[Congressional Record Volume 143, Number 131 (Friday, September 26, 1997)]
[Senate]
[Pages S10053-S10055]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
NATIONAL LAWSUIT ABUSE AWARENESS WEEK
Mr. ASHCROFT. Mr. President. This week, the American Tort Reform
Association is holding a series of events to mark the National Lawsuit
Awareness Week. Since it was founded in 1986, ATRA has played a
valuable role in the effort to restore fairness, balance, and
predictability to the civil justice system.
To commerate this week, ATRA is hosting a 5k ``Tort Trot'' to benefit
the Hydrocephalus Research Foundation. Patients who suffer from
hydrocephalus--excess fluid on the brain--particularly have been
impacted by law suit abuse. Such patients require brain shunts to drain
the excess fluid from the brain. While these shunts have saved the
nearly 75,000 hydrocephalus patient's lives, they are made out of
silicone which is becoming scarce. The silicone supply used by implant
manufacturers is threatened by deep pocket liability lawsuits. Rather
than take a risk over a product which they did not design or
manufacture, some suppliers are exiting the medical device market.
Congress can fix this problem. We can pass meaningful tort reform to
make sure that our system no longer lines the pockets of special
interests at the expense of those in need of life-saving medical
devices.
Americans deserve a system of justice, not justice delayed. Those
wrongfully injured should have access to a timely remedy from the
responsible party. A recent study found cases take about 2\1/2\ to 3
years to be resolved, and even longer in appealed cases. In our
present--overburdened--system, 50-70 cents of every jury-awarded dollar
goes to lawyers and legal costs.
I want to focus my remarks on reforming the product liability system;
however, I also want to mention a case which illustrates the need for
overall civil justice reform. This case, coined the ``Great New Orleans
Train Robbery'' by the national media, resulted in a $2.5 billion
punitive damages award against a company found to be only 15 percent at
fault in an accident that did not result in loss of life, serious
injuries, or major property damage.
On September 9, 1987, a railroad tank car containing butadiene, a
volatile compound used in making synthetic rubber, was located in a
rail yard in New Orleans on tracks that belong to CSX Corp. Since the
fire involved hazardous materials, the officials involved made a
determination that the best approach was to let the fire burn itself
out. In order to avoid any possible harm to nearby residents, an
evacuation of those living near the yard was undertaken. The fire
lasted 36 hours. By all accounts, fire officials, and corporate
representatives undertook heroic efforts to protect life and property.
As a result, and as I said earlier, no deaths or significant injuries
were involved, and there was only minimal property damage.
One year later, the National Transportation Safety Board--the Federal
agency charged with investigating transportation accidents--determined
that CSX had not caused this accident. In fact, other than providing
the track over which the tank car was operated, CSX had no connection
to the car.
The very day of the fire, a group of law firms brought a class action
suit against CSX and other companies alleging various kinds of physical
and mental anguish. A jury has now decided that the 8,000 plaintiffs
should be awarded $3.5 billion in punitive damages. Although CSX was
only found to be 15 percent responsible--presumably because they owned
the track--its portion of the punitive damage award is $2.5 billion.
How can it be that a Federal agency determines that a company has no
responsibility for an accident, another agency declines to assess any
safety violation against that company, and yet, this enormous verdict
is awarded?
The case in New Orleans is but the latest example of why we need to
reform the entire civil justice system. We need to place some limits on
verdicts. We need to modify the laws regarding joint liability.
Finally, we need to provide disincentives for lawyers to sue the deep
pocket every time they can.
Before I begin talking about product liability reform, Mr. President
I ask unanimous consent that articles appearing recently in the Wall
Street Journal and the Washington Post relating to this almost
unbelievable case, appear in the Record at this point.
There being no objection, the articles were ordered to be printed in
the Record, as follows:
[From the Wall Street Journal, Sept. 18, 1997]
Louisiana Jackpot
The tort wheel of fortune turns round and round. By all
accounts, the legal freak show is about to descend on the
``fen-phen'' diet-pill manufacturers. There will be
``thousands of lawsuits scattered all around the country,''
one tort lawyer roared in the Journal yesterday. But before
this circus hits town, attention should be drawn to the one
now playing in Louisiana.
In a case that has already been dubbed the Great New
Orleans Train Robbery, 8,047 residents of the Big Easy hit
the jackpot, winning $3.4 billion in punitive damages in a
[[Page S10054]]
state court. Forget about McDonald's hot coffee and BMW's
paint job; the Louisiana train case is one of the wildest
examples yet of the craziness that infects our civil-justice
system.
If the accident that led to the huge award didn't get much
attention at the time, that was because nothing much
happened. On December 9, 1987, a tank car carrying butadiene,
a petroleum byproduct, caught on fire while standing on a
railway track in the Gentilly section of New Orleans. The
fire burned for 36 hours and about 1,000 neighborhood
residents were evacuated. No one died. No one was seriously
hurt. There was no significant property damage.
Within hours the personal-injury lawyers were on the scene
sniffing out clients, and the first lawsuit was filed before
the fire had even stopped burning. Ultimately, the class in
the suit decided last week ballooned to 8,047 people, seeking
compensation for the mental anguish that the incident
supposedly imposed on them.
Along the way, a much smaller group of plaintiffs ended up
in federal court, which dismissed a bunch of cases and
awarded several plaintiffs each about $1,000 in compensatory
damages. The court ruled against punitive damages. Reading
the writing on the wall, some of the original plaintiffs in
the federal case apparently jumped over to the state case as
soon as they realized they could shop for more money there.
There are nine defendants in the tank-car case, but the one
that got socked with by far the biggest judgment--$2.5
billion in punitive damages--was CSX Transportation, a unit
of CSX Corp. Never mind that CSX's only connection to the
case was that it owned the track on which the tank car was
resting. Never mind that an investigation by the National
Transportation Safety Board concluded that CSX bore no
responsibility for the accident, which was cause by a faulty
gasket. And never mind that the owner and previous owner of
the tank car admitted liability for the accident at the
trial.
None of this reality mattered to the jury, which was
looking for someone with deep pockets. Stymied because it
couldn't go after the previous owner, which under state law
was exempt from punitive damages, it settled on CSX.
The jury, of course, was encouraged to reach this decision
by the plaintiff's lawyers, whose notion of justice has more
to do with how much money they can siphon off for themselves
than how much they can help their clients. The lawyer
representing many of the plaintiffs was one Wendell Gauthier,
the class-action king better known for masterminding the
Castano tobacco suit.
He and his colleagues were in high dudgeon, carrying on
about ``corporate greed,'' executives who travel in ``private
Lear Jets and their limos,'' and corporations that cared more
about the rich residents of the French Quarter than the
lower-middle-class, mostly black residents of Gentilly.
``There is only one thing that will make a company that big
respond,'' said Mr. Gauthier in asking the jury for punitive
damages.
It's widely expected that Judge Wallace Edwards will
overturn or drastically reduce the verdict. One school of
thought opines that this means such unfair awards don't
really do any damage; courts usually rein in such irrational
exercises of jury power so all turns out well in the end. Or
does it? Each case sends a ripple through the civil-justice
system. It encourages fee-hungry plaintiff's lawyers to chase
crazier and crazier cases, and it encourages companies to
settle, no matter how outrageous the claim, if only to avoid
having to play Russian roulette in court.
Louisiana, recognizing the need to restore sanity to its
civil-justice system, last year enacted a comprehensive tort-
reform law that pretty much eliminates punitive damages. This
will have the welcome effect of reining in runaway juries and
neutralizing Mr. Gauthier and his fellow tort tycoons. But it
of course comes too late for CSX and the other defendants in
the Great New Orleans Train Robbery.
____
[From the Washington Post, Sept. 9, 1997]
Jury Awards $3.4 Billion in 1987 Rail Blast
A jury awarded damages totaling $3.4 billion today to 8,000
people who said they were injured mentally and physically by
a 1987 railroad tank car explosion.
Hardest hit by the award was rail firm CSX Transportation,
a unit of Richmond-based CSX Corp., which was ordered to pay
$2.5 billion.
The plaintiffs accused CSX Transportation and eight other
defendants of negligence in the Sept. 9, 1987, incident in
which a rail car carrying the petrochemical butadiene leaked
and caught fire.
Residents from nearly 200 blocks in New Orleans were
evacuated overnight. They said they suffered health problems
and mental anguish, which the defendants disputed.
Chicago-based defendant GATX Corp., which was ordered to
pay $190 million, said there were no deaths or significant
injuries and no major property damage occurred.
Defense attorney Brent Barriere said: ``This should have
been a case of reasonable damages for the inconvenience of
residents being out of their homes for about 36 hours. But it
was not reasonable. It was outrageous.''
Plaintiffs' attorney Wendell Gauthier said the companies
had been ``careless and indifferent'' to the people living
near the railroad. He said the accident was preceded by
ongoing mishandling of dangerous materials by the defendants.
CSX Transportation President A.R. Carpenter said in a
statement that the firm was ``very disappointed with this
decision. . . .It is clearly not consistent with the facts.
``CSXT handled the leaking car in complete accordance with
very stringent federal safety standards. The National
Transportation Safety Board investigation into this accident
concluded the incident was not caused by CSXT,'' he said.
Juror Kimbra Whitney told reporters she thought the
defendants did not do enough to protect residents of the
area. ``I felt the evidence showed they were unconcerned,''
she said.
Other defendants ordered to pay damages were Mitsui & Co.,
$375 million; Alabama Great Southern Railway, $175 million;
and Illinois Railroad Co., $125 million.
Mr. ASHCROFT. Commonsense product liability reform is vital to the
global competitiveness of American manufacturers and workers. U.S.
companies face product liability insurance costs that are 20 to 50
times greater than those of our foreign competitors. Due to these high
costs, American many manufacturers spend more on litigation than on
research and development and the American consumer is deprived of the
highest quality and most innovative product.
In addition, commonsense reform is vital to the health--in a very
real sense--of millions of Americans. In 1993, Jim Vincent, the
chairman and CEO of Biogen, indicated to this committee that his
company decided not to pursue research into the development of an AIDS
vaccine, because of the current U.S. product liability system. In
addition, availability of many biomaterials such as silicone,
polyester, dacron, and rubber that are used in lifesaving medical
implant devices is being threatened by our current product liability
system.
Despite years of effort, the only Federal tort reform we have been
able to accomplish has been in the areas of food donations, securities
litigation, general aviation aircraft, and individual volunteer
liability. The one area of reform that has been, in effect, long enough
for us to measure its results is the General Aviation Revitalization
Act of 1994, which was signed by President Clinton on August 17, 1994.
The aviation liability reform bill enacted a statute of repose for
general aviation aircraft. In 1994, proponents of the bill said that it
would produce jobs. It has. To date, over 9,000 new jobs, good jobs,
have been created. Single engine aircraft are being manufactured in
American again, and an endangered industry has been revitalized.
President Clinton was right to support that bill. Let us bring the
results of the General Aviation Revitalization Act of 1994 to the broad
segments of our country and industries.
The principles which we begin this conversation should be based on
making the product liability laws in this Nation fair for consumers who
purchase defective products while placing the burden on those
responsible for putting these products into the stream of commerce. We
also should seek to ensure that those who misuse products, or use them
while under the influence of drugs or alcohol, do not collect a
windfall which becomes a burden for American consumers in the form of
increased costs for products--useful products that are no longer
available in the market, and the loss of jobs and greater
opportunities.
We should not affect the ability of plaintiffs to sue manufacturers
or sellers of medical implants. Rather, we should allow raw materials
suppliers to be dismissed from lawsuits if the generic raw material
used in the medical device met contract specifications, and if the
biomaterial supplier is not classified as either a manufacturer or
seller of the implant.
Strong product liability reform is good for America. It ensures that
consumers, injured by a product, will be fairly compensated. It will
enhance American innovation, which is the best in the world, by
treating responsible entrepreneurs fairly while treating the bad actors
harshly and to the full extent of the law.
As chairman of the Consumer Affairs Subcommittee I am committed and
look forward to working with members of this committee, on both sides
of the aisle, and with the administration toward ending the 20-year
study and painstaking endeavor to provide our Nation with sound and
fair Federal
[[Page S10055]]
product liability law. It took the European community about 6 years to
accomplish this goal and create the European Product Liability
Directive. Japan enacted its first product liability reform law almost
2 years ago. Our Nation, this Congress, and this administration should
pull together and meet the challenge of our foreign competitors and
enact fair and balanced product liability law.
____________________