addressed:
Now let us bring it up to date in two
to me, give extraordinarily heavy Dear friend: The enclosed tape is another
in the regular series of GOPAC audio cas-
instances. The Speaker himself uses
weight to saying that if we expand it, if these words. You look in David
we expand it to other areas, we will settes, but is more than just another tape.
This is a special lecture I delivered just a few Broder’s column here just about 10
have a similar, if perhaps not so strik- weeks ago on August 22, 1990, to the third- days ago and you will see where Speak-
ing, increase in the creation of jobs in generation group at the Heritage Founda- er GINGRICH, talking of his revolution,
this country, in the development and tion. says we have a revolution against the
marketing of new products, of volunta- I am sending you this tape in the belief
that it contains a timely and extraordinary
Washington Government. But he does
rism, if the DOLE amendment passes not call it the Washington Govern-
and the like. message that could be of help to you in the
coming months. While most activists and ment. He calls it—and he has the buzz
I hope we will be able to go forward, words, the key words, ‘‘the corrupt, lib-
legislative candidates are not asked to give
Mr. President, and cast votes on these your views on Iraq, the Mideast crisis, the eral welfare state.’’
various amendments and the other budget conference, and the state of the econ-
amendments before the Senate, and omy, it is critical that you have the tools If these are not inflammatory, I do
reach a positive conclusion to this de- available that will help you take the offen- not know what are. They have had that
bate within the immediate and foresee- sive and define the agenda of the campaign effect in my State of South Carolina.
able future. based on our values rather than falling into I went home to a 600-member State
the trap of merely answering the news re-
Mr. HOLLINGS. Mr. President, I Chamber of Commerce seminar where
leases.
thank the distinguished Senator from I have also included a new document enti- they bring in the congressional delega-
Washington. tled ‘‘Language, a Key Mechanism of Con- tion and we answer these questions as
I mention once again the Girl Scouts, trol,’’ drafted by GOPAC political director they go along. It so happened the dis-
because I want to try to clean up the Tom Morgan. The words in that paper attest tinguished colleague from the 4th dis-
RECORD here. What I will read here is to language from a recent series of focus trict in Greenville, SC, BOB INGLIS, had
the Associated Press report: groups where we actually tested ideas and
language.
answered a question and ended up by
When advocates of tort reform went look- I hope this proves useful in writing speech- saying:
ing for sympathetic symbols, they thought es and other campaign communications. My
they had found a winner—the Girl Scouts of Yes, abolish the Departments of Com-
personal wish for the best of luck in your merce, Education, Energy and Housing.
America. The story spread quickly among campaign and everything else.
tort reform lobbyists and their supporters on My turn came immediately after-
Capitol Hill, and it was compelling. Girl Then, the GOPAC language is here,
‘‘A Key Mechanism of Control.’’ wards and I said:
Scouts in the Nation’s Capitol have to sell
87,000 boxes of cookies each year just to As you know, one of the key points in the Wait a minute. You don’t mean to say that
cover the cost of their liability insurance. GOPAC tapes is that language matters. the Chamber of Commerce wants to do away
The lobbying and public relations machinery I will repeat that sentence. Here is with the Department of Commerce?
went into high gear. The U.S. Chamber of the Speaker himself now saying back 5 Yes. Yes.
Commerce produced a radio ad using the in- years ago, practically:
formation, and a business coalition began As you know, one of the key points in the
A good number of them, I would say,
planning a television spot showing a Girl GOPAC tapes is that language matters. a fifth of them, started smiling and
Scout trudging door to door with a basket of In the video ‘‘We Are a Majority,’’ lan- putting their hands together. And I
Thin Mints and S’Mores. But when the Girl guage is listed as a key mechanism of con- said to Dick Riley, the former Gov-
Scouts got wind of it, they called a halt. The trol used by a majority party along with ernor, popular Governor, Secretary of
87,000-box statistic was undocumented, they gender, rules, attitude, and learning. As the
said. The Girl Scouts do not consider damage
Education—he was there and I said:
tapes have been used in training sessions
suits much of a problem. The local council in across the country and mailed to candidates, Dick Reilly, do you want to do away with
Washington has never been sued, and the Na- we have heard a plaintive plea: ‘‘I wish I the Department of Education?
tional Accounting Organization takes no po- could speak like Newt.’’ That takes years of Yes, yes, yes.
sition on tort reform legislation. ‘‘They practice, but we believe that you could have
found an easy and emotional issue that they And HUD and Energy both? All four of
a significant impact on your campaign in the
could get hold of,’’ said Sandra Jordan, them?
way you communicate if we help a little.
spokeswoman for the Washington Area Girl That is why we have created this list of Yes.
Scouts. People will take a sound bite on easy words and phrases.
image over hard information. This list is prepared that you might have a
Half of them clapping and all, stand-
directory of words to use in writing lit- ing up. That is what is happening about
Therein, Mr. President, is my posi-
erature and mail, in preparing speeches, and this ‘‘corrupt, liberal welfare state.’’
tion in referring not only to Girl
producing electronic media. The words and They feel, irrespective of the functions
Scouts, but to the sound bites here phrases are powerful. Read them. Memorize and the need for these various depart-
with respect to ‘‘Let’s put an end to as many as possible. And remember that, ments, that the dickens with it. ‘‘The
the lawsuit lottery.’’ like any tool, these words will not help if
Now, we are not talking about prod- Government is the enemy,’’ they say.
they are not used. While the list could be the
uct liability reform or uniformity or, size of the latest college edition dictionary,
‘‘Get rid of the Government. That is
more correctly, any kind of abuses of we have attempted to keep it small enough the only way. Tear it down, rip it out.
the law. They immediately call it a to be readily useful yet large enough to be Abandon it, abolish it. And then let us
lottery and skyrocket, and all these broadly functional. The list is divided into start all over again and to be sure
words that have been used; ‘‘The lot-
two sections, the optimistic governing words none,’’ as they say, ‘‘get corrupted. Be
to help describe your vision, contrasting sure nobody serves over 6 years, or 12
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
tery wins, and the consumer loses,’’ words to help you clearly define the policies
and that kind of thing. years in this body.’’ That is what you
and record of your opponent in the Demo-
I referred a moment ago to the mat- have going on in this land.
cratic Party.
ters of words with respect to these Then, ‘‘Please let us know of your I can tell you here and now, words do
words being used here. I know some in suggestions.’’ count. And they count with respect to
this Congress are very sensitive about Now, Mr. President, listen to these this, which is a total mislead as to the
it. However, it has had its effect. words amongst others. We will put actual hearings, the facts that we had
A former colleague here had intro- them all in the RECORD: before us about the lawsuit lottery,
duced this, and we had it received oth- Sick, lie, liberal, betray, traitors, devour, who wins and who loses, and about the
erwise back in 1990, because I am refer- corrupt, corruption, cheat, steal, criminal rights of consumers and everything
ring to the one who is disassociating rights. else. It is entirely different. It is the
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May 2, 1995 CONGRESSIONAL RECORD — SENATE S5959
safety of consumers. It is the defend- It occurs to me as I listen to the de- bar you have to get over in order to
ants’ lawyers on billable hours that are bate on product liability, as well as the prove that you are entitled to punitive
winning, sitting up there just grinding debate on tort reform in general, that damages and that this enterprise
out, trying their own case. this is another one of those cases where should be punished for its behavior.
It is a matter not of a lottery but a there is truth on both sides of this That is an appropriate place to estab-
sworn jury to listen to the facts, re- issue. I listened to the Senator from lish burden of proof. You have to prove
viewed by the trial judge and reviewed South Carolina, who has spoken not that there is clear and convincing evi-
by the appellate court. And all back to just this year but in previous years on dence that the harm is carried out with
the issue at hand, punitive damages, a this subject and speaks with great pas- a conscious, flagrant indifference to
sum total of $1.333 billion, the whole sion and eloquence on this issue. He the safety of others.
sum total of all punitive damage find- feels very strongly that it is a mistake
ings in the last 30 years, which is less Once you have done that, we should
for Congress to move forward and to
than half of one business verdict not say to the largest enterprises in
enact Federal legislation in this area. I
against another business verdict in pu- this country, those with billions and
understand what he says and why he
nitive damages, in two cases, not only billions of dollars, do not worry—even
says it.
the Pennzoil case but in the Exxon though you knew that product was
On the other hand, I hear others in
case. going to harm them, could have killed
the Chamber stand up and speak with
I yield the floor. them, we have put a limit on punitive
great persuasiveness about the need for
Mr. DORGAN addressed the Chair. damages. It does not make any sense to
Federal product liability legislation to
The PRESIDING OFFICER. The Sen- me.
restrain the number of suits that are
ator from North Dakota. filed. Let us take punitive damages as an
AMENDMENT NO. 619 TO AMENDMENT NO. 617 issue. The punitive damage section of
My sense is we are a country that
(Purpose: To strike the punitive damage litigates too much. We have lawyers all tort law is to punish or deter a defend-
limits) ant’s egregious conduct. There is no
over our country filing suits for vir-
Mr. DORGAN. Mr. President, I rise to litigation crisis with respect to puni-
tually everything. I would like to see
offer a second-degree amendment to tive damages. According to a survey,
us litigate a little less in this country.
the Dole amendment that is now pend- from 1965 to 1990, 355 punitive damages
I would like to see judges throw out
ing. I send the amendment to the desk were awarded in State and Federal
frivolous lawsuits and sanction those
and ask for its immediate consider- product liability lawsuits nationwide,
who bring them. I would like to see us
ation. an average of 14 a year. Of these
The legislative clerk read as follows: back away from this excessive litiga-
tion. awards, only 35 were larger than $10
The Senator from North Dakota [Mr. DOR-
Excessive litigation puts many small million. All but one of these awards
GAN] proposes an amendment numbered 619
to amendment No. 617. businesses and others at risk. I talked were reduced, and 11 of the 35 were re-
with a business owner recently and she duced to zero. This was in a 25-year
Mr. DORGAN. Mr. President, I ask
said, ‘‘They have jacked up my insur- span.
unanimous consent that reading of the
amendment be dispensed with. ance cost to $500 a month. I pay $6,000 It is hard for anyone to make the
The PRESIDING OFFICER. Without a year now for liability insurance to case that punitive damages represent
objection, it is so ordered. protect me against lawsuits.’’ I asked, some sort of crisis in the area of prod-
The amendment is as follows: ‘‘Have you ever been sued?’’ ‘‘No, never uct liability. That is not supported by
On page 1, beginning with line 3, strike had a suit against me. But, I have to the facts. Congress should decide to
through line 2 on page 8 and insert the fol- pay these tremendous costs because raise the bar and create a new, higher
lowing: somebody might decide to sue me.’’ standard, higher threshold over which
SEC. 107. UNIFORM STANDARDS FOR AWARDS OF This is a real problem for many. someone who was injured must cross in
PUNITIVE DAMAGES. Some might say this is a problem order to prove punitive damages. To re-
‘‘(a) GENERAL RULE.—Punitive damages with insurance companies. That may
may, to the extent permitted by applicable
strict it even further by placing a
be, I do not know. I do know we have limit, a substantial limit on what
State law, be awarded against a defendant in
a product liability action that is subject to too many lawsuits in this country and someone can collect on punitive dam-
this title if the claimant establishes by clear too many people who want to sue. Ex- ages, is not justified. I think in rare
and convincing evidence that the harm that cessive litigation has an effect on peo- cases where punitive damages should
is the subject of the action was the result of ple trying to run small businesses who be or can be awarded, if this test is
conduct that was carried out by the defend- have to shell out money month after met, the test of conscious, flagrant in-
ant with a conscious, flagrant indifference to month in order to protect themselves. difference to the safety of others, then
the safety of others. On the other hand, there are enter-
‘‘(b) BIFURCATION AT REQUEST OF EITHER it is inappropriate for this Congress to
prises in this country that provide provide this limitation.
PARTY.—At the request of either party, the
trier of fact in a product liability action that products that they know are unsafe.
My amendment would allow the
is subject to this title shall consider in a sep- They make these products available to
States to debate this and provide their
arate proceeding whether punitive damages consumers figuring they can make a
own limitation. Some States have lim-
are to be awarded for the harm that is the bunch of money. These corporations
subject of the action and the amount of the
its. My amendment will not affect
accept the risk that a product might
award.’’ those States. But it will say that the
hurt somebody in order to make a prof-
Mr. DORGAN. Mr. President, the underlying bill, S. 565 will not establish
it. In most cases their profit will ex-
amendment I have offered deals with a new national standard that will re-
ceed their potential risk for damages.
the cap on punitive damages in the bill, place every other State that has a
There are plenty of lawsuits that exem-
S. 565, that was reported out by the limit and replace those specific limits.
plify this.
Senate Commerce Committee. I voted I think there are merits on each side Or, in cases where States do not now
for this legislation because I think, on of this issue. I think we need to pass a have a limit, tell those States, ‘‘Here is
balance, there is reason for us to legis- Federal standard with respect to prod- your new limit on punitive damages.’’
That is inappropriate.
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late in this area. I think there is a uct liability. But, let us go back to last
problem with product liability legisla- year’s legislation on the issue of puni- I hope that Congress will support the
tion. And I think the approach that is tive damages. The bill that we reported amendment that I am offering today,
taken is generally a reasonable ap- out of the Senate Commerce Com- which strikes those provisions in the
proach. Therefore, I cast a ‘‘yes’’ vote. mittee last year had no limit on puni- punitive damages section that limit
I did say in the committee, however, I tive damages. We do change the stand- caps.
was concerned about the punitive dam- ard or the threshold. We raise the bar. I come from a State that is largely a
age section and intended to offer an We require clear and convincing evi- State of small businesses. We have
amendment on the floor of the Senate dence that the harm caused was carried some industry and a few larger enter-
to respond to my concerns. That is out with a conscious, flagrant indiffer- prises. I have visited with many North
what brings me to the floor today. ence to the safety of others. That is the Dakotans who have told me of their
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S5960 CONGRESSIONAL RECORD — SENATE May 2, 1995
view of and their circumstances with The FDA provision was not included Mr. GORTON. Madam President, for
respect to product liability. The case in this year’s provision, but, they put the information of the Senate, this is
they make warrants this kind of legis- in another cap on punitive damages identical to the Snowe amendment on
lation. But, it does not warrant a cap which they did not have last year. That punitive damages which was adopted as
that has been placed on punitive dam- makes no sense to me. I hope that this a part of the medical malpractice
ages. Congress will come to the same conclu- amendment which now, as a result of
I would like to include in the RECORD sion that I have come to, that this bill our last recorded vote, is a part of this
some examples of punitive damage is worth advancing, that we should bill. It differs only in that it is an
cases. I will not go into them. But pass a product liability reform bill, but amendment to the underlying Gorton
most of us understand where and when that it should be enacted without the substitute and imposes the same rule
punitive damages have been awarded in section that includes a cap on punitive with respect to punitive damages, that
this country, and in most of these in- damages. I think a cap is unwarranted, is to say, two times the combination of
stances they were warranted and nec- unfair and unwise. economic and noneconomic damages
essary. The fact is the awarding of With that, I yield the floor. for the original limitation on punitive
those punitive damages deter and per- Mr. GORTON addressed the Chair. damages included in the Gorton sub-
suade other corporations from taking The PRESIDING OFFICER (Ms. stitute.
the same risk. Corporations who suf- SNOWE). The Senator from Washington.
I have discussed this next request
fered those damages may be more care- Mr. GORTON. Madam President, I
with the distinguished Senator from
ful in the future. thank the distinguished Senator from
North Dakota because it is a milder
I think that many safety improve- North Dakota for offering and defend-
version than his, I think logically as-
ments on products have been made not ing his amendment. It moves this proc-
suming that we get the votes tomor-
because of the benevolence of those ess forward, and as he said we are seek-
row, that it be voted on before his
making the products but because they ing at this point a unanimous-consent
amendment, and I ask unanimous con-
worry about the consequences of put- agreement under which we can deal
sent that it be placed on any future
ting an unsafe product on the market. with punitive damages today and to-
agreement to a vote ahead of the Dor-
Especially because other large enter- morrow morning the way in which we
gan amendment.
prises which put unsafe products on the dealt with medical malpractice yester-
market knowing they were not safe day and this morning, by gathering all The PRESIDING OFFICER. Without
suffered some very substantial punitive the amendments together, debating objection, it is so ordered.
damages. them tonight and for a while tomorrow Mr. DORGAN. Reserving the right to
That has helped this country and the morning and then voting on them all in object.
people in this country produce prod- a row. The PRESIDING OFFICER. The Sen-
ucts that are safer and more reliable AMENDMENT NO. 620 TO AMENDMENT NO. 596
ator from North Dakota.
and products that consumers could (Purpose: To limit the amount of punitive
purchase without fear of being hurt by damages that may be awarded in a health Mr. DORGAN. And I do not expect we
the product. I hope that we will have care liability action.) will object, but I wanted to clear that
an opportunity to allow others to dis- Mr. GORTON. Madam President, at with our side of the aisle, so if the Sen-
cuss my amendment. My under- this point I send an amendment to the ator will withhold momentarily.
standing is that they are seeking some desk on behalf of the distinguished Mr. GORTON. I will withhold it mo-
kind of unanimous consent in which we Senator who now occupies the Chair mentarily.
would stack some votes tomorrow. I and ask for its immediate question. Madam President, I briefly explained
would like the opportunity to have I ask unanimous consent to set aside this amendment. I would expect that it
others discuss the issue of lifting the the pending amendment. would be adopted by voice vote because
cap on punitive damages in the under- The PRESIDING OFFICER. Without there was a rollcall vote earlier today
lying bill. objection, it is so ordered. The clerk on precisely this amendment, and I
Let me again reemphasize. I am not will report the amendment. doubt that the body needs that vote re-
amending the Dole amendment that Mr. GORTON. This is an amendment peated. It is in my view a preferable
deals with issues other than product li- to the Gorton substitute, so I ask to formula to that proposed by the Sen-
ability. My amendment will deal with set aside the Dole amendment as well ator from North Dakota, which, of
the underlying bill, and the cap on pu- for the purposes of considering this course, would remove all limitations
nitive damages in S. 565. amendment. and essentially all Federal controls
My hope would be that we will con- The PRESIDING OFFICER. Without over punitive damages. And it is puni-
tinue to debate this issue. As we dis- objection, it is so ordered. tive damages, of course, which is the
cuss punitive damages, this Congress The bill clerk read as follows: subject not only of the Dole amend-
ought to consider the option of return- The Senator from Washington [Mr. GOR- ment but of much of the original prod-
ing to the language in the product li- for Ms. SNOWE, proposes an amendment
TON],
numbered 620 to amendment No. 596.
uct liability bill, and it is a formula
ability reform legislation considered
with respect to punitive damages pro-
last year with respect to punitive dam- Mr. GORTON. Mr. President, I ask posed by the occupant of the chair as
ages. Under last year’s legislation a unanimous consent that reading of the accepted by a unanimous vote this
Federal standard would have been es- amendment be dispensed with. morning.
tablished without a cap on punitive The PRESIDING OFFICER. Without
damages. The legislation we are con- objection, it is so ordered. Mr. DORGAN. Madam President, I
sidering this year not only changes the The amendment is as follows: withdraw my reservation. I have no ob-
standard but imposes a cap. It seems to On page 19 strike line 22 through page 20 jection.
me this cap is not necessary and inap- line 4, and insert the following new sub- Mr. GORTON. I repeat the unani-
propriate. section: mous-consent request.
Last year, I was upset about another (b) LIMITATION ON AMOUNT.—
(1) IN GENERAL.—The amount of punitive The PRESIDING OFFICER. Would
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
provision. The legislation that was damages that may be awarded to a claimant the Senator from Washington repeat
brought to the floor included an FDA in a product liability action that is subject the unanimous-consent request?
defense, whereby, a product that was to this title shall not exceed 2 times the sum
approved by the FDA would be immune of— Mr. GORTON. Assuming there is
from punitive damage liability. Last (A) the amount awarded to the claimant later today an order for votes on all
year, I said I will not support that, and for economic loss; and amendments dealing with punitive
I will not vote for cloture until that is (B) the amount awarded to the claimant damages, that the Snowe amendment
for noneconomic loss. be voted on immediately prior to the
stripped out. I voted against cloture, (2) APPLICATION BY COURT.—This subsection
until I was assured that the FDA de- Dorgan amendment.
shall be applied by the court and the applica-
fense would be stricken. I decided to tion of this subsection shall not be disclosed The PRESIDING OFFICER. Without
vote for cloture at that point. to the jury. objection, it is so ordered.
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May 2, 1995 CONGRESSIONAL RECORD — SENATE S5961
Mr. GORTON. Madam President, I situation which is about as perfectly ment reached by this administration
wish to repeat once more that I under- suited as is possible to the intent of the with the Government of Japan in July
stand there are additional amendments law as it was written, then we may be of 1993, the so-called Framework for a
to be proposed by the Senator from looking at a continuation of these defi- New Economic Partnership. This
Tennessee [Mr. THOMPSON], the Senator cits in perpetuity. framework established a general set of
from Arizona [Mr. KYL], the Senator Madam President, if anyone doubts results to be used in specific negotia-
from Utah [Mr. HATCH], the majority the persistence of unfair barriers in tions, and refocused the criteria for
leader, the Senator from Kansas [Mr. Japan to her marketplace, then they progress away from the process of re-
DOLE], and the Senator from Alabama ought to take a look at the 1995 Na- moving trade barriers to actual results
[Mr. SHELBY], from this side of the tional Trade Estimate Report on For- in the way of real economic progress in
aisle and perhaps additional amend- eign Trade Barriers, which provides an market penetration. After 18 months of
ments on punitive damages on the annual inventory of the most impor- negotiations on automobile negotia-
other side of the aisle. We have no tant foreign barriers affecting U.S. ex- tions—including access to the motor
unanimous consent on the subject yet. port of goods and services, foreign di- vehicle market by breaking into Ja-
I hope that Members who want to rect investment, and protection of in- pan’s dealerships, the purchase of origi-
speak to the subject of punitive dam- tellectual property rights. The latest nal parts by Japan’s automakers from
ages and introduce amendments on the report dedicates some 44 pages of mate- United States suppliers, and the regu-
subject of punitive damages will do so rial to the subject on Japan alone, far lation of the auto parts aftermarket,
as promptly as is convenient to them. more than to any other country, far which is repair parts—Ambassador
I suggest the absence of a quorum. more than to the second place, the Eu- Kantor has concluded that ‘‘there has
The PRESIDING OFFICER. The ropean Union, most of the important been virtually no progress.’’ One result
clerk will call the roll. countries of Western Europe combined, has been the initiation by the Trade
The bill clerk proceeded to call the which takes up 28 pages, and double Representative, on October 1, 1994, of a
roll. that of China, with which country we section 301 investigation of Japan’s re-
Mr. BYRD. Mr. President, I ask unan- run our second largest annual trade placement auto parts market, which is
imous consent that the order for the deficit—44 pages, much of it dedicated virtually closed.
The difference between the United
quorum call be rescinded. to the automobile trade.
How important is the auto trade for States and Japanese markets in this
The PRESIDING OFFICER. Without
America’s current account balance and area could not be more dramatic and
objection, it is so ordered.
for the American economy? The answer more symbolic of our troubled trade re-
f lationship: A Department of Commerce
is: as important as any single sector
AUTOMOTIVE TRADE WITH JAPAN study in 1991 estimated that Japanese
can be. America’s trade deficit with
Mr. BYRD. Madam President, Amer- vehicle manufacturers controlled about
Japan in 1994 reached another record
ica’s trading relationship with Japan is 80 percent of the parts market, while in
high, at $65.7 billion, up 10 percent
now reaching a historic, serious phase the United States the situation is the
from 1993, when it totaled $59.3 billion. reverse, and independent replacement
in what has been a long history of in- Of that amount, the bilateral auto- parts producers account for 80 percent
numerable initiatives and negotiations motive trade deficit accounted for of the market. So, while the United
to gain access for American products about $37 billion, or 56 percent of the States market is wide open, the Japa-
into her market. Strong action will total, so most of our deficit with Japan nese market is closed. To make the sit-
very likely need to be taken by the ad- can be attributed to cars and to auto uation more unfair to us, the Japanese
ministration, and the support of the parts. More than that, the auto trade closed market allows their manufac-
Senate and American industry will be deficit with Japan constituted some 22 turers to run the prices up on their own
important. percent of our entire trade deficit with consumers for repair parts. Another
The United States and Japan are the world. The policy announced by our U.S. Government survey has concluded
nearing the end of over a year and a Trade Representative, Ambassador that their aftermarket repair parts
half of negotiations on automotive Kantor—according to his testimony be- cost, on average, some 340 percent
trade, aimed at reducing our $66 billion fore the Finance Committee on April 4, higher than comparable parts in the
trade imbalance with Japan by opening 1995—is that this deficit is the result of United Sates.
major elements of her closed domestic unfair Japanese practices, that it is un- This tremendous windfall of billions
market to our products. The issue, ac- acceptable, that he will use every tool of dollars in extra profits helps sub-
cess to Japan’s automobile market, in- at his disposal to correct it, and that, sidize the Japanese car industry, so
cluding to her dealerships for American in general, he will use a practical, mar- that it can compete more effectively in
cars, and to the lucrative auto parts ket-based, results oriented approach to the international market, subsidizing
market, is reaching a critical juncture. dealing with these non-market bar- lower costs for Japanese cars here in
The issue this time involves, once riers. I strongly support this approach, the United States, Europe, and else-
again, more than the securing of com- and I believe that the Senate as a where. Therefore, it’s a triple wham-
mitments by the Japanese in a written whole does as well. my: Our parts manufacturers cannot
agreement to try to do something to As far as the impact on the American sell effectively in the Japanese market;
open her market. It goes to the heart economy is concerned, a strong auto Japanese consumers get gouged; and
of America’s strategy on how to gain sector is crucial. Two million, two hun- the whole thing results in cheaper,
the actual results of opening the Japa- dred thousand people in the United more competitive Japanese cars world-
nese market. States are employed in the parts indus- wide.
The question is whether we, includ- try alone—such vital industries as alu- The ‘‘Karetsu’’ system of inter-
ing both the executive branch and the minum, steel, glass, rubber, elec- locking and cozy exclusive relation-
Congress, along with American indus- tronics, semiconductors, machine ships among suppliers, manufacturers,
try are all prepared to stick to our tools, and many others. This is on top and dealers serves as an effective
guns and take action against Japanese of the some 700,000 people employed by blocking action against market pene-
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
imports if the auto market in Japan re- the Big Three auto manufacturers tration, and I am advised that the pow-
mains essentially closed to our cars themselves, the Nation’s largest manu- erful Japanese Government bureauc-
and our spare parts. Specifically, are facturing industry. Sales of cars and racy serves to abet this exclusivity in
we willing to take retaliatory action trucks constitute some 4.4 percent of supporting a regulatory framework not
and impose trade sanctions on her our gross domestic product. conductive to easy access. Japan’s
products, under section 301 of the 1974 Negotiations with Japan have competition law, known as the
Trade Act? I say to my colleagues that reached a crucial stage regarding the Antimonopoly Act, which prohibits un-
now is the time to change the para- auto industry’s attempts to deregulate fair trade practices has, according to
digm in our trading relations with the Japanese auto parts market. Nego- the 1995 Foreign Trade Barriers report,
Japan. If we are not prepared to take tiations on access to the Japan auto a ‘‘weak and ineffective’’ enforcement
retaliatory actions under the law, in a business began as a result of the agree- history. The
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