104th Congress: Democratic Perspectives 103rd-107th
Congress Committee Activity MINORITY VIEWS
We believe the rush to judgment on H.R. 917, the so-called `Common Sense Product Liability Reform Act,' produced an unnecessary bill that severely and adversely affects the citizens we were elected to serve.
Members of the Committee were given no meaningful opportunity to review the bill prior to markup. The author of the bill produced three different versions of it in the forty-eight hours prior to its approval. All versions differed significantly from each other and from the original bill introduced a week earlier. Many serious problems resulting from the lack of meaningful consideration by the Committee were noted at the markup. Many of the glaring defects, inconsistencies, and extreme measures uncovered during the markup resulted from the unfair and undesirable process in which this bill was hurriedly approved.
The proponents of this legislation claim that a virtual `explosion' of product liability cases and associated punitive damage awards is stifling American ingenuity and hurting American corporations. But the evidence clearly shows there is no product liability litigation explosion. According to the March 1994 report by the National Center for State Courts, the number of product liability cases filed in State courts (where the vast majority of such cases are filed) make up an extremely small percentage of all civil filings (.36%). The evidence also shows these cases are on the decline. State tort cases have declined by 2 percent since 1990 on a national basis. Excluding asbestos cases, the number of product liability cases in Federal court declined 36 percent between 1985 and 1991.
Nor is there any epidemic of punitive damage awards. Only 355 such awards in all product liability cases nationwide were found over a 25-year period, according to research that the United States Supreme Court last year called `the most exhaustive study' ever of punitive damages. See, Rustad, In Defense of Punitive Damages in Products Liability: Testing Tort Anecdotes with Empirical Data, 78 Iowa L. Rev. 1 (1992). The median of all such awards was $565,000. Only 13% of all such awards were 4 times compensatory damages or greater. Half of these awards were reduced by a judge, in settlement, or on appeal.
The need for this legislation, as claimed by its proponents, simply does not exist. To the contrary, the facts demonstrate our current State-based product liability system works well. It allows individuals to hold wrongdoers accountable when they manufacture or sell defective products that cause harm. The current system affirms the virtue of personal responsibility and fairly compensates injured citizens, all without Federal regulation and without publicly-funded government programs.
The bill is the ultimate display of a `Washington Knows Best' philosophy. It is an irony, if not a bizarre inconsistency, that those who signed the so-called `Contract With America' and campaigned on a pledge to reduce the role of the Federal Government and give more authority back to the States are now proposing this unprecedented grab of Federal control. The majority is taking an entire area of law that for 200 years has been the sovereign responsibility of the States and imposing standards and controls from Washington.
Nor will the legislation achieve what its proponents claim is one of its most important objectives--to achieve uniformity. Testimony by the National Conference of State Legislatures notes that: the bill's preemption applies only to the extent that State law applies to a subject covered by the bill, provisions of the bill will be interpreted by 50 separate State courts, and the bill will create immediate and lasting turmoil over concepts, procedures, and standards that have been subject to State control for many years.
Most States have enacted changes to their product liability laws in the last 15 years, demonstrating they are willing and able to adapt their laws to changing needs and circumstances. But H.R. 917 will alter or undo reforms State legislatures have enacted and will replace the judgment of Washington for the judgment of State legislatures.
The bill is extreme, mean-spirited, and unfair. It favors powerful corporations at the expense of women, the elderly, the young, the poor, and indeed, at the expense of ordinary middle class Americans who simply ask of their national leaders that we not interfere with their individual rights to hold wrongdoers fully accountable under State law. Several notable provisions discriminate against injured women and others: elimination of the doctrine of joint liability for noneconomic damages; caps on punitive damages; and immunity from punitive damages for products approved by the Food and Drug Administration (FDA).
Joint liability requires multiple tortfeasors--those who have been found to be at fault and who have caused part of the claimant's injuries--to apportion responsibility among themselves. The doctrine assumes these wrongdoers have greater knowledge as to responsibility for loss. At the heart of the doctrine is the protection of the innocent injured person from bearing responsibility for her injuries. The doctrine requires even a `marginally' responsible defendant (say less than 10%) to pay damages if other defendants are insolvent or unable to be found. While this may be less than a perfect result, it is far preferable to require such a wrongdoer to pay than requiring the innocent victim to go without full compensation.
Eliminating joint liability, as section 7 of the bill does with respect to noneconomic damages, shifts responsibility from wrongdoers to the victim. Its effect is particularly insidious for women, the elderly, the young, the poor, and other vulnerable persons. It says that a CEO's six-figure income loss is more important than the homemaker's injuries for pain and suffering. Even if they suffer the same injury in the same incident, the bill will prevent full recovery for only one type of victim--the one who makes less money.
A majority of the Committee rejected an amendment offered at markup to delete section 7. There was discussion during the markup of limiting the bill's elimination of joint liability for noneconomic damages to apply solely to defendants adjudged to be less than 10% at fault, but no amendment was approved to accomplish this.
The injuries women suffer when they are made sterile by a dangerous contraceptive device, when they are disabled by dangerous and defective medical implants, or when they are grossly disfigured by defective household products, are very real losses. The loss of vision due to defective implanted intra-ocular lenses in an elderly retiree costs nothing but the patient's enjoyment of her last golden years. The loss of a husband to an unsafe machine tool is at least as significant as the loss of a breadwinner. Yet this bill will say to these victims that their losses are valueless, because they are not losses of dollars and cents.
Punitive damages are an effective tool to punish and deter corporate misconduct. By limiting punitive damages to the greater of $250,000 or three times the amount of economic damages, the bill destroys a characteristic of punitive damages that is critical to their effectiveness--that the penalty for egregious misconduct is indeterminate. With this change, companies that consider only their own profitability, rather than their responsibility to the community, will find it easier to quantify the risk of loss from decisions to forego testing, warning, redesigning, or recalling of defective products, making it much more likely that public safety will be imperiled.
The potential for punitive damages is a powerful incentive for safety. A large number of companies report they made safety improvements after imposition of punitive damages. But if companies can count on paying as little as $250,000 for intentional or knowing misconduct, they simply will add this to the cost of their products. H.R. 917 will result in Americans being surrounded by hazardous machines, drugs, cars, and toys. It will not have the same effect as State laws have had on manufacturers or sellers who pulled dangerous products off the market, such as the Ford Pinto, the Dalkon Shield, silicone breast implants, asbestos, and super-absorbent tampons.
A punitive damage award of as little as $250,000 does not serve as an effective deterrent in many cases. The $5 billion punitive damage award against the Exxon Valdez represents 3 weeks of income for the company. The Ford Pinto represented tens of millions of dollars in profit. Even the much-misrepresented `coffee case' against McDonald's (reduced by the court and again by agreement of the parties) was originally $2.7 million, or just two days' worth of coffee sales for McDonald's.
Proponents of the bill argue that $250,000 is just a floor and that punitive damages could go above that level where there are significant economic losses (i.e., monetary losses). But this calculation discriminates against women and others who may not have large incomes. Economic damages generally were not high in the cases of women who developed endometriosis, pelvic inflammatory disease, toxic shock syndrome, and other illnesses that left them sterile when they used Copper-7 intrauterine devices, Dalkon Shields, or super-absorbency tampons. Nor were they high in cases of women who bore disfigured children because of Accutane or in cases where elderly women died of liver-kidney disease after taking Oraflex.
The cap on punitive damages is a slap in the face to normal American wage earners. Those who have spent their lives supporting their families on modest incomes should be able to recover fully and to punish those who knowingly made extremely dangerous raw asbestos fibers. A worker making the minimum wage should not be forced to receive a lower punitive damage award than a Member of Congress for deaths or serious injuries caused by wrongful conduct. H.R. 917 rewards successful professionals working at the height of their careers while ignoring the harms suffered by nonworking or low-wage Americans.
We believe juries are better suited than Congress to determine the appropriate level of damages, based on the particular facts proven in each case. The current system allows juries flexibility to fashion appropriate punishment for egregious corporate conduct, instead of allowing Washington to dictate the upper limits of how corporate wrongdoers will be punished in each and every instance.
The bill includes a provision (section 6(d)) that was expressly rejected by Chairman Hyde and other Members of the Judiciary Committee. The so-called FDA defense will eliminate punitive damage awards in cases where a drug or medical device is approved by the FDA, so long as the manufacturer or product seller has not withheld or misrepresented information required to be submitted to the FDA, or has not bribed an FDA official.
Mr. Dingell's amendment to delete section 6(d) was rejected at the markup. Mr. Dingell argued the effect of the provision is unclear, particularly in light of statements made by the Republican leadership indicating its desire to restructure, privatize, or even eliminate the FDA. He argued the defense is premised on the notion that FDA approval has to be meaningful and effective or otherwise no limitation of liability should be considered.
We believe the provision has other major defects. The record is replete with instances where drugs and devices have been approved or under-regulated by the FDA. The FDA approved the Copper-7 intrauterine device, which caused sterility in young childless women. It approved high-estrogen birth control pills, which caused renal failure. The FDA was unable to convince the manufacturer of the Dalkon Shield to withdraw its dangerous product. It failed to act on silicone gel breast implants--which were never proven to be safe--for decades.
To overcome the FDA defense (once a drug or medical device has been approved by the FDA), the bill sets an evidentiary standard that is virtually impossible to prove. First, the injured person must show clear and compelling evidence, not just the usual preponderance of evidence applied to most civil case issues. Second, the injured person must prove the corporation that made or sold the drug or device withheld or misrepresented information to the FDA. Even if the injured party can prove this very difficult standard, the manufacturer or seller can counter by showing that it did not withhold or misrepresent information required to be submitted by the FDA.
Under H.R. 917, a drug manufacturer that learns its product causes death after approval can report this to the FDA but still embark on a huge sales campaign before any regulatory action is taken--as did the manufacturer of Zomax. It means that no punitive damages can be sought for these actions. It means that punitive damages cannot be imposed to force manufacturers to put safety ahead of profits. It means that women will continue to die and suffer needlessly.
During the markup, the Republicans rejected the Markey/Wyden amendment to impose the same rules on commercial cases as the bill provides for cases brought by individuals. They did so despite the fact that the proponents of the bill are supposedly seeking to achieve uniformity and despite the fact that, unlike product liability cases brought by ordinary people, there truly is an explosion in commercial litigation.
The bill unfairly reduces rights of injured working men and women while doing nothing to rein in or penalize irresponsible businesses. A worker injured by an unguarded, unsafe machine tool will be barred from bringing a case if the tool was sold to his employer more than 15 years ago. But the bill has no effect on the company that bought the machine to bring a case to recover commercial losses based on any defect, including loss of use, replacement costs, and lost profits. Or consider the case where a company wrongfully buys a household drain cleaner for use in its power plant. The cleaner explodes, causing damage to the power plant. The utility that owns the plant is entitled to full recovery for the cost of repairing the damage under State law. A visitor to the plant, a homemaker visiting her husband on his lunch hour, is blinded in the explosion. Her recovery is limited to that allowed under H.R. 917, no matter what State law says.
The bill approved by the Committee is friendly to business and industry while it reduces the rights of ordinary Americans to get full recovery in court.
H.R. 917, as reported by the Committee, shields corporate wrongdoers and limits their accountability for even the most egregious misconduct. During the markup, proponents conceded the bill will not produce uniformity--even though that is what they have been arguing for years. Instead, this legislation is about Washington usurping the authority of States so that corporations who make and sell defective products can shield themselves from cases brought by consumers who are harmed by those products. That is precisely what H.R. 917 will achieve and why we are compelled to strenuously oppose this extreme piece of legislation.
Henry A. Waxman.
Edward J. Markey.
John Bryant.
Thomas J. Manton.
Edolphus Towns.
Gerry E. Studds.
Frank Pallone, Jr.
Elizabeth Furse.
Sherrod Brown.
Peter Deutsch.
Bobby L. Rush.
Anna G. Eshoo.
Ron Klink.
Bart Stupak.
I support product liability reform and voted to report H.R. 917, the Common Sense Product Liability Reform Act, as amended. Given the severe and unusual `external' time constraints driving the schedule, I appreciate the manner in which Chairman Bliley and Chairman Oxley conducted the markup. But the manner in which this legislation is being considered remains counterproductive and dangerous. It is not about common sense. It is the herd mentality in action.
Members who have served on this Committee know that a rush to judgment is dangerous. It is at best ill-advised and contrary to democratic principles. At worst, it creates sloppy legislation that adversely affects those whom we were elected to serve. Following are a few examples of problems that we know were created by the rash and overzealous schedule:
1. Both the original bill (H.R. 917, introduced February 13) and the original version of the Oxley substitute (dated February 17) provided that proof of the so-called FDA defense would act as a complete bar to any recovery for harm caused by drugs or medical devices. Some Republican Members might have voted blindly for such an extreme provision, though I and other Members who have worked on these issues for years would have been forced to oppose any such bill. When we pointed out the effect of the provision, we were told it was a `drafting error' and that the defense was intended to apply solely to punitive damage awards.
2. During the markup, we discovered major inconsistencies in the substitute offered--the third revision of the Oxley substitute. For example, it provided two very different evidentiary standards for punitive damage awards: `malice' (in the definition of punitive damages) and `conscious, flagrant indifference' (in another section of the bill). The new definition of `economic damages' had similar problems. Again, we were told these were `drafting errors' and amendments later were adopted to correct these defects. Written materials provided to Members at the markup describing the substitute were inaccurate or misleading in other respects, for example, in reflecting that the statute of repose was 25 years (when the substitute provided for 15 years) and failing to note that it applies to all products instead of just to `capital goods,' as with previous bipartisan bills.
3. During the markup, Mr. Hastert offered an amendment to limit the liability of biomaterials suppliers. In response to my questions, Mr. Hastert and counsel admitted that protections of the amendment would apply even to a biomaterials supplier who intentionally had withheld or misrepresented information to the FDA or the manufacturer of the drug or medical device! Such an extreme approach evidently was not intended by the author of the amendment and would be difficult to justify on any rational public policy basis. The amendment contained other provisions I assume are erroneous (for example, section 10(a)(A) refers to materials that `did not constitute the product described in the contrast [sic] between the biomaterials supplier and the person who contracted for delivery of the product', and section 10(1)(B)(iii)(II) refers to materials that `were not expressly repudiated by the biomaterials supplier prior to the acceptance by [sic] the raw materials or component parts'). Democrats voted for the Hastert amendment with the understanding that these and other problems would be addressed before considering the bill on the floor. Unfortunately, amendments offered by Democrats (such as Mr. Hall's amendment to eliminate the cap on punitive damages and to allocate one-half of the punitive damage awards to Federal or State treasuries) were voted down, even when Republicans indicated support for the concept but felt there were `drafting problems' that needed to be worked out.
The objections and cautions I have raised concerning the Committee's lack of appropriate process are not meant to make headlines. Neither the media nor the public generally understand or care about the process by which legislation is crafted. My objections and cautions have not been made for the purpose of delaying action on this or other legislation, although more time certainly has been needed. Had I or other Members of the Committee wanted to engage in pure dilatory or delaying tactics, the rules of the House and the Committee provide alternatives that would have served this purpose. Nor have I made my objections and cautions to embarrass any of my colleagues. As the record shows, I have worked for many years in a bipartisan way in support of product liability reform.
The process is important for many reasons: to allow for full and appropriate participation by all Members, including the minority; to assure that an appropriate level of factual evidence underpins the legislation; and to ensure that the legislative `product' is well-crafted and does precisely what it is intended to accomplish. By forcing this and other legislation through the Committee and the House at a breakneck pace, the Republican leadership has eroded all of these principles. They have forgotten or ignored what all of us who have served on this great Committee know: we are here to legislate, not to punch holes in laminated cards.
The lack of meaningful and appropriate process does not merely threaten to produce sloppy law and unintended consequences. It also threatens to diminish bipartisan efforts to craft fair and balanced legislation. For example, no one can challenge my record of support for product liability reform during more than a decade. But the process, along with the extreme agenda of the new Republican leadership, commands me to reevaluate my support for provisions and legislation I long have supported. Before this legislation goes to the full House, I intend to examine it carefully to make sure that it does not contain further defects or extreme provisions.
During the markup, some of my Republican colleagues indicated they understood my concerns. I sincerely hope we can work in a bipartisan way in the future to consider and craft legislation that we fully understand, in which we can take pride, and which we may defend without reservation.
John D. Dingell.
104th Congress: Democratic Perspectives
103rd-107th
Congress Committee Activity