CONGRESSIONAL RECORDSENATE

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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
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                                                        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
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                                                        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
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                                                                                                                                                                        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
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                                                        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.
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                                                        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.
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                                                          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
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                                                        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
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                                                        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
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                                                        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
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                                                        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-
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                                                        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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