[House Report 108-682]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 108-682
======================================================================
LAWSUIT ABUSE REDUCTION ACT OF 2004
_______
September 13, 2004.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 4571]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 4571) to amend Rule 11 of the Federal Rules of Civil
Procedure to improve attorney accountability, and for other
purposes, having considered the same, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 3
Background and Need for the Legislation.......................... 5
Hearings......................................................... 36
Committee Consideration.......................................... 37
Vote of the Committee............................................ 37
Committee Oversight Findings..................................... 39
New Budget Authority and Tax Expenditures........................ 39
Congressional Budget Office Cost Estimate........................ 39
Performance Goals and Objectives................................. 40
Constitutional Authority Statement............................... 40
Section-by-Section Analysis and Discussion....................... 40
Changes in Existing Law Made by the Bill, as Reported............ 41
Agency Views..................................................... 44
Markup Transcript................................................ 48
Dissenting Views................................................. 95
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Lawsuit Abuse Reduction Act of
2004''.
SEC. 2. ATTORNEY ACCOUNTABILITY.
Rule 11 of the Federal Rules of Civil Procedure is amended--
(1) in subdivision (c)--
(A) by amending the first sentence to read as
follows: ``If a pleading, motion, or other paper is
signed in violation of this rule, the court, upon
motion or upon its own initiative, shall impose upon
the attorney, law firm, or parties that have violated
this subdivision or are responsible for the violation,
an appropriate sanction, which may include an order to
the other party or parties to pay for the reasonable
expenses incurred as a direct result of the filing of
the pleading, motion, or other paper, that is the
subject of the violation, including a reasonable
attorney's fee.'';
(B) in paragraph (1)(A)--
(i) by striking ``Rule 5'' and all that
follows through ``corrected.'' and inserting
``Rule 5.''; and
(ii) by striking ``the court may award''
and inserting ``the court shall award''; and
(C) in paragraph (2), by striking ``shall be
limited to what is sufficient'' and all that follows
through the end of the paragraph (including
subparagraphs (A) and (B)) and inserting ``shall be
sufficient to deter repetition of such conduct or
comparable conduct by others similarly situated, and to
compensate the parties that were injured by such
conduct. The sanction may consist of an order to pay to
the party or parties the amount of the reasonable
expenses incurred as a direct result of the filing of
the pleading, motion, or other paper that is the
subject of the violation, including a reasonable
attorney's fee.''; and
(2) by striking subdivision (d).
SEC. 3. APPLICABILITY OF RULE 11 TO STATE CASES AFFECTING INTERSTATE
COMMERCE.
In any civil action in State court, the court, upon motion, shall
determine within 30 days after the filing of such motion whether the
action affects interstate commerce. Such court shall make such
determination based on an assessment of the costs to the interstate
economy, including the loss of jobs, were the relief requested granted.
If the court determines such action affects interstate commerce, the
provisions of Rule 11 of the Federal Rules of Civil Procedure shall
apply to such action.
SEC. 4. PREVENTION OF FORUM-SHOPPING.
(a) In General.--Subject to subsection (b), a personal injury claim
filed in State or Federal court may be filed only in the State and,
within that State, in the county (or Federal district) in which--
(1) the person bringing the claim, including an estate in
the case of a decedent and a parent or guardian in the case of
a minor or incompetent--
(A) resides at the time of filing; or
(B) resided at the time of the alleged injury; or
(2) the alleged injury or circumstances giving rise to the
personal injury claim allegedly occurred; or
(3) the defendant's principal place of business is located.
(b) Determination of Most Appropriate Forum.--If a person alleges
that the injury or circumstances giving rise to the personal injury
claim occurred in more than one county (or Federal district), the trial
court shall determine which State and county (or Federal district) is
the most appropriate forum for the claim. If the court determines that
another forum would be the most appropriate forum for a claim, the
court shall dismiss the claim. Any otherwise applicable statute of
limitations shall be tolled beginning on the date the claim was filed
and ending on the date the claim is dismissed under this subsection.
(c) Definitions.--In this section:
(1) The term ``personal injury claim''--
(A) means a civil action brought under State law by
any person to recover for a person's personal injury,
illness, disease, death, mental or emotional injury,
risk of disease, or other injury, or the costs of
medical monitoring or surveillance (to the extent such
claims are recognized under State law), including any
derivative action brought on behalf of any person on
whose injury or risk of injury the action is based by
any representative party, including a spouse, parent,
child, or other relative of such person, a guardian, or
an estate; and
(B) does not include a claim brought as a class
action.
(2) The term ``person'' means any individual, corporation,
company, association, firm, partnership, society, joint stock
company, or any other entity, but not any governmental entity.
(3) The term ``State'' includes the District of Columbia,
the Commonwealth of Puerto Rico, the United States Virgin
Islands, Guam, and any other territory or possession of the
United States.
(d) Applicability.--This section applies to any personal injury
claim filed in Federal or State court on or after the date of the
enactment of this Act.
SEC. 5. RULE OF CONSTRUCTION.
Nothing in section 3 or in the amendments made by section 2 shall
be construed to bar or impede the assertion or development of new
claims or remedies under Federal, State, or local civil rights law.
SEC. 6. THREE-STRIKES RULE FOR SUSPENDING ATTORNEYS WHO COMMIT MULTIPLE
RULE 11 VIOLATIONS.
(a) Mandatory Suspension.--Whenever a Federal district court
determines that an attorney has violated Rule 11 of the Federal Rules
of Civil Procedure, the court shall determine the number of times that
the attorney has violated that rule in that Federal district court
during that attorney's career. If the court determines that the number
is 3 or more, the Federal district court--
(1) shall suspend that attorney from the practice of law in
that Federal district court for 1 year; and
(2) may suspend that attorney from the practice of law in
that Federal district court for any additional period that the
court considers appropriate.
(b) Appeal; Stay.--An attorney has the right to appeal a suspension
under subsection (a). While such an appeal is pending, the suspension
shall be stayed.
(c) Reinstatement.--To be reinstated to the practice of law in a
Federal district court after completion of a suspension under
subsection (a), the attorney must first petition the court for
reinstatement under such procedures and conditions as the court may
prescribe.
SEC. 7. ENHANCED SANCTIONS FOR DOCUMENT DESTRUCTION.
(a) In General.--Whoever willfully and intentionally influences,
obstructs, or impedes, or attempts to influence, obstruct, or impede, a
pending court proceeding through the willful and intentional
destruction of documents sought in, and highly relevant to, that
proceeding shall be punished with mandatory civil sanctions of a degree
commensurate with the civil sanctions available under Rule 37 of the
Federal Rules of Civil Procedure, in addition to any other civil
sanctions that otherwise apply.
(b) Applicability.--This section applies to any court proceeding in
any Federal or State court.
Purpose and Summary
The Lawsuit Abuse Reduction Act of 2004 (``LARA''), H.R.
4571, was introduced by Rep. Lamar Smith. H.R. 4571 will
restore the teeth that Federal Rule of Civil Procedure 11 once
had to deter frivolous Federal lawsuits. It would also extend
Rule 11's protections to prevent frivolous lawsuits in state
courts when state judges determine that a case would have
national economic consequences that affect interstate commerce.
The bill would also prevent forum shopping, the harmful
practice by which personal injury attorneys bring lawsuits in
courts that notoriously and consistently hand down astronomical
awards even when the case has little or no connection to the
court's jurisdiction. H.R. 4571 would prevent forum shopping by
requiring that personal injury cases be brought only where the
plaintiff resides, where the plaintiff was allegedly injured,
or where the defendant's principal place of business is
located.
LARA would: (1) restore mandatory sanctions for filing
frivolous lawsuits in violation of Rule 11, (2) remove Rule
11's ``safe harbor'' provision that currently allows parties
and their attorneys to avoid sanctions for making frivolous
claims by withdrawing frivolous claims after a motion for
sanctions has been filed, (3) allow monetary sanctions,
including attorneys' fees and compensatory costs, against any
party making a frivolous claim, (4) allow sanctions for abuses
of the discovery process (the process by which lawyers on each
side request information from the other side prior to trial),
(5) apply Rule 11's provisions to state cases that a state
judge finds affect interstate commerce, (6) require that
personal injury cases be brought only where the plaintiff
resides, where the plaintiff was allegedly injured, or where
the defendant's principal place of business is located; (7)
apply a ``three strikes and you're out'' rule to attorneys who
commit Rule 11 violations in Federal district court; and (8)
impose mandatory civil sanctions for willful and intentional
document destruction intended to obstruct a pending court
proceeding.
H.R. 4571 applies to cases brought by individuals as well
as businesses (both big and small), including business claims
filed to harass competitors and illicitly gain market share.
The bill also applies to both plaintiffs and defendants.\1\
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\1\ Under the pre-1993 Rule 11, sanctions were imposed on
defendants for having raised frivolous defenses. In SEC v. Keating,
1992 WL 207918, [1992 Transfer Binder] Fed.Sec.L.Rep. (CCH) 96,906
(C.D.Cal.1992), the court imposed sanctions on the defendant Charles
Keating because 12 of 14 ``shotgun'' defenses were ``patently
frivolous.'' Sanctions were also imposed on defendants for filing
inappropriate Rule 11 motions; See Berger v. Iron Workers, 843 F.2d
1395 (D.C. Cir. 1988) (affirming in part per curiam 7 Fed. Rules Serv.
3d 306 (D.D.C. 1986)); and also for filing frivolous or harassing
counterclaims. See Aetna Insurance v. Meeker, 953 F.2d 1328 (11th Cir.
1992) (affirming district court Rule 11 sanction of defendants for
pursuing frivolous counterclaims of negligent salvage and conversion).
In Swanson v. Sheppard, 445 N.W.2d 654 (N.D.1989), for example, the
court imposed Rule 11 sanctions on the defendant because the defendant
counterclaimed ``simply to discourage the plaintiff from continuing
with his cause of action.'' Sanctions were imposed on defendants for
failing to conduct a reasonable inquiry into the legal basis for their
Rule 12(b)(6) motion to dismiss. In National Survival Game, Inc. v.
Skirmish, U.S.A., Inc., 603 F. Supp. 339 (S.D.N.Y. 1985), the court sua
sponte imposed Rule 11 sanctions on defendants' counsel on the ground
that counsel failed to conduct a reasonable inquiry into the legal
basis for the Rule 12(b)(6) motion to dismiss, stating ``Defendants
failed to cite a single case or authority in their two-page memorandum
[in support of the motion]. Apparently, they completely ignored the
firmly established precedents directly contradictory to their position.
No doubt exists that [defendants'] counsel failed to conduct the
`reasonable inquiry' that Rule 11 requires to ensure that a motion `is
warranted by existing law or a good faith argument for the extension,
modification or reversal of existing law . . .' '' Id. at 341-42. See
also Steele v. Morris, 608 F. Supp. 274 (S.D.W.Va. 1985) (court granted
the plaintiff's motion for Rule 11 sanctions to be imposed upon the
defendant, concluding that the defendant's counsel failed to make
reasonable inquiry into both the facts and the law before filing a
motion to dismiss in this case which alleged, among other things, that
the plaintiff suffered emotional distress due to the defendant's
willful, deliberate, and outrageous conduct). Sanctions were also
imposed on defendants when they were found to have ignored firmly
established precedent. In National Survival Game, Inc. v. Skirmish,
U.S.A., Inc., 603 F. Supp. 339, 341-42 (S.D.N.Y. 1985), Rule 11
sanctions were imposed because defendants ``completely ignored the
firmly established precedents directly contradictory to their
position.'' See also Smith v. United Transp. Union Local 81, 594 F.
Supp. 96, 101 (S.D. Cal. 1984) (Rule 11 sanctions imposed where
defendants frivolously maintained suit by ignoring relevant law,
relying on irrelevant law, and basing arguments on vacated cases).
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The bill also expressly provides that ``Nothing in'' the
changes made to Rule 11 ``shall be construed to bar or impede
the assertion or development of new claims or remedies under
Federal, State, or local civil rights law.'' Civil rights
claims are thereby exempted from the bill's Rule 11 provisions.
Background and Need for the Legislation
H.R. 4571 will prevent frivolous lawsuits and help dispel
the legal culture of fear that has come to permeate American
society.
FRIVOLOUS LITIGATION HAS A CORROSIVE EFFECT ON AMERICAN CULTURE AND
VALUES, THREATENING AMERICA'S CHURCHES, SCHOOLS, DOCTORS, SPORTS,
PLAYGROUNDS, FRIENDLY RELATIONS, AND EVEN THE GIRLS SCOUTS AND OTHER
FAMILY INSTITUTIONS
As Philip Howard has pointed out, due to an onslaught of
frivolous lawsuits ``[l]egal fear has become a defining feature
of our culture.'' \2\ This values crisis caused by lawsuit
abuse reaches all parts of American society:
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\2\ Philip K. Howard, The Collapse of the Common Good: How
America's Lawsuit Culture Undermines Our Freedom (2001) at 11.
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Churches
In response to litigation against a church after a
parishioner committed suicide, churches have begun implementing
policies discouraging counseling by ministers. Instead,
parishioners are being referred to secular psychologists and
other therapists.\3\ According to a recent Newsweek cover
story, ``The Rev. Ron Singleton's door is always open. That
way, when the Methodist minister of a small congregation in
Inman, S.C., is counseling a parishioner, his secretary across
the hall is a witness in case Singleton is accused of
inappropriate behavior. (When his secretary is not around, the
reverend does his counseling at the local Burger King.)
Singleton has a policy of no hugging from the front; just a
chaste arm around the shoulders from the side. And he's
developed a lame little hand pat to console the lost and the
grieving. The dearth of hugging is `really sad,' he says, but
what is he going to do? He could ill afford a lawsuit.'' \4\
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\3\ Id. at 32.
\4\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
(December 15, 2003) at 43.
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Schools
A recent poll found that ``[n]early 8 in 10 teachers (78%)
said students are quick to remind them that they have rights or
that their parents can sue.'' \5\
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\5\ Public Agenda, ``Teaching Interrupted: Do Discipline Policies
in Today's Public Schools Foster the Common Good?'' (May 2004) at 2-3.
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The Supreme Court's 1975 Goss v. Lopez \6\ decision
extended Federal due process rights to student discipline and
literally made every school discipline decision a potential
Federal case. According to Newsweek:
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\6\ 419 U.S. 565 (1975) (holding imposition of suspensions without
preliminary hearings violated students' due process rights guaranteed
by Fourteenth Amendment).
``Legal fear'' is just as intense in the educational
system. Many Americans sense that schools have become
chaotic and undisciplined over time and the quality of
teachers has declined. Many teachers say that the joy
has gone out of their jobs. What's not generally known
is the role of courts and Congress in creating these
problems by depriving teachers and principals of the
freedom to use their own common sense and best
judgment. Thanks to judicial rulings and laws over the
past four decades, parents can sue if their kids are
suspended for even a single day--for any reason--
without adequate ``due process.''\7\
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\7\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
(December 15, 2003) at 48.
Unruly students sense the teachers' fear and their own
empowerment. ``A kid will be acting out in class, and
you touch his shoulder, and he'll immediately come back
with `Don't touch me or I'll sue,' or, `You don't have
any witnesses','' says Rob Wiel, who taught high-school
math and coached football and baseball in the Denver
suburbs for 20 years before retiring recently.\8\
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\8\ Id. at 49.
In New Jersey, ``A state judge . . . threw out a lawsuit
filed by an Atlantic County man who said assigned seating in a
school lunchroom violated his 12-year-old daughter's right to
free speech. Superior Court Judge Valerie Armstrong said
Galloway Township school administrators had the right to impose
the restriction to maintain order and safety in a cafeteria
that serves 260 students in each of four 30-minute lunch
periods.''\9\
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\9\ John Curran, ``Judge Rejects a Rights Suit Over School's Lunch
Seating,'' The Philadelphia Inquirer (July 20, 2004) at B4.
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According to the St. Petersburg Times:
In Pinellas County [Florida], two Palm Harbor
University High School baseball players sued the school
district claiming they were wrongly booted from school
because of a roughhousing incident that occurred on a
team road trip. In Hillsborough County, Robinson High
School senior Nicole ``Nikki'' Youngblood filed suit
after her picture was left out of the school yearbook
when she refused to wear a feminine drape instead of a
shirt and tie as she wished. These two cases only
scratch the surface of lawsuits filed against local
public school districts on an almost daily basis. More
and more, offenses that used to be settled inside the
schoolhouse now end up at the courthouse. The result,
educators say, is less money for learning. ``We spend
millions and millions on attorney fees every year that
has nothing to do with the classroom,'' said Wayne
Blanton, executive director of the Florida School
Boards Association. ``Every lawsuit we have to defend
is money that doesn't get to the classroom.'' . . .
``Lots of people file suit,'' said Crosby Few,
Hillsborough School Board attorney. ``A lot of them are
frivolous.'' . . . In the book, Judging School
Discipline: The Crisis of Moral Authority, the authors
argue that the hundreds of lawsuits challenging school
disciplinary procedures have hurt the quality of public
education. One of the authors, Richard Arum, an
associate professor of sociology at New York
University, said just the threat of lawsuits keeps
teachers from taking charge of their classrooms.\10\
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\10\ Melanie Ave, ``Lawsuits Drain School Dollars'' St. Petersburg
Times (February 2, 2004) (emphasis added).
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And as the Arizona Republic has reported:
Scottsdale School Board member Christine Schild has
called the legal fees ``outrageous.'' . . . Legal bills
for the 2003-04 school year are estimated to be as high
as $675,000. This is the highest amount in recent
years, and possibly ever . . . Large school districts
routinely spend thousands of dollars each year on
attorneys. The most common expenses are for student
expulsion hearings and employee discipline . . . [D]ay-
to-day legal expenses involving disputes with employees
and student discipline are not covered by insurance and
come out of the operating budget.\11\
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\11\ Anne Ryman, ``Baracy to Pick In-house Attorney for School
District,'' The Arizona Republic (July 8, 2004) at 1.
Thanks to frivolous lawsuits, ``in America, hugging or,
indeed, even a pat on the back is now considered so dangerous
that teachers can't do it.'' \12\ According to Lynn Maher of
the New Jersey chapter of the National Education Association
(``NEA''), ``Our policy is basically don't hug children.'' \13\
The guidelines of the Pennsylvania chapter of the NEA urge
teachers to do no more than ``briefly touch'' a child's arm or
shoulder.\14\
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\12\ Philip K. Howard, The Collapse of the Common Good: How
America's Lawsuit Culture Undermines Our Freedom (2001) at 5.
\13\ Id. at 5.
\14\ Id. at 5.
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Doctor's Offices
According to Newsweek:
Dr. Sandra R. Scott of Brooklyn, N.Y., has never been
sued for malpractice, but that doesn't keep her from
worrying. As an emergency-room doctor, she often hears
her patients threaten lawsuits--even while she's
treating them. ``They'll come in, having bumped their
heads on the kitchen cabinet, and meanwhile I'll be
dealing with two car crashes,'' she says. ``And if they
don't have the test they think they should have in a
timely fashion, they'll get very angry. All of a
sudden, it's `You're not treating me, this hospital is
horrible, I'm going to sue you'.'' \15\ ``I'm only a
human being,'' she says. ``I'm an educated physician
but the miracles are out of my hands.'' \16\
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\15\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
(December 15, 2003) at 43-44.
\16\ Id. at 51.
When Dr. Brian Bachelder moved back to Mt. Gilead,
Ohio, to practice family medicine in 1984, he hoped to
emulate the country doc who'd treated him as a kid . .
. But in recent years, Bachelder, 49, has watched
litigation reshape his practice. Last December, facing
malpractice premiums that soared from $12,000 in 2000
to $57,000 in 2003, Bachelder decided to lower his bill
by cutting out higher-risk procedures like vasectomies,
setting broken bones and delivering babies--even though
obstetrics was his favorite part of the practice . . .
Today the threat of litigation hangs over nearly every
move Bachelder makes, changing the very nature of his
relationship with patients. He worries that the
slightest mistake could provoke a lawsuit. ``Anything
less than perfection is malpractice,'' he says. Even in
confronting the most common ailments--headaches or ear
infections--Bachelder must consider the possibility of
a rare and devastating disease. He often orders
expensive tests--not just to rule out the worst, but
also to bolster his case before a potential jury . . .
Bachelder's fear of lawsuits isn't just theoretical--
he's been sued a half-dozen times in his 20-year
career. In one case, Bachelder referred a boy with a
bladder problem to a urologist. The urologist operated,
and the patient subsequently sued; Bachelder was also
named in the complaint. He was eventually dropped from
the case, but not before his liability insurance paid
out $40,000 in legal fees.\17\
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\17\ Debra Rosenberg, ``Hard Pill to Swallow'' Newsweek (December
15, 2003) at 46.
The most dangerously incompetent doctors often remain
in place for many years, in part because employers fear
wrongful-dismissal lawsuits by fired doctors even more
than malpractice suits by their victims.\18\
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\18\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
(December 15, 2003) at 48.
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Sports
The New Yorker reports on how diving boards and U.S.
Olympic diving medals have both become a thing of the past due
to frivolous lawsuits: ``After a golden age in the seventies .
. . the American pool has suffered a gradual decline: thanks,
for the most part, to concerns about safety and liability,
diving boards have been removed and deep ends undeepened. . . .
Such developments have consequences. . . . In the last two
Olympics, medal counts for [once-dominant] American divers
reached their lowest levels since the 1912 Games.'' \19\
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\19\ Field Maloney, ``Cannonball!'' New Yorker, Talk of the Town
(September 8, 2004).
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According to Newsweek:
Ryan Warner is a volunteer who runs an annual softball
tournament in Page, Ariz., that usually raises about
$5,000 to support local school sports programs. But not
this year. A man who broke his leg at a recent
tournament sliding into third base filed a $100,000
lawsuit against the city, and Warner fears he may be
named as a defendant. ``It's very upsetting when you're
doing something for the community, not making any money
for yourself, to be sued over something over which you
had no control,'' he says. So Warner canceled the
tournament.\20\
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\20\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
(December 15, 2003) at 44.
Parents, on behalf of their children, increasingly sue
not only for physical injuries, but for ``hurt
feelings'' when they don't make a team, says John
Sadler of Columbia, S.C., who insures amateur sports
leagues .. If a ref steps into a fight, he can be sued
if one of the players he is holding back takes a punch.
If the ref doesn't intervene, he can be sued for
allowing the fight to go on.\21\
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\21\ Id. at 49.
Even apparently innocent soccer moms are at risk. In
Jupiter, Fla., one mother volunteered to pick up a
pizza for the team. She drove over the foot of a child
who, left unattended, had run into the road. The police
did not even give the woman a ticket. But the parents
of the child sued the mother and the soccer league and
tried to sue the city, the refs and various
sponsors.\22\
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\22\ Id. at 49.
Other examples include the following. In Vestavia Hills,
Alabama, the father of Laura Brooke Smith ``sued [the] school
district, saying his daughter's rejection from the high school
cheerleading squad despite professional coaching has caused her
humiliation and mental anguish.'' \23\
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\23\ Fox News (May 31, 2001).
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In North Haven, Connecticut, the ``families of two high
school sophomores have filed a Federal lawsuit over the
school's decision to drop them from the drum majorette squad.''
\24\
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\24\ Ann DiMatteo, ``Families Sue Over Unfair Twirl Tryouts,'' The
New Haven Register, May 18, 2001.
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And in Pennsylvania, ``[a] teenager, who felt she was
destined for greatness as a softball player, has filed a
$700,000 lawsuit against her former coach, alleging his
`incorrect' teaching style ruined her chances for an athletic
scholarship.'' \25\
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\25\ Dave Sommers, ``Legal Pitch,'' The Trentonian, May 1, 2001.
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ABC News reported that:
When his 16-year-old son didn't get the most valuable
player award, Michel Croteau didn't get upset. He hired
a lawyer and sued his son's youth hockey league to the
tune of more than $200,000 . . . The Croteaus are not
alone. In the last year, parents have filed more than
200 non-injury-related sports lawsuits against coaches,
leagues and school districts in the United States,
according to Gil Fried, a University of New Haven
professor who specializes in sports law . . . The
Butzke family sued the Comsewogue, N.Y., school
district because their eighth-grade daughter was taken
off the varsity high school soccer team. The Branco
family took legal action against the Washington
Township, N.J., school district after their son, David,
was cut from the junior varsity basketball team . . .
The Rubin family sued California's New Haven Unified
School District for $1.5 million because their son got
kicked off the varsity basketball team . . . The family
felt James Logan High School Coach Blake Chong may have
cost their son not just a scholarship, but an NBA
career.\26\
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\26\ ABCNews.com Report, ``Blame the Coach? Angry Parents Take
School Coaches to Court'' (August 7, 2003).
In 1999, even major league baseball issued a directive to
players that they should no longer throw foul balls to eager
fans in the stands because there might be a lawsuit if someone
got hurt trying to recover a souvenir.\27\
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\27\ Philip K. Howard, The Collapse of the Common Good: How
America's Lawsuit Culture Undermines Our Freedom (2001) at 46.
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Playgrounds
The lawsuit culture is even changing the traditional
American landscape: playgrounds are increasingly removing
seesaws for fear of liability.\28\ According to Newsweek:
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\28\ Id. at 3.
Playgrounds all over the country have been stripped of
monkey bars, jungle gyms, high slides and swings,
seesaws and other old-fashioned equipment once
popularized by President John F. Kennedy's physical-
fitness campaign. The reason: thousands of lawsuits by
people who hurt themselves at playgrounds. But some
experts say that new, supposedly safer equipment is
actually more dangerous because risk-loving kids will
test themselves by, for instance, climbing across the
top of a swing set. Other kids sit at home and get
fat--and their parents sue McDonald's.\29\
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\29\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
(December 15, 2003) at 44.
As Philip Howard has written, ``just letting a claim go to
a jury . . . will affect whether seesaws stay in playgrounds
all across America.'' \30\
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\30\ Philip K. Howard, The Collapse of the Common Good (New York:
2001) at 58.
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Today, a brochure from the National Program for Playground
Safety advises: ``Seesaw use is quite complex because it
requires two children to cooperate and combine their actions,''
and now ``there is a trend to replace [them] with spring-
centered seesaws.'' \31\ A culture of legal fear is actually
reducing the opportunities of American children to burn
calories in playgrounds.
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\31\ U.S. Consumer Product Safety Commission, Handbook for Public
Playground Safety, Pub. No. 325 at 23.
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Good Deeds
According to the Chicago Daily Herald:
By day, Dave Peterson works with diagnostic
multiplexers and beam shakers to maintain the Fermi
National Accelerator Laboratory's antiproton source.
But at dawn and dusk the Geneva resident drags a
homemade snowplow behind his daughter's Pacific Electra
mountain bike, clearing a 16-inch wide section of the
Fox River Trail as he rides to and from work in
Batavia. Because he rides at a time when few are
watching, he's become something of a local legend the
last two winters, a Bigfoot. ``It's one of those weird
things that has touched a nerve with a lot of people,''
Peterson said. A whole lot. In fact, many of the path's
regulars have come to expect it to be clear--and that
has put Peterson's plowing on hiatus. The county has
asked him to stop because if there's an expectation
that the trail will be plowed, there's a greater chance
for litigation, said Kane County Forest Preserve
District operations supervisor Pat McQuilkin. ``If a
person falls, you are more liable than if you had never
plowed at all. Crazy world,'' wrote AnnMarie Fauske,
the district's community affairs director, in response
to a letter to Peterson. ``Unfortunately, the times we
are in allow for a much more litigious environment than
common sense would dictate.'' . . . ``There is
something I can do here,'' Peterson said. ``I can use
my skills as an engineer to make life easier for the
little old ladies who walk on the path.'' But the
forest preserve worries that if they take a wrong step
and fall, those little old ladies might decide to
sue.\32\
---------------------------------------------------------------------------
\32\ Garrett Ordower, ``County Tells Bicyclist Thanks, But Stop
Plowing Trail,'' The Chicago Daily Herald (February 21, 2004).
---------------------------------------------------------------------------
The Girl Scouts
The Girl Scouts in Metro Detroit alone have to sell 36,000
boxes of cookies each year just to pay for liability
insurance.\33\ According to former Girl Scout Laurie Super [of
Downington, Pennsylvania], ``[i]t's getting harder to sell
[cookies] . . . Our local Wawa stores said they couldn't let
the girls set up their booth anymore, because of liability
issues.'' \34\
---------------------------------------------------------------------------
\33\ See ``Fine Filers of Frivolous Lawsuits,'' The Detroit News
(February 24, 2004).
\34\ Julia Moskin, ``Crave Thin Mints?'' The New York Times (March
14, 2004).
---------------------------------------------------------------------------
Everyone
The corrosive effects of lawsuit abuse were recently
summarized by Newsweek:
Americans will sue each other at the slightest
provocation. These are the sorts of stories that fill
schoolteachers and doctors and Little League coaches
with dread that the slightest mistake--or offense to an
angry or addled parent or patient--will drag them into
litigation hell, months or years of mounting legal fees
and acrimony and uncertainty, with the remote but scary
risk of losing everything . . . Americans don't just
sue big corporations or bad people. They sue doctors
over misfortunes that no doctor could prevent. They sue
their school officials for disciplining their children
for cheating. They sue their local governments when
they slip and fall on the sidewalk, get hit by drunken
drivers, get struck by lightning on city golf courses--
and even when they get attacked by a goose in a park
(that one brought the injured plaintiff $10,000). They
sue their ministers for failing to prevent suicides.
They sue their Little League coaches for not putting
their children on the all-star team. They sue their
wardens when they get hurt playing basketball in
prison. They sue when their injuries are severe but
self-inflicted, when their hurts are trivial and when
they have not suffered at all. Many of these cases do
not belong in court. But clients and lawyers sue
anyway, because they hope they will get lucky and win a
jackpot from a system that allows sympathetic juries to
award plaintiffs not just real damages--say, the cost
of doctor's fees or wages lost--but millions more for
impossible-to-measure ``pain and suffering'' and highly
arbitrary ``punitive damages.'' (Under standard
``contingency fee'' arrangements, plaintiffs' lawyers
get a third to a half of the take.) . . . Many
Americans sue because they have come to believe that
they have the ``right'' to impose the costs and burdens
of defending a lawsuit on anyone who angers them,
regardless of fault or blame. The cost to society
cannot be measured just in money, though the bill is
enormous, an estimated $200 billion a year, more than
half of it for legal fees and costs that could be used
to hire more police or firefighters or teachers.\35\
---------------------------------------------------------------------------
\35\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek
(December 15, 2003) at 44-45.
[T]he time may come when ordinary Americans recognize
that for every sweepstakes winner in the legal lottery,
there are millions of others who have to live with the
consequences--higher taxes and insurance rates,
educational and medical systems seriously warped by
lawsuits, fear and uncertainty about getting sued
themselves.\36\
---------------------------------------------------------------------------
\36\ Id. at 51. Although the American Trial Lawyers Association has
vociferously attacked the Newsweek article, Newsweek stands solidly by
its report, stating ``Newsweek received a large volume of mail from
trial lawyers critical of our cover story. We stand by the story as
both accurate and fair. The criticisms are for the most part easily
refuted with material in the public record.'' Newsweek, ``Mail Call''
(January 12, 2004).
As Will Rogers once observed, Americans are ``letting
lawyers instead of their conscience be their guide.''
POLLS SHOW AMERICANS OVERWHELMINGLY SUPPORT LEGISLATION BARRING
FRIVOLOUS LAWSUITS
We all pay for these frivolous lawsuits through higher
prices as consumers and through higher taxes as taxpayers.
A recent poll found that 83% of likely voters believe there
are too many lawsuits in America, 76% believe lawsuit abuse
results in increased prices for goods and services, and 65%
said they would be more likely to vote for congressional
candidates who supported curbs on lawsuit abuse.\37\ Another
poll found that 73% of Americans support requiring sanctions
against attorneys who file frivolous lawsuits.\38\
---------------------------------------------------------------------------
\37\ See American Tort Reform Association, ``National Poll on Tort
Reform'' (February 27, 2003).
\38\ See Insurance Research Council, ``IRC Study Finds Strong
Support for Wide Variety of Civil Justice Reform Measures'' (April 5,
2004) at 4.
---------------------------------------------------------------------------
Small businesses rank the cost and availability of
liability insurance as second only to the costs of health care
as their top priority,\39\ and both problems are fueled by
frivolous lawsuits.
---------------------------------------------------------------------------
\39\ Bruce D. Phillips, ``Small Business Problems and Priorities''
(National Federation of Independent Business Research Foundation, June
2004).
---------------------------------------------------------------------------
FRIVOLOUS LAWSUITS AGAINST INNOCENT VICTIMS HAVE BECOME COMMONPLACE,
ESPECIALLY THREATENING SMALL BUSINESSES AND HEALTH CARE
Because existing rules against frivolous lawsuits are
ineffective, as one commentator has pointed out, ``The right to
sue has been exploited by lawyers. They can gamble on taking
cases on a contingency basis because they need only win 1 in 10
to score the big judgment that will make up for the other
losses.'' \40\
---------------------------------------------------------------------------
\40\ Mortimer B. Zuckerman (Editorial) ``Welcome to Sue City,
U.S.A.'' U.S. News & World Report (June 16, 2003) at 64.
---------------------------------------------------------------------------
Small businesses and workers suffer. This year, the
nation's oldest ladder manufacturer, family-owned John S.
Tilley Ladders Co. of Watervliet, New York, near Albany, filed
for bankruptcy protection and sold off most of its assets due
to litigation costs. Founded in 1855, the Tilley firm could not
handle the cost of liability insurance, which had risen from 6%
of sales a decade ago to 29%, even though the company never
lost an actual court judgment. ``We could see the handwriting
on the wall and just want to end this whole thing,'' said
Robert Howland, a descendant of company founder John
Tilley.\41\
---------------------------------------------------------------------------
\41\ Carrie Coolidge, ``The Last Rung; The Tort System Takes Down a
149-year-old Ladder Manufacturer,'' Forbes (January 12, 2004) at 52.
---------------------------------------------------------------------------
A recent report by the AEI-Brookings Joint Center for
Regulatory Studies has concluded that ``The tort liability
price tag for small businesses in America is $88 billion a
year'' and that ``Small businesses bear 68 percent of business
tort liability costs, but take in only 25% of business
revenue.'' \42\ The small businesses studied in the report
account for 98% of the total number of businesses with
employees in the United States.\43\
---------------------------------------------------------------------------
\42\ Judyth Pendell and Paul Hinton, ``Liability Costs for Small
Business'' (U.S. Chamber Institute for Legal Reform, June, 2004) at 1
(``small business'' defined as ``those with less than $10 million in
annual revenue and at least one employee in addition to the owner'').
\43\ Id.
---------------------------------------------------------------------------
Doctors and patients suffer. Before the 1960s, only one
physician in seven had ever been sued in their entire
lifetime,\44\ whereas today's rate is about one in seven
physicians sued per year.\45\
---------------------------------------------------------------------------
\44\ See ``Opinion Survey of Medical Professional Liability,'' JAMA
164:1583-1594 (1957).
\45\ See R. Bovbjerg, ``Medical Malpractice: Problems & Reforms,''
The Urban Institute, Intergovernmental Health Policy Project (1995).
---------------------------------------------------------------------------
Further, the Harvard Medical Practice Study found that over
half of the filed medical professional liability claims they
studied were brought by plaintiffs who suffered either no
injuries at all, or, if they did, such injuries were not caused
by their health care providers, but rather by the underlying
disease.\46\ The researchers found that, of the 47 medical
malpractice claims they studied that resulted in
litigation,\47\ ``[i]n 14 cases, the physicians reviewed the
record and found no adverse event. For most of these cases, the
physicians examined the outcome and concluded that the cause
was the underlying disease rather than medical treatment . . .
In these 14 cases, our physician reviewers took a stand
opposite to that of the plaintiff-patient's expert.'' \48\
Further, the reviewers found that in an additional 10 cases an
adverse event occurred, but there was no negligence on the part
of the health care provider.\49\ Of the 47 claims filed that
the researchers analyzed, less than half demonstrated any
actual negligence, and many demonstrated no discernable
injury.\50\
---------------------------------------------------------------------------
\46\ See Harvard Medical Practice Study to the State of New York,
Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation,
and Patient Compensation in New York at 11-5 (1990) (``[T]he tort
system imposes the costs of defending claims on [health care] providers
who may not even have been involved in an injury, let alone a negligent
injury.'').
\47\ See id. at 7-1.
\48\ See id. at 7-33.
\49\ See id. at 7-33.
\50\ See also Paul Weiler, et al., A Measure of Malpractice (1993)
at 71 (``[Of those 47,] 10 claims involved hospitalization that had
produced injuries, though not due to provider negligence; and another
three cases exhibited some evidence of medical causation, but not
enough to pass our probability threshold. That left 26 malpractice
claims, more than half the total of 47 in our sample, which provided no
evidence of medical injury, let alone medical negligence.'').
---------------------------------------------------------------------------
EXAMPLES OF FRIVOLOUS LAWSUITS
Here are just a few examples of the frivolous lawsuits that
have tormented innocent Americans.\51\
---------------------------------------------------------------------------
\51\ Recently, Britain's most senior judges, the Appellate
Committee of the House of Lords, branded Britain's U.S.-style claims
system an ``evil'' that interferes with civil liberties and freedom in
a landmark ruling in a compensation case. In the case of Tomlinson v.
Congleton Borough Council, [2003] U.K.H.L. 47 (2003), the Appellate
Committee stated ``The pursuit of an unrestrained culture of blame and
compensation has many evil consequences and one is certainly the
interference with the liberty of the citizen. Of course there is some
risk of accidents arising out of the joie de vivre of the young, but
that is no reason for imposing a grey and dull safety regime on
everyone.''
LBarbara Streisand sued the California Coastal
Records Project, which took thousands of pictures of
the California coastline intended to protect the
state's shoreline. The photographs are made available
free of charge to state and local governments,
university researchers, conservation organizations, and
others. Streisand sued because a picture of her Malibu
estate (her mansion composed only 3% of one photo among
thousands) was posted on the public interest
organization's Web site. She sued for $50 million (five
separate claims for $10 million each), but on May 10,
2004, Streisand was ordered to pay the people she sued
$154,000 in legal fees they accrued defending against
her ridiculous lawsuit.\52\
---------------------------------------------------------------------------
\52\ See Jennifer Pittman, ``The Blame Game'' The Silicon Valley/
San Jose Business Journal (January 9, 2004); Kenneth R. Weiss,
``Streisand Sues Over Photograph of Her Coast Home on Web Site,'' The
Los Angeles Times (May 30, 2003) at B1; Streisand v. Adelman, Case No.
SC077257 (Sup. Ct. Los Angeles Cty.) (complaint filed May 30, 2003);
Streisand v. Adelman, Case No. SC077257 (Sup. Ct. Los Angeles Cty.)
(ruling on submitted matters: Motion to Tax Costs and Motion for
Attorneys; Fees).
LAccording to the Indianapolis Star, ``Indiana
drivers who get into wrecks with someone who is talking
on a cell phone can forget about suing the phone's
manufacturer. The Indiana Court of Appeals on Friday
dismissed an Evansville lawsuit in which Terry L.
Williams tried to do just that after a March 2002
traffic crash. Williams collided with Kellie Meagher,
who was allegedly talking on a Cingular Wireless phone.
In the lawsuit, Williams alleged Cingular knew--or
should have known--that Meagher would use the phone
while driving. Vanderburgh Superior Court Judge Mary
Margaret Lloyd dismissed Cingular from the suit. After
the dismissal, Williams asked the judge to reconsider,
citing new evidence that included a `Blondie' cartoon
strip in which Blondie, while talking on a cell phone,
caused an accident. But the Evansville judge was
unmoved. Now an appellate court also agrees that
Cingular was not liable.'' \53\
---------------------------------------------------------------------------
\53\ Kevin Corcoran, ``Court: Don't Blame Cell-Phone Maker for
Crash,'' The Indianapolis Star (June 5, 2004).
LIn April, 1995, Carl and Diana Grady sued
Frito Lay claiming that Dorito chips stuck in Charles
Grady's throat and tore his esophagus. The Gradys
wanted to present the ``expert'' testimony of Dr.
Charles Beroes to support their claim that Doritos are
inherently dangerous and negligently designed. Beroes'
research included pressing Doritos onto a scale until
the tip snapped off, and measuring the amount of time
it took saliva to soften the Doritos. None of Beroes'
tests involved chewing. After eight years of costly
litigation, the Pennsylvania Supreme Court threw out
the case, noting that Dr. Beroes' tests ``smacked of a
high school science fair project and did not bear any
relationship to the reality of the . . . consumption of
foodstuffs.'' \54\ Justice Saylor pointed out in his
concurring opinion ``the common sense notion that it is
necessary to properly chew hard foodstuffs prior to
swallowing.'' \55\
---------------------------------------------------------------------------
\54\ Grady v. Frito-Lay, Inc., 839 A.2d 1038, 1042 (8th Cir. 2003)
(citing Grady v. Frito-Law, Inc., 2000 WL 33436367, at *2) (Pa.Com.Pl.
April 3, 2000)).
\55\ Id. at 1053 (Saylor, J., concurring).
LAfter three years of litigation, an appeals
court finally held that the survivor of a crash cannot
sue an airline for punitive damages when the pilots did
not intentionally crash the plane. At midnight on June
1, 1999, during a severe thunderstorm, a fully loaded
American Airlines jet crashed while trying to land in
Little Rock, Arkansas. Eleven people died, including
the pilot. Two passengers sued seeking compensatory and
punitive damages. A U.S. district court judge ruled
that ``uncontroverted evidence'' showed the pilots had
a good faith belief that the plane could be landed
safely.\56\ Upholding the district court's decision,
Judge Morris Arnold held that no reasonable jury could
find that the members of the flight crew crashed the
plane on purpose. Judge Morris wrote, ``[s]tated
differently, we hold that no reasonable jury could find
that the members of the flight crew knew, or ought to
have known, in light of the surrounding circumstances,
that their conduct would naturally and probably result
in injury.'' \57\
---------------------------------------------------------------------------
\56\ In re: Aircraft Accident at Little Rock, Arkansas on June 1,
1999, 231 F.Supp. 852, 879 (E.D.Ark. 2002).
\57\ Id. at 878-79.
LAfter five years of litigation, the Nevada
Supreme Court dismissed the appeal of Lane Holmes, who
sued the Turtle Stop in Las Vegas, claiming a cup
caused him to suffer leg burns from dripping hot
coffee.\58\ The court upheld the decision of the trial
court that ruled ``[t]he danger is open and obvious.''
\59\
---------------------------------------------------------------------------
\58\ Holmes v. Turtle Stop, Inc., 62 P.3d 1165 (2000).
\59\ Cy Ryan, ``Court Says Warning About Hot Coffee Unnecessary,''
The Las Vegas Sun (July 11, 2000).
LA woman in Knoxville, Tennessee, sought
$125,000 in damages against McDonald's, claiming a hot
pickle dropped from a hamburger, burning her chin and
causing her mental injury. Her husband also sued for
$15,000 for loss of consortium.\60\
---------------------------------------------------------------------------
\60\ See Randy Kenner, ``Lawsuit on Hot Pickle Draws Attention
Around the Globe,'' Knoxville News-Sentinel (October 10, 2000) at A1.
LOn September 3, 2003, a Federal district
judge in New York threw out for a second time a lawsuit
filed on behalf of obese children claiming McDonald's
Corporation was legally responsible for their over-
consumption of food.\61\ The court earlier noted the
national ramifications of the complaint and the
requested damages, stating ``McDonalds has also,
rightfully, pointed out that this case, the first of
its kind to progress far enough along to reach the
stage of a dispositive motion, could spawn thousands of
similar `McLawsuits' against restaurants . . . The
potential for lawsuits is even greater given the
numbers of persons who eat food prepared at other
restaurants in addition to those serving fast food.''
\62\
---------------------------------------------------------------------------
\61\ See Pelman v. McDonald's Corp., S.D.N.Y. 02 Civ. 7821 (RWS),
at 34-35 (September 3, 2003).
\62\ Pelman v. McDonald's Corp., 237 F.Supp.2d 512, 518 (S.D.N.Y.
2003).
LThe Michigan Court of Appeals threw out a
case brought by Richard Overton, who ``pointed to
defendant's television advertisements featuring Bud
Light as the source of fantasies coming to life,
fantasies involving tropical settings, and beautiful
women and men engaged in unrestricted merriment.
Plaintiff sought monetary damages in excess of $10,000,
alleging that defendant's misleading advertisements had
caused him physical and mental injury, emotional
distress, and financial loss.'' \63\
---------------------------------------------------------------------------
\63\ Overton v. Anheauser-Busch Co., 517 N.W.2d 308, 309 (Mich.
App. 1994).
LIn Florida, a woman sued Universal Studios
for $15,000 for ``extreme fear, emotional distress and
mental anguish'' because the theme park's annual
haunted house was too scary.\64\
---------------------------------------------------------------------------
\64\ Tim Barker, ``Universal Fall Leads to Lawsuit,'' Orlando
Sentinel (January 5, 2000) at C1.
LAfter over three years of litigation,
Georgia's Court of Appeals held that the day trading
firms where Mark Barton invested before embarking on a
shooting rampage are not liable for the victims'
injuries and deaths. A unanimous panel on the court
stated ``We find this case is one in which the issue of
proximate cause is so plain, palpable and indisputable
as to demand summary judgment for the defendants.''
\65\ The court noted that it was ``troubled by the
implication that the list of defendants potentially
liable for any person's violence, if sparked by
economic misfortune, would be limited only by the
number of stock brokers, investment advisers, lawyers,
business partners, lottery ticket sellers, etc., whom
the assailant blamed for his financial losses.'' \66\
---------------------------------------------------------------------------
\65\ Brown v.All-Tech Investment Group, 2003 WL 23315394 (Ga. App.)
at *5.
\66\ Id. at *7, n.5.
LAfter a decade of litigation, Texas's 1st
Court of Appeals reversed a $43 million judgment
against a car manufacturer in a products liability suit
that alleged a defective seat belt caused the 1992
drowning death of a woman with a blood-alcohol level of
0.17 who failed to escape from her Honda Civic when it
became submerged under water.\67\
---------------------------------------------------------------------------
\67\ Honda of America Manufacturing, Inc. v. Norman, 104 S.W.3d.
600 (2003) (Tex.App. 1st.).
LThe family of a man who died on a fishing
trip sued the Weather Channel for $10 million, claiming
that the man relied on the channel's forecast for his
safety. In dismissing the case, the Miami Federal court
stated that if forecasters were held accountable, ``the
duty could extend to farmers who plant their crops
based on a forecast of no rain, construction workers
who pour concrete or lay foundation based on the
forecast of dry weather, or families who got to the
beach for the weekend.'' \68\
---------------------------------------------------------------------------
\68\ See ``Storm Death Is Not Weatherman's Fault,'' New York Post
(March 29, 1999) at 84.
LA West Virginia man who fell down an
escalator at an airport finally dropped a lawsuit filed
against US Airways over the accident. According to the
Associated Press, ``The lawsuit in circuit court in
Fort Myers alleged the airline didn't warn Floyd
Shuler, 61, about the adverse affects of drinking
alcohol on a plane. Shuler said in a news release from
Wheeling, W.Va., that he didn't intend for the suit to
be filed. `I learned about the filing of the lawsuit
against US Airways . . . along with everyone else,'
Shuler said. `It was never my intent to take on the
airline industry. I apologize for any inconvenience
this has caused US Airways.' Shuler's attorney, Paul
Kutcher, did not return a phone call from The
Associated Press seeking comment. The suit . . . said
US Airways was negligent by failing to warn Shuler that
the effects of alcohol are greater at night on airline
passengers. The suit also alleged that the company did
not properly maintain the escalator at Southwest
Florida International Airport when he fell down it on
Aug. 28, 1999, and it sought damages in excess of
$15,000.'' \69\
---------------------------------------------------------------------------
\69\ Associated Press, ``Man Drops Suit Filed Against Airline After
He Drank Booze, Fell,'' USA Today (April 4, 2004).
LSeveral months after the Escondido,
California library's resident cat attacked Richard
Espinosa's 50-pound Labrador-mix assistance dog,
Espinosa filed a $1.5-million claim against the city,
alleging that he was harmed due to the dog's injuries.
According to the legal papers filed, Espinosa claimed
his Federal and state constitutional rights were
violated and that ``. . . the defendants actions and
subsequent inactions caused Espinosa to suffer
significant lasting, extreme and severe mental anguish
and emotional distress including, but not limited to,
terror, humiliation, shame, embarrassment,
mortification, chagrin, depression, panic, anxiety,
flashbacks, nightmares, loss of sleep . . .'' \70\
According to the North County Times, ``It took a jury
little more than 2 hours of deliberation Friday to
reject a claim from a man that the city of Escondido
violated his civil rights when a cat living in a city
library attacked his assistance dog more than 3 years
ago . . . Espinosa originally asked for $1.5 million in
compensation and damages . . . During jury selection
Wednesday, Judge Hofmann excused four potential jurors
who said they felt the case was `frivolous' and that
they could not be impartial. Others also said the case
was without merit, but said they could look beyond that
feeling. After that first juror said the word
`frivolous,' and so did the next five, I thought the
whole panel should have been thrown out,'' Espinosa
said . . . The city offered twice to settle with
Espinosa, including one offer of $1,000. Espinosa
declined. Nelson was unable to estimate how much the
city spent defending itself against Espinosa's
allegations, but he said it was a considerable sum. He
also said the case could drag on for months or years if
Espinosa does appeal.'' \71\
---------------------------------------------------------------------------
\70\ Chuck Shepherd, ``News of the Weird,'' The Orlando Weekly
(August 30, 2001).
\71\ Teri Figueroa, ``Jury Rejects Claim by Man in Attack on Dog by
Library Cat,'' The North County Times (January 20, 2004).
LIn Ohio, Hamilton County Commissioner Todd
Portune sued the Bengals and the National Football
League claiming the team violated its stadium lease by
failing to be competitive. The complaint, which also
named the other 31 NFL franchises as defendants,
alleges fraud, civil conspiracy, antitrust violations
and breach of contract.\72\
---------------------------------------------------------------------------
\72\ Terry Kinney (the Associated Press) ``Commissioner Sues
Bengals, NFL'' (January 31, 2003).
LAfter three years of litigation, the Nebraska
Supreme Court upheld a lower court ruling and found
Ford Motor Co. and Bridgestone/Firestone Inc. not
liable for the death of a woman killed by a man who
gave her a lift after she got a flat tire. The woman's
parents claimed in the lawsuit that a Firestone
Wilderness AT tire on their daughter's Ford Explorer
failed, setting off the chain of events that resulted
in her death. The Nebraska court said the companies
could not have foreseen the murderer's criminal
acts.\73\
---------------------------------------------------------------------------
\73\ Kevin O'Hanlon, ``Court: Faulty Tire Didn't Cause Murder,''
the Associated Press (August 8, 2003).
---------------------------------------------------------------------------
TODAY'S PRODUCT WARNINGS ARE A SAD TESTAMENT TO THE
LEGAL CULTURE OF FEAR
Today, testaments to the age of frivolous lawsuits are
written on all manner of product warnings that aim to prevent
obvious misuse. A label on a snow sled says ``Beware: sled may
develop a high speed under certain snow conditions.'' A 5-inch
brass fishing lure with three hooks is labeled ``Harmful if
swallowed.'' A warning on an electric router made for
carpenters states ``This product not intended for use as a
dental drill.'' A warning label on a baby stroller cautions
``Remove child before folding.'' A sticker on a 13-inch wheel
on a wheelbarrow warns ``Not intended for highway use.'' A
dishwasher carries the warning ``Do not allow children to play
in the dishwasher.'' A manufactured fireplace log states
``Caution--Risk of Fire.'' A household iron contains the
warning ``Never iron clothes while they are being worn.'' \74\
And a cardboard car sun shield that keeps sun off the dashboard
warns ``Do not drive with sun shield in place.'' \75\
---------------------------------------------------------------------------
\74\ Sonny Garrett, ``Warning: People Are as Dumb as You Think,''
The Baxter Bulletin (April 17, 2004) (compiling list from Michigan
Lawsuit Abuse Watch in Annual Wacky Warning Label Contest).
\75\ Larry D. Hatfield, ``Dumbest Warning Labels Get their Due,''
The San Francisco Chronicle (January 24, 2002).
---------------------------------------------------------------------------
THE COSTS OF FRIVOLOUS LITIGATION
It should be emphasized that statistics do not capture the
very real experiences of victims of lawsuit abuse that people
suffer, and this debate is not about aggregate statistics
regarding the number of lawsuits filed.
However, requiring sanctions when judges find lawsuits are
frivolous will surely deter many frivolous cases from being
brought. That will be a good thing, considering the cost of
today's tort system to Americans is staggering. After leveling
off during the 1990s, the system's direct costs soared by a
stunning 14.4% in 2001 and another 13.3% in 2002, to a 2002
total of $233 billion, the equivalent of a 5% tax on wages,\76\
according to a report released by Tillinghast-Towers Perrin,
which publishes the most definitive trend statistics on tort
system costs. Inflation-adjusted direct U.S. tort costs per
person have shot from $89 in 1950 to $809 in 2002.\77\
---------------------------------------------------------------------------
\76\ Tillinghast-Towers Perrin, U.S. Tort Costs: 2003 Update:
Trends and Findings on the Costs of the U.S. Tort System, at 1.
Tillinghast's reports on tort system costs are funded internally.
\77\ Id. at 1.
---------------------------------------------------------------------------
According to the Economic Report of the President, ``The
expansive tort system has a considerable impact on the U.S.
economy. Tort liability leads to lower spending on research and
development, higher health care costs, and job losses.'' \78\
And according to the Council of Economic Advisers, ``the United
States tort system is the most expensive in the world, more
than double the average cost of other industrialized nations.''
\79\ The direct costs of medical malpractice claims jumped by
an average of 11.9 percent a year from 1975 to 2002.\80\
---------------------------------------------------------------------------
\78\ Economic Report of the President (February 2004) at 203.
\79\ Council of Economic Advisers, ``Who Pays for Tort Liability
Claims? An Economic Analysis of the U.S. Tort Liability System'' (April
2002) at 1.
\80\ Tillinghast-Towers Perrin, U.S. Tort Costs: 2003 Update:
Trends and Findings on the Costs of the U.S. Tort System, at 2.
---------------------------------------------------------------------------
Of the $233 billion total, only 22 cents on the dollar went
to compensate alleged victims' economic losses; almost as much
(19 cents) went to their lawyers; 24 cents went to payments for
inherently unquantifiable noneconomic losses, mainly pain and
suffering; 14 cents went to defense costs; and 21 cents went to
insurance overhead costs.\81\
---------------------------------------------------------------------------
\81\ Id. at 17. According to an analysis of a report by the
National Center for State Courts by Newsweek's Stuart Taylor, Jr.,
although tort filings declined by 9 percent from 1992 to 2001, almost
all of that decline came in routine car-crash lawsuits. The report
shows that medical malpractice claims increased by 24 percent from
1992-2001 and that total tort filings soared by 40 percent from 1975 to
2001, despite a dip during the 1990's. See Stuart Taylor, Jr. Response
to ATLA's Claims, available at http://www.overlawyered.com/archives/
000708.html. Chief Justice Rehnquist released new data on January 1,
2004, showing an 8 percent drop in civil filings in fiscal year 2003,
``primarily as a result of decreases in personal injury/product
liability cases involving asbestos (such filings had soared 98 percent
the previous year).'' William H. Rehnquist, 36 The Third Branch 1
(January 2004), 2003 Year-End Report on the Federal Judiciary, Chapter
III, n.5. See also Economic Report of the President (February 2004), at
204-05 (``The number of injuries handles by the tort system has
increased along with expenditures. The number of filings per capita
started to rise in the early 1980's and peaked in the mid-1980's, at
least in the 16 states for which data on lawsuit filings are available
between 1975 and 2000. Much of the decline in filings since 1985
appears to have occurred in California, where medical liability reforms
included a $250,000 limit for noneconomic damages that was found
constitutional in 1985.'').
---------------------------------------------------------------------------
A recent report by Judyth Pendell, Senior Fellow at the
AEI-Brookings Joint Center for Regulatory Studies, and Paul
Hinton, Vice President of NERA Economic Consulting, has
concluded that ``The tort liability price tag for small
businesses in America is $88 billion a year'' and that ``Small
businesses bear 68 percent of business tort liability costs,
but take in only 25% of business revenue.'' \82\ The small
businesses studied in the report account for 98% of the total
number of businesses with employees in the United States.\83\
---------------------------------------------------------------------------
\82\ Judyth Pendell and Paul Hinton, ``Liability Costs for Small
Business'' (U.S. Chamber Institute for Legal Reform, June, 2004) at 1
(``small business'' defined as ``those with less than $10 million in
annual revenue and at least one employee in addition to the owner'').
\83\ Id.
---------------------------------------------------------------------------
Without the serious threat of punishment for filing
frivolous lawsuits, innocent individuals and companies will
continue to face the harsh economic reality that simply paying
off frivolous claimants through monetary settlements is often
cheaper than litigating the case. If it costs $10,000 to defend
yourself in court against frivolous charges, it makes financial
sense to settle the case for $9,000, even if you weren't at
fault in any way. This perverse dynamic not only results in
legalized extortion, but it leads to increases in the insurance
premiums all individuals and businesses must pay.\84\
---------------------------------------------------------------------------
\84\ Opponents of reform often claim that contingency fees--
agreements by which personal injury attorneys are allowed a percentage
cut from any monetary damages awarded to their client--provide a
``screening mechanism'' that weeds out frivolous cases. The argument
used is that personal injury attorneys will not take frivolous cases
because doing so would leave them with no monetary recovery. The
perverse dynamic outlined above, and the fact that filing fees are
usually no more than a hundred dollars and additional defendants can be
named in the lawsuit at no extra charge, makes clear that contingency
fee agreements provide no effective screening mechanism at all since
personal injury attorneys can simply take advantage of the legal costs
they impose on defendants simply in virtue of their filing a case to
extort money from those they sue.
---------------------------------------------------------------------------
The incentives for personal injury lawyers to file
meritless nuisance lawsuits for their settlement value are
clear. As leading commentators from Harvard Law School have
described the situation under current law:
[T]he plaintiff may choose to file a claim at some
(presumably small) cost. If the defendant does not then
settle with the plaintiff and does not, at a cost,
defend himself, the plaintiff will prevail by default
judgment . . . Given the model and the assumption that
each party acts in his financial interest and realizes
the other will do the same, it is easy to see how
nuisance suits can arise. By filing a claim, any
plaintiff, and thus the plaintiff with a weak case,
places the defendant in a position where he will be
held liable for the full judgment demanded unless he
defends himself. Hence, the defendant should be willing
to pay a positive amount in settlement to the plaintiff
with a weak case--despite the defendant's knowledge
that were he to defend himself, such a plaintiff would
withdraw.\85\
---------------------------------------------------------------------------
\85\ D. Rosenberg and S. Shavell, ``A Model in which Suits are
Brought for their Nuisance Value,'' 5 International Rev. of Law and
Economics 3, 3 (June 1985).
These commentators point out that defendants will always
have to suffer extortion through nuisance lawsuits because ``to
defeat a claim, the defendant will have to engage in actions
that are frequently more expensive than the plaintiff's cost of
making the claim, for the defendant will have to gather
evidence supporting his contention that he was not legally
responsible for harm done to the plaintiff or that no harm was
actually done.'' \86\ The same commentators offer the following
illustration:
---------------------------------------------------------------------------
\86\ Id. at 10.
Suppose, for instance, that the plaintiff files a claim
and demands $180 in settlement. The defendant will then
reason as follows. If he settles, his costs will be
$180. If he rejects the demand and does not defend
himself, he will lose $1000 by default judgment. If he
rejects the demand and defends himself, the plaintiff
will withdraw, but he will have spent $200 to
accomplish this. Hence, the defendant's costs are
minimized if he accepts the plaintiff's demand for
$180; and the same logic shows that he would have
accepted any demand up to $200. It follows that the
plaintiff will find it profitable to file his nuisance
claim; indeed, this will be so whenever the cost of
filing is less than the defendant's cost of
defense.\87\
---------------------------------------------------------------------------
\87\ Id. at 4.
Personal injury lawyers can always extort money from
innocent victims by filing nuisance lawsuits for their
settlement value. H.R. 4571 will prevent such extortion by
giving victims an opportunity they do not have now to get
financial compensation for the costs they are forced to bear by
legal tormentors filing frivolous lawsuits.
H.R. 4571: THE LAWSUIT ABUSE REDUCTION ACT (``LARA'')
What follows is a discussion of the need for The Lawsuit
Abuse Reduction Act (``LARA''), which was introduced by
Congressman Lamar Smith on June 15.
Section 2 of LARA: Attorney Accountability
Federal Rule of Civil Procedure 11 (``Rule 11''), as
originally adopted and prior to the adoption of weakening
amendments in 1993, was widely popular among Federal judges,
and it served to significantly limit lawsuit abuse.
In 1990, the Judicial Conference's Advisory Committee on
Civil Rules undertook a review of Rule 11 and asked the Federal
Judicial Center to conduct an empirical study of its operation
and impact. The survey of 751 Federal judges found that an
overwhelming majority of Federal judges believed that Rule 11
did not impede development of the law (95%); the benefits of
the rule outweighed any additional requirement of judicial time
(71.9%); the 1983 version of Rule 11 had a positive effect on
litigation in the Federal courts (80.9%); and the rule should
be retained in its then-current form (80.4%).\88\
---------------------------------------------------------------------------
\88\ Federal Judicial Center Final Report on Rule 11 to the
Advisory Committee on Civil Rules of the Judicial Conference of the
United States (May 1991). A subsequent survey conducted by the Federal
Judicial Center in June, 1995, consisting of 148 Federal judges and
over 1,000 trial attorneys found that the 1993 amendments that
disallowed monetary compensation for victims of frivolous lawsuits were
a bad idea. In that survey, two-thirds of judges (66%), defense
attorneys (63%), and other attorneys (66%), and even a substantial
portion of plaintiff's attorneys (43%), supported restoring Rule 11's
compensatory function once again. See John Shapard et. al., Federal
Judicial Center, Report of a Survey Concerning Rule 11, Federal Rules
of Civil Procedure at 5.
---------------------------------------------------------------------------
Despite this wide judicial support for a strong Rule 11, in
1991 the Civil Rules Advisory Committee included provisions to
weaken Rule 11 in a much broader package of proposed amendments
to the Federal Rules driven largely by the desire to avoid
``satellite litigation'' of Rule 11 issues that could burden
allegedly overworked judges. The proposed changes were then
sent to the Supreme Court for approval or modification.
Exercising what it viewed to be a very limited oversight
role,\89\ the Supreme Court approved the proposed changes
without substantive comment in April, 1993.
---------------------------------------------------------------------------
\89\ While the Supreme Court is authorized to ``prescribe'' the
general rules of Federal court practice and procedure, See Judicial
Improvements and Access to Justice Act, 28 U.S.C. Sec. 2072(a), in fact
it has been the general practice of the Supreme Court to merely act as
a conduit for the rule changes and rely on the Judicial Conference to
make the decisions in this area. As pointed out in the House
Judiciary's Committee Report on H.R. 988 in the 104th Congress, Justice
White believed that, as a matter of practice, the role of the Supreme
Court is to ``. . . transmit the Judicial Conference recommendations
without change and without careful study as long as there is no
suggestion that the committee system has not operated with integrity.''
Indeed Chief Justice Rehnquist's April 22, 1993 letter conveying the
rules to the Speaker states: ``While the Court is satisfied that the
required procedures have been observed, this transmittal does not
necessarily indicate that the court itself would have proposed these
amendments in the form submitted.'' H.R. Rep. No. 104-62, at 11, n.14
(1995).
---------------------------------------------------------------------------
In a strongly worded dissent on the Rule 11 changes,
Justice Scalia correctly anticipated that the proposed revision
would eliminate a ``significant and necessary deterrent'' to
frivolous litigation, stating ``the overwhelming approval of
the Rule by the Federal district judges who daily grapple with
the problem of litigation is enough to persuade me that it
should not be gutted.'' \90\ Justices Scalia and Thomas
properly dissented from the transmittal of the amendments to
Rule 11 to Congress, arguing that ``[t]he proposed revision
would render the Rule toothless, by allowing judges to dispense
with sanction, by disfavoring compensation for litigation
expenses, and by providing a 21-day `safe harbor' within which,
if the party accused of a frivolous filing withdraws the
filing, he is entitled to escape with no sanction at all.''
\91\
---------------------------------------------------------------------------
\90\ Id. at 11.
\91\ 146 F.R.D. 401, 507-08 (1993).
---------------------------------------------------------------------------
Rule 11 as it existed prior to the 1993 amendments was very
popular with Federal judges. The Federal Judicial Center
(``FJC'') was commissioned to conduct empirical studies and
surveys on the operation of the old Rule 11,\92\ and in a
survey of all Federal trial judges, the FJC found that 80% were
of the opinion that the old Rule 11 had had an overall positive
effect and should not be changed.\93\ We need to restore those
positive effects once again.
---------------------------------------------------------------------------
\92\ Standing Committee on Rules of Practice and Procedure of the
Judicial Conference of the United States, Call for Written Comments on
Rule 11 of the Federal Rules of Civil Procedure and Related Rules as
Amended in 1983 (August 1990), reprinted in 131 F.R.D. 335 (1990).
\93\ Interim Report on Rule 11, Advisory Committee on Civil Rules,
reprinted in Georgene M. Vairo, Rule 11 Sanctions: Case Law
Perspectives and Preventive Measures, App. at 1-8 to 1-10 (2d ed.
1991).
---------------------------------------------------------------------------
After the proposal to gut Rule 11 was forwarded to
Congress, there was a 7-month period under the Rules Enabling
Act in which the Congress had the authority to make changes,
but time ran out before Congress could stop these damaging
amendments to Rule 11.\94\
---------------------------------------------------------------------------
\94\ Under the Rules Enabling Act, Congress has 7 months to act on
the proposed rules; if Congress does not act, the proposed rules become
law. See 28 U.S.C. Sec. 2074(a). Despite the introduction of H.R. 2979
in the 103rd Congress by Carlos J. Moorhead, which would have delayed
the effective date of the proposed changes to Rule 11, and a companion
bill in the Senate, no formal action was taken in the Democrat-
controlled House, and the revisions went into effect on December 1,
1993. The House later passed H.R. 988 in the 104th Congress--which,
among other things, would have restored Rule 11 to its original form--
by a vote of 232-193, but it was not taken up in the Senate.
---------------------------------------------------------------------------
Section 2 of LARA would restore teeth to Rule 11 once
again.
In particular, Section 2 of LARA would:
LAllow monetary sanctions against parties that
file frivolous lawsuits. Shockingly, the 1993
amendments to Rule 11 prohibited any monetary sanctions
against parties who filed frivolous lawsuits. Rule 11
currently states that ``[m]onetary sanctions may not be
awarded against a represented party for a violation of
subdivision (b)(2),'' and subdivision (b)(2) requires
lawyers to certify that the case they're bringing is
``warranted by existing law or by a nonfrivolous
argument for the extension, modification, or reversal
of existing law or the establishment of new law.'' H.R.
4571 would allow monetary penalties against parties who
file frivolous lawsuits. Indeed, a survey conducted by
the Federal Judicial Center in June, 1995, consisting
of 148 Federal judges and over 1,000 trial attorneys
found that the 1993 amendments that prohibited monetary
compensation for victims of frivolous lawsuits were a
bad idea. In that survey, two-thirds of judges (66%),
defense attorneys (63%), and other attorneys (66%), and
even a substantial portion of plaintiff's attorneys
(43%), supported restoring Rule 11's compensatory
function once again.\95\ H.R. 4571 would do just that.
---------------------------------------------------------------------------
\95\ See John Shapard et al., Federal Judicial Center, Report of a
Survey Concerning Rule 11, Federal Rules of Civil Procedure at 5.
LReverse the 1993 amendments to Rule 11 that
made Rule 11 sanctions discretionary rather than
mandatory. Because today, under a weak Rule 11,
sanctions in frivolous cases are not mandatory, there
is little incentive for a victim of a frivolous lawsuit
to spend time and money seeking Rule 11 sanctions.
Deterrence cannot be achieved without certain
punishment. While a court should have discretion to
fashion an appropriate sanction based on the
circumstances of the violation, litigants making
frivolous claims should not be allowed the opportunity
to escape sanctions entirely. Even Senator John Edwards
has written in Newsweek that ``[L]awyers who bring
frivolous cases should face tough, mandatory
sanctions.'' \96\ Senator Edwards also said on Meet the
Press that ``I feel very strongly that we need real and
enforceable penalties for frivolous lawsuits that may
be filed in this country.'' \97\ And Senator Edwards's
campaign issued a statement saying Senator Edwards
``believes that we need a national system in place that
will weed out the meritless lawsuits without taking
away patients' rights.'' \98\ H.R. 4571 would do
exactly that.
---------------------------------------------------------------------------
\96\ John Edwards, ``Juries: `Democracy in Action,' '' Newsweek
(December 15, 2003) at 53.
\97\ NBC News, ``Meet the Press'' (May 5, 2002) (transcript).
\98\ John Stossel, ``Lawyers and the Little Guy,'' ABCNews.com
(``Give Me a Break'' commentary on ABC News' 20/20) (July 23, 2004).
LReverse the 1993 amendments to Rule 11 that
allow parties and their attorneys to avoid sanctions
for making frivolous claims and demands by withdrawing
them within 21 days after a motion for sanctions has
been filed. Justice Scalia correctly pointed out that
such amendments would in fact encourage frivolous
lawsuits: ``In my view, those who file frivolous suits
and pleadings should have no `safe harbor.' The Rules
should be solicitous of the abused (the courts and the
opposing party), and not of the abuser. Under the
revised Rule, parties will be able to file thoughtless,
reckless, and harassing pleadings, secure in the
knowledge that they have nothing to lose: If objection
is raised, they can retreat without penalty.'' \99\
H.R. 4571 would get rid of the ``free pass'' lawyers
have to file frivolous lawsuits under today's Rule 11.
---------------------------------------------------------------------------
\99\ H.R. Rep. No. 104-62, at 11-12 (1995).
LReverse the 1993 amendments to Rule 11 that
prohibit sanctions for discovery abuses. Monetary
sanctions for frivolous and harassing conduct during
the course of discovery should be allowed if
circumstances warrant. (``Discovery'' is the term used
to describe the process by which parties are made to
exchange information each side requests from the other
prior to trial.) A study conducted by the American
Judicature Society found that discovery was at issue in
over 19% of the motions that were filed under the
original Rule 11, prior to the 1993 amendments, when
discovery abuses were sanctionable.\100\
---------------------------------------------------------------------------
\100\ See Marshall, Kritzer, and Zeamans, ``The Use and Impact of
Rule 11,'' 86 N.W.U.L.Rev. 943, 951-55 (discovery abuse was cited as
the reason for 19.2% of formal Rule 11 activity not leading to
sanctions and 14.9% of activity resulting in sanctions).
It is important to remember that nothing in H.R. 4571, the
Lawsuit Abuse Reduction Act, changes the current standard by
which frivolous lawsuits are judged. That is, under H.R. 4571,
the standard a judge will use to determine whether a case is
frivolous will remain as it has been, namely a determination
---------------------------------------------------------------------------
that:
Lthe case is not being presented for any
improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of
litigation;
Lthe claims, defenses, and other legal
contentions therein are warranted by existing law or by
a nonfrivolous argument for the extension,
modification, or reversal of existing law or the
establishment of new law;
Lthe allegations and other factual contentions
have evidentiary support or, if specifically so
identified, are likely to have evidentiary support
after a reasonable opportunity for further
investigation or discovery; and
Lthe denials of factual contentions are
warranted on the evidence or, if specifically so
identified, are reasonably based on a lack of
information or belief.
Only cases that meet the criteria outlined above will be
subject to Rule 11 sanctions under the Lawsuit Abuse Reduction
Act. The baseless nature of arguments by reform opponents that
Rule 11 somehow stifles growth in the law is belied by the fact
that Rule 11 explicitly allow for growth in the law, but not
for frivolous arguments for extensions of the law.
Further, LARA expressly provides that ``Nothing in'' the
changes made to Rule 11 ``shall be construed to bar or impede
the assertion or development of new claims or remedies under
Federal, State, or local civil rights law.'' Civil rights
claims are thereby exempted from the bill's Rule 11 provisions.
Section 3 of LARA: Applying Rules Against Frivolous Lawsuits to State
Cases Affecting Interstate Commerce
Section 3 of LARA would extend Rule 11's provisions
preventing frivolous lawsuits to state cases in which the state
court determines, based on an analysis of the relief requested,
that the case would affect interstate commerce. (For the most
part, states' rules of civil procedure are modeled after
Federal Rule 11,\101\ and sanctions for frivolous filings are
not mandatory in 38 states and the District of Columbia, just
as they are not mandatory under the Federal Rule 11.) \102\
---------------------------------------------------------------------------
\101\ See Arkansas Rule 11, Addition to Reporter's Notes, 1997
Amendment (``The rule has been amended by designating the former text
as subdivision (a) and by adding new subdivision (b), which is based
[on] Rule 11(c)(1) of the Federal Rules of Civil Procedure, as amended
in 1993 . . . New subdivision (b) provides that requests for sanctions
must be made as a separate motion, rather than simply be included as an
additional prayer for relief in another motion. The motion for
sanctions is not to be filed until at least 21 days, or other such
period as the court may set, after being served . . .); Minn. R. Civ.
P. 11.04 (Minnesota), Advisory Committee Comments, 2000 Amendments
(``Rule 11 is amended to conform completely to the Federal rule . . .
On balance, the Committee believes that the amendment to the Rule to
conform to its Federal counterpart makes the most sense, given this
Committee's long-standing preference for minimizing the differences
between state and Federal practice . . .''); N.D. R. Civ. P. 1 (North
Dakota), Explanatory Note (``As will become readily apparent from a
reading of the rules, they are the Federal Rules of Civil Procedure
adapted, insofar as practicable, to state practice.''), N.D. R. Civ. P.
11, Explanatory Note (``Rule 11 was revised, effective March 1, 1996,
in response to the 1993 revision of Rule 11.''); Tenn. R. Civ. P. 11
(Tennessee), Advisory Commission Comment to 1995 Amendment (``Amended
Rule 11 tracks the current Federal version. Sanctions no longer are
mandatory, and non-monetary sanctions are encouraged. The 21-day safe
harbor provision allows otherwise sanctionable papers to be withdrawn,
thereby escaping sanctions.''); Utah R. Civ. P. 11 (Utah), Advisory
Committee Note (``The 1997 amendments conform state Rule 11 with
Federal Rule 11.''); Vt. R. Civ. P. 11 (Vermont), Reporter's Notes to
1996 Amendment (``Rule 11 is amended to conform to the 1993 amendment
of Federal Rule 11.''); W. Va. R. Civ. P. 11 (West Virginia) (West
Virginia's Rule 11 as amended effective April 1, 1998, is identical to
the current Federal Rule 11); Wyo. R. Civ. P. 11 (Wyoming) (Wyoming's
Rule 11 is identical to the current Federal Rule 11); Restatement
(Third) of the Law Governing Lawyers Sec. 170 reporter's note to cmt. c
(Tentative Draft No. 8, 1997). State courts also often rely on Federal
court decisions when interpreting their rules. See, e.g., Gray v.
Washington, 612 A.2d 839, 842 (D.C. 1992); Bryson v. Sullivan, 412
S.E.2d 327, 332 (1992); Bryant v. Joseph Tree, Inc., 829 P.2d 1099,
1104-05 (Wash. 1992) (en banc).
\102\ See Alabama Rule of Civil Procedure 11; Alaska Rule of Civil
Procedure 11; Arkansas Rule of Civil Procedure 11; Cal.C.C.P.
Sec. 128.5 (California); C.R.C.P. Rule 11 (Colorado); C.G.S.A. Sec. 52-
190a (Connecticut); De.R.S.Ct. Rule 33 (Delaware); D.C.R.R.C.P. Rule 11
(D.C.); Fl.St. R.C.P. Rule 1.150 (Florida); Hi.R.R.C.P. Rule 11
(Hawaii); Il.C.S.S.Ct. Rule 137 (Illinois); In.St. Trial P. Rule 11
(Indiana); L.S.A.-C.C.P. Art. 864 (Louisiana); Me.R.R.C.P. Rule 11
(Maine); Md.Rules, Rule 1-311 (Maryland); Massachusetts Rules of Civil
Procedure (Mass.R.Civ.P.), Rule 11; Minnesota Rules of Civil Procedure,
Rule 11.03; Ms.R.R.C.P. Rule 11; Miss. Code Ann. Sec. 11-55-5
(Mississippi); Missouri Supreme Court Rule 55.03; Ne.R.Civ.Pro.St.
Sec. 25-824 (Nebraska); N.H.R.Super.Ct. Rule 59 (New Hamphsire);
N.J.S.A. 2A:15-59.1 (New Jersey); N.M.R.Dist.Ct.R.C.P. Rule 1-011 (New
Mexico); N.D.R.R.C.P. Rule 11 (North Dakota); Ohio Civ.R. Rule 11; 12
Okl.St.Ann. Sec. 2011 (Oklahoma); Or.R.R.C.P. O.R.C.P. 17 (Oregon);
Pa.R.C.P. No. 1023.1; Pa.R.C.P. No. 1023.4 (Pennsylvania); R.I.R.R.C.P.
Rule 11 (Rhode Island); Rule 11, S.C.R.C.P. (South Carolina);
Tn.R.R.C.P. Rule 11.03 (Tennessee); Texas Civil Practice & Remedies
Code Sec. 10.004; Ut.R.R.C.P. Rule 11 (Utah); Vt.R.R.C.P. Rule 11
(Vermont); Va.R.S.S.Ct. Rule 1:4; Va.R.S.Ct. Rule 4:1 (Virginia);
Wa.R.Super.Ct.Civ. Cr. 11 (Washington); W.V.R.R.C.P. Rule 11 (West
Virginia); W.S.A. 802.05 (Wisconsin); Wy.R.R.C.P. Rule 11 (Wyoming).
In the remaining states various exceptions to the sanctions rule
allow frivolous filings to go unpunished and undeterred. See Arizona
Rules of Civil Procedure, Rule 11(a) (only ``appropriate'' sanction
required, not a sanction ``sufficient to deter repetition of such
conduct'' as under Federal Rule 11); Ga.St. Sec. 9-15-14 (Georgia)
(standard is that frivolous pleading must include claims or defenses no
court anywhere could be reasonably expected to accept); Id.R.R.C.P.
Rule 11 (Idaho) (only ``appropriate'' sanction required, not a sanction
``sufficient to deter repetition of such conduct''); I.C.A. Rule 1.413
(Iowa) (only ``appropriate'' sanction required, not a sanction
``sufficient to deter repetition of such conduct''); Ks.R.R.C.P. Code
60-211 (Kansas) (does not apply to abusive discovery requests and only
``appropriate'' sanction required in other cases, not a sanction
``sufficient to deter repetition of such conduct''); Ky.St.R.C.P. Rule
11 (Kentucky) (only ``appropriate'' sanction required, not a sanction
``sufficient to deter repetition of such conduct,'' and state rule
postpones ruling on frivolous pleadings until after entry of final
judgement); Mi.R.R.C.P.M.C.R. 2.114 (Michigan) (bars punitive damages
for frivolous pleadings); Mt.R.R.C.P. Rule 11 (Montana) (only
``appropriate'' sanction required, not a sanction ``sufficient to deter
repetition of such conduct''); Nv.St.R.C.P. Rule 11 (Nevada) (only
``appropriate'' sanction required, not a sanction ``sufficient to deter
repetition of such conduct''); N.Y.C.P.L.R. Sec. 8303-a (New York)
(sanctions limited to civil personal injury and property damage claims
and subject to a $10,000 limit); N.C.St.R.C.P. Sec. 1A-1, Rule 11
(North Carolina) (only ``appropriate'' sanction required, not a
sanction ``sufficient to deter repetition of such conduct''); S.D.C.L.
Sec. 15-6-11(b) (South Dakota) (only ``appropriate'' sanction required,
not a sanction ``sufficient to deter repetition of such conduct'').
---------------------------------------------------------------------------
Congress--under its constitutional authority in Article I,
Section 8 to regulate interstate commerce--has a responsibility
to require state judges to conduct their own analysis, upon
motion of parties, to determine whether, based on the relief
requested (including potentially huge monetary damage requests)
the case is such that it would affect interstate commerce by
threatening to bankrupt a multi-state industry, by risking the
loss of out-of-state jobs, or by otherwise incurring costs to
the interstate economy. Where a case filed in state court
affects interstate commerce, as determined by a state judge, it
is entirely appropriate that national attorney accountability
rules should govern. Liability litigation, under existing
rules, presents a serious threat to state autonomy.
Manufacturers have no practical way of keeping their products
out of certain states. Personal injury lawyers, on the other
hand, get to choose their own forum and law. As a result, the
jurisdictions most friendly to personal injury lawyers can
unfairly impose the costs of their rules on the entire country
and redistribute income from out-of-state parties to in-state
parties.
H.R. 4571's application of Rule 11 to state cases that
affect interstate commerce is entirely consistent with
federalism principles. James Madison, in Federalist No. 42,
described the purpose of the Commerce Clause as follows: ``A
very material object of this power was the relief of the States
which import and export through other States, from the improper
contributions levied on them by the latter. Were these at
liberty to regulate the trade between State and State, it must
be foreseen that ways would be found out to load the articles
of import and export, during the passage through their
jurisdiction, with duties which would fall on the makers of the
latter and the consumers of the former.'' \103\ That is,
Madison foresaw the problem in which products or services would
be made to cost more to consumers in one state because other
states those products and services passed through would levy
duties on them. That is precisely the problem today: some
states, by allowing frivolous lawsuits to be brought for
unlimited damages in cases involving products or services that
touch their jurisdictions are raising the costs of providing
those products and services to out-of-state customers,
resulting in higher prices and lost jobs across multiple states
or nationwide. It is the duty of Congress to prevent such
unfairness.\104\ H.R. 4571 addresses a problem directly
analogous to the prime example James Madison used when
describing the need for the Constitution's Commerce Clause.
---------------------------------------------------------------------------
\103\ The Federalist Papers, Federalist No. 22 (Madison) at 267-68
(Clinton Rossiter ed., 1961).
\104\ James Madison, according to his own notes of what he argued
at the Constitutional Convention (he referred to himself in the third
person), made clear that Congress must have the power to regulate
commerce in this manner: ``Whether the States are now restrained from
laying tonnage duties depends on the extent of the power `to regulate
commerce.' . . . He was more & more convinced that the regulation of
Commerce was in its nature indivisible and ought to be wholly under one
authority.'' Debates on the Adoption of the Federal Constitution in the
Convention Held at Philadelphia in 1787 (Jonathan Elliot, ed. 1845) (as
reported by James Madison, notes of May 31, 1787) at 548.
---------------------------------------------------------------------------
Congress unquestionably has the authority to regulate
economic activities that ``affect'' interstate commerce,\105\
and such a provision would have state judges themselves
determine whether the case before them affected interstate
commerce and national interests that would trigger a Federal
rule against frivolous lawsuits.
---------------------------------------------------------------------------
\105\ See Kenneth Thomas, CRS Report for Congress, Federalism,
State Sovereignty and the Constitution: Basis and Limits of
Congressional Power (September 5, 2003) at 7 (stating that Congress can
regulate ``economic activities which `affect' commerce'').
---------------------------------------------------------------------------
Further, requiring state courts to determine whether a case
affects interstate commerce based on an assessment of the costs
to the interstate economy, including the loss of jobs, ``were
the relief requested granted'' is likely to deter trial lawyers
from grossly inflating the size of damages requested (which are
designed to pressure unfair settlements) because doing so will
increase the chances that their case will be found to affect
interstate commerce, thus triggering the application of Federal
Rule 11's provisions preventing frivolous lawsuits. This
provision takes personal injury attorneys requesting vast
damages at their word regarding what damages might be
appropriate, but then holds them to account for those requested
damages by making them subject to an analysis of the interstate
economic costs were such damages to be awarded. University of
Chicago law professor Cass Sunstein, along with Nobel Prize
winner Daniel Kahneman, have compiled research from studies
involving more than 8,000 jury-eligible citizens in Illinois,
Colorado, Texas, Arizona, and Nevada that shows that juries
give higher awards when personal injury attorneys simply demand
higher amounts.\106\ As Philip Howard has written, ``A great
thing about bringing lawsuits in modern America is that it's so
easy to threaten the adversary's entire livelihood. One stroke
of a finger on the lawyer's word processor, and damages go from
$100,000 to $1,000,000. Three more keystrokes, and we're suing
for a billion dollars. This is fun . . . Damages claimed today
are completely arbitrary. Just stick your finger in the air and
threaten someone with any number that comes to mind.'' \107\
Section 3 of LARA will deter personal injury lawyers from
making ridiculous claims for astronomical damages.
---------------------------------------------------------------------------
\106\ See Cass Sunstein and Reid Hastie, Punitve Damages: How
Juries Decide (University of Chicago Press 2002) at 62.
\107\ Philip K. Howard, The Collapse of the Common Good: How
America's Lawsuit Culture Undermines Our Freedom (2001) at 59.
---------------------------------------------------------------------------
How ridiculous can damages claims get? In Michigan, a woman
who had a $5 fingernail repair job done at a local salon filed
a lawsuit for $500,000 or more in damages, claiming a
beautician nicked her finger with cuticle scissors. The woman's
lawyer said ``The $500,000 figure isn't necessarily what we'll
get [in court]. It's to put some attention to the case, and to
how important we consider it.'' \108\
---------------------------------------------------------------------------
\108\ Chad Halcom, ``Woman Files $500,000 Lawsuit for `Ruined'
Fingernail,'' The Macomb Daily (February 5, 2003).
---------------------------------------------------------------------------
The following exchange between a 60 Minutes correspondent
and Caesar Barber, who sued various restaurants for damages
related to his overconsumption of their products, also
illustrates the frivolous rationales behind gigantic damages
claims:
Caesar Barber: I'm saying that McDonald's affected my
health. Yes, I am saying that.
Richard Carleton(CBS News, 60 Minutes): So what do you
want in return?
Caesar Barber: I want compensation for pain and
suffering.
Richard Carleton: But how much money do you want?
Caesar Barber: I don't know . . . maybe $1 million.
That's not a lot of money now. \109\
---------------------------------------------------------------------------
\109\ ``Food Fight,'' CBS News ``60 Minutes'' (Australia)
(September 15, 2002) (transcript).
Section 3 of LARA is not likely to be abused for several
reasons. Any party that fears it may run afoul of Rule 11
sanctions for filing frivolous pleadings will not move the
court to determine if the case affects interstate commerce.
Further, any party that does not fear sanctions under Rule 11
will only request that a state court rule on whether the case
affects interstate commerce in rare circumstances. This is
because, first, no one is required under LARA to make such a
request to a state court if they do not want to, and second,
because the burden will be on any party who decides to move for
a determination that the case ``affects interstate commerce''
to show just that, and that will not be an easy case to make,
especially in smaller cases. The end result will be that
motions will be made under Section 3 of LARA only in those
cases in which large amounts of money are at stake with clear
interstate effects and only by those parties who have very
strong reasons to believe the court system is being abused by a
party filing frivolous pleadings. In such cases, it is entirely
appropriate that a Federal rule sanctioning lawsuit abuse be
available.
Section 3 of LARA would serve national economic interests
by focusing attention on the jobs costs of frivolous
litigation. The provision would provide that the interstate
economy, including workers and jobs, when potentially
negatively affected, should be protected by a rule prohibiting
frivolous claims. The provision provides that if your lawsuit
in state court asks for damages that will cost jobs in other
states, and your lawsuit is determined to be frivolous, you'll
have to pay for the costs of that frivolous lawsuit.\110\
---------------------------------------------------------------------------
\110\ Such a provision will not result in state cases being removed
to Federal court, as a Federal standard does not confer Federal
question jurisdiction in the absence of Congressional creation of a
Federal cause of action. Under Supreme Court precedent, Congress has
given the lower courts jurisdiction to hear, originally or by removal
from a state court, only those cases in which a well-pleaded complaint
establishes either that Federal law creates the cause of action or that
the plaintiff's right to relief necessarily depends on resolution of a
substantial question of Federal law. Federal question jurisdiction
exists only if plaintiffs' right to relief depends necessarily on a
substantial question of Federal law. See Merrell Dow Pharmaceuticals
Inc. v. Thompson, 478 U.S. 804, 807 n.2 (1986); 28 U.S.C. Sec. 1331.
---------------------------------------------------------------------------
Further, LARA expressly provides that ``Nothing in section
3 . . . shall be construed to bar or impede the assertion or
development of new claims or remedies under Federal, State, or
local civil rights law.'' Civil rights claims are thereby
exempted from the bill's provisions governing the application
of Rule 11 in cases with interstate effects.
Section 4 of LARA: Preventing Forum-Shopping for Favorably-minded
Judges
One of the nation's wealthiest personal injury attorneys is
Richard ``Dickie'' Scruggs, who sued asbestos companies in the
1980s and has made about $844 million from lawsuits against
tobacco companies. \111\ Here is what Scruggs said about what
he calls ``magic jurisdictions'':
---------------------------------------------------------------------------
\111\ Tom Wilemon, ``Social Ties Bind Political Elite,'' The Biloxi
Sun Herald (October 13, 2002) at 10.
``What I call the `magic jurisdiction,' . . . [is]
where the judiciary is elected with verdict money. The
trial lawyers have established relationships with the
judges that are elected; they're State Court judges;
they're popul[ists]. They've got large populations of
voters who are in on the deal, they're getting their
[piece] in many cases. And so, it's a political force
in their jurisdiction, and it's almost impossible to
get a fair trial if you're a defendant in some of these
places. The plaintiff lawyer walks in there and writes
the number on the blackboard, and the first juror meets
the last one coming out the door with that amount of
money . . . Any lawyer fresh out of law school can walk
in there and win the case, so it doesn't matter what
the evidence or law is.'' \112\
---------------------------------------------------------------------------
\112\ Richard ``Dickie'' Scruggs, ``Asbestos for Lunch Panel
Discussion'' at the Prudential Securities Financial Research and
Regulatory Conference (May 9, 2002) (quoted in Industry Commentary
(Prudential Securities, Inc., N.Y., New York) (June 11, 2002) at 5).
Personal injury lawyers often file cases in places that
have no connection to the case. They file their cases where
court procedures and the law are systematically applied in an
unfair manner against defendants, including in jurisdictions
with reputations for high damage awards and lower standards for
the admissibility of expert testimony.\113\
---------------------------------------------------------------------------
\113\ See generally, American Tort Reform Association, ``Bringing
Justice to Judicial Hellholes'' (2003).
---------------------------------------------------------------------------
West Virginia State Supreme Court Justice Richard Neely
candidly described one of the reasons behind this phenomenon in
a book: ``As long as I am allowed to redistribute wealth from
out-of-state companies to injured in-state plaintiffs, I shall
continue to do so. Not only is my sleep enhanced when I give
someone else's money away, but so is my job security, because
the in-state plaintiffs, their families, and their friends will
reelect me . . . It should be obvious that the instate local
plaintiff, his witnesses and his friends, can all vote for the
judge, while the out-of-state defendants can't even be relied
upon to send a campaign donation.'' \114\
---------------------------------------------------------------------------
\114\ Richard Neely, The Product Liability Mess: How Business Can
Be Rescued From The Politics of State Courts 4, 62 (1998).
---------------------------------------------------------------------------
While businesses are hauled into court all over the
country, local personal injury lawyers work with the same
judges day after day, contribute to their election campaigns,
and routinely socialize with them.
Section 4 of LARA will help ensure that lawsuits have a
logical connection with the jurisdiction in which they are
heard. Section 4, by requiring plaintiffs to bring their cases
where they live or where they were injured, or where the
defendant's principal place of business is located, would help
stop forum-shopping. It would also allow a court to refuse to
hear a case if there is a more appropriate forum, including a
different state, in which the case could and should be heard.
By strengthening the rules governing venue and forum non
conveniens, courts can help ensure that cases are heard in a
court that has a logical connection to the claim, rather than a
court that is expected to produce the highest award for the
plaintiff.
Section 4 of LARA would also prevent situations in which
floods of cases by non-residents interfere with in-state
residents' access to timely justice.
Congress unquestionably has the authority to regulate
economic activities that ``affect'' interstate commerce,\115\
and forum shopping clearly has a substantial affect on
interstate commerce by allowing opportunities for personal
injury lawyers to exploit lax venue and forum non conveniens
rules to pick and choose those courts with a reputation for
consistently awarding near-limitless awards. Section 4 of the
Lawsuit Abuse Reduction Act clearly applies to economic
activities, as the definition of ``personal injury claim'' is a
claim ``to recover'' for a person's personal injury. Such a
provision is entirely consistent with federalism principles.
James Madison, in Federalist No. 42, described the purpose of
the Commerce Clause as follows: ``A very material object of
this power was the relief of the States which import and export
through other States, from the improper contributions levied on
them by the latter. Were these at liberty to regulate the trade
between State and State, it must be foreseen that ways would be
found out to load the articles of import and export, during the
passage through their jurisdiction, with duties which would
fall on the makers of the latter and the consumers of the
former.'' \116\ That is, Madison foresaw the problem in which
products or services would be made to cost more to consumers in
one state because other states allowed the companies that
manufactured those products or supplied those services to be
sued in those other states even when the facts and
circumstances of the lawsuit had no connection to those states.
When personal injury attorneys are allowed to bring cases in
certain states and county courts that have a reputation for
being most favorable to granting the most lucrative awards, the
costs imposed on companies by such awards must be passed on to
consumers nationwide. That is precisely the problem today: some
states, by allowing lawsuits to be brought in local
jurisdictions even when the facts and circumstances of the case
have no connection to such local jurisdictions, are raising the
costs of providing products and services to out-of-state
customers, resulting in higher prices and lost jobs to people
in multiple states. It is the duty of Congress to prevent such
unfairness.\117\
---------------------------------------------------------------------------
\115\ See Kenneth Thomas, CRS Report for Congress, Federalism,
State Sovereignty and the Constitution: Basis and Limits of
Congressional Power (September 5, 2003) at 7 (stating that Congress can
regulate ``economic activities which `affect' commerce'').
\116\ The Federalist Papers, Federalist No. 22 (Madison) at 267-68
(Clinton Rossiter ed., 1961).
\117\ James Madison, according to his own notes of what he argued
at the Constitutional Convention (he referred to himself in the third
person), made clear that Congress must have the power to regulate
commerce in this manner: ``Whether the States are now restrained from
laying tonnage duties depends on the extent of the power `to regulate
commerce.' . . . He was more & more convinced that the regulation of
Commerce was in its nature indivisible and ought to be wholly under one
authority.'' Debates on the Adoption of the Federal Constitution in the
Convention Held at Philadelphia in 1787 (Jonathan Elliot, ed. 1845) (as
reported by James Madison, notes of May 31, 1787) at 548.
---------------------------------------------------------------------------
Jurisdictions with ``magic jurisdiction'' reputations
include the following:
LMadison County, Illinois. Twice, the Chicago
Tribune crowned Madison County a ``jackpot
jurisdiction.'' \118\ As the newspaper recognized,
``[t]he number of suits has shot through the roof, and
local newspapers sport advertisements looking for the
local plaintiff who can provide a convenient excuse to
file in Edwardsville . . . [T]he Madison County
phenomenon also provides a dramatic illustration of the
potential for poor public policy when things get
carried away.'' \119\ A retired Madison County Judge
has said ``Eventually, because of the money created
through the plaintiffs bar and the power that money
brings, I believe there became an idea that the system
was beholden to the plaintiffs' bar.'' \120\ Retired
Madison County judge John DeLaurenti has said that it
took Madison County four decades to earn its
reputation, ``but now, it is so big with so much money
and potential influence on people's careers that is has
become very difficult to limit it in any way.'' \121\
That same judge has also said ``When people come from
hither and thither to file these cases, there's gotta
be an inducement, doesn't there? They're not coming to
see beautiful Madison County.'' \122\
---------------------------------------------------------------------------
\118\ Editorial, ``A Madison County Jackpot,'' The Chicago Tribune
(April 2, 2003), at 22; Editorial, ``The Judges of Madison County,''
The Chicago Tribune (September 6, 2002) at 22.
\119\ Editorial, ``The Judges of Madison County,'' The Chicago
Tribune (September 6, 2002) at 22.
\120\ David Bailey (Reuters), ``Illinois County Court a Corporate
`Hellhole,' '' (October 5, 2003).
\121\ Id.
\122\ Marin Kasindorf, ``Robin Hood is Alive in Court, Say Those
Seeking Lawsuit Limit,'' USA Today (March 8, 2004) at A1 (emphasis
added).
LMadison County judges are infamous for their
willingness to take cases from across the country, with
little or no local connection, and hand down decisions
that regulate entire industries nationwide. Madison
County's over-eagerness to hear cases from other parts
of the state has even been criticized by the Supreme
Court of Illinois. Both the Madison County Circuit
Court and the Fifth District Court of Appeals have been
reversed many times in cases in which they denied
defendants' motions to transfer venue. In January 2002,
the Supreme Court of Illinois counted fourteen cases
since 1995 in which it ordered the Madison County
Circuit Court to transfer venue. In another ten cases,
the Supreme Court ordered the Fifth District to
consider vacating its denial of a defendant's forum non
conveniens motion.\123\
---------------------------------------------------------------------------
\123\ See First National Bank v. Guerine, 764 N.E.2d 54, 64-66
(Ill. 2002) (appendix).
LAsbestos cases, in particular, find their way to
Madison County Circuit Court at an astonishing rate.
Madison County (population 259,000) now hosts more
mesothelioma claims than New York City (population
8,000,000), and a nine member law firm with one office
in Madison County claims to handle more mesothelioma
cases than any firm in the country.\124\ This is
because, according to former Carter Administration U.S.
Attorney General Griffin Bell, its judges accept cases
from throughout the state and place them on
extraordinarily expedited schedules that do not provide
defendants with adequate time to prepare for
trial.\125\
---------------------------------------------------------------------------
\124\ See ``Asbestos Case Leads to $5.1 Million, Sanction,''
National Law Journal (December 2, 2002) at A4.
\125\ See Griffin B. Bell, ``Asbestos & the Sleeping
Constitution,'' 31 Pepp.L. Rev. 1, 8 (2003).
LJefferson County (Beaumont), Texas. The
Austin American-Statesman has recognized that ``[o]ver
the past few decades, personal injury lawyers have
claimed this territory as their own, establishing
Beaumont, Port Arthur, Orange, and nearby towns as an
enclave where . . . juries often pass down sizable
judgments.'' \126\ As a result, huge verdicts against
doctors have caused medical professional liability
insurance rates to soar, sending Jefferson County
neurosurgeons, obstetricians, and other doctors fleeing
the area.\127\
---------------------------------------------------------------------------
\126\ David Pasztor, ``As Quinn Laid to Rest, Mourners Contemplate
Irony of His Slaying,'' The Austin American-Statesman (June 16, 2002)
at A1.
\127\ See Andrea Wright, ``Beaumont, Texas, Area Loses Doctors to
High Cost of Malpractice Insurance,'' Knight-Ridder Tribune Business
News (November 6, 2001).
L22nd Judicial Circuit (Copiah, Claiborne and
Jefferson Counties), Mississippi. Fayette, the county
seat of Jefferson County, Mississippi, was dubbed the
``jackpot justice capital of America'' by CBS's 60
Minutes program.\128\ In this small, rural county, the
number of plaintiffs far exceeds the number of
residents.\129\ The national media, including the Los
Angeles Times,\130\ The New York Times,\131\ and the
Washington Times,\132\ have all recognized the
Jefferson County phenomenon. In November 2002, the CBS
News program, ``60 Minutes,'' devoted a program to
explaining why Mississippi's 22nd Judicial Circuit,
which includes Copiah, Claiborne, and Jefferson County
is a favorite place for plaintiffs' lawyers to flock
from all over the Nation. After the airing of the 60
Minutes program, Media General Operations, which owns
the local CBS-affiliate, the 60 Minutes producers, and
several individuals who commented in the program, found
themselves named as defendants in a $6.4 billion
defamation lawsuit in Jefferson County.\133\
---------------------------------------------------------------------------
\128\ Transcript, ``Jackpot Justice,'' 60 Minutes (November 25,
2002).
\129\ See Robert Pear, ``Mississippi Gaining as Lawsuit Mecca,''
The New York Times (August 20, 2001) at A1 (``Jefferson County, with
9,740 residents, is a small county, but litigation there is a big
business. An affidavit . . . said that more than 21,000 people were
plaintiffs in Jefferson County from 1995 to 2000.'').
\130\ See Ken Ellingwood, ``Mississippi Curbs Big Jury Awards Caps
on Liability Verdicts Are Seen as Pro-Business: Critics Say Companies
Will be Less Accountable,'' The Los Angeles Times (December 4, 2002) at
A1.
\131\ See Robert Pear, ``Mississippi Gaining as Lawsuit Mecca,''
The New York Times (August 20, 2001) at A1.
\132\ See Tim Lemke, ``Best Place to Sue?'' The Washington Times
(June 30, 2002) at A1.
\133\ See ``Judge Dismisses Two Mississippi Defendants from `60
Minutes' Defamation Lawsuit,'' Mercury News (July 3, 2003). The lawsuit
was filed by two former jurors who were offended by the program. See
id.
LOne small business, Bankston Drug Store, has been
called ``ground zero'' in the pharmaceutical litigation
business because, as the only pharmacy in Jefferson
County, it has been named in hundreds of lawsuits
alleging the defective manufacture of consumer
prescription drugs in order to bring a large, out-of-
state pharmaceutical company into local court.\134\ The
costs are real, and staggering. As Ms. Bankston
explained, ``I've searched record after record and made
copy after copy for use against me . . . I've had to
hire personnel to watch the store while I was dragged
into court on numerous occasions to testify. I have
endured the whispers and questions of my customers and
neighbors wondering what we did to end up in court so
often. And I have spent many sleepless nights wondering
if my business would survive the tidal wave of lawsuits
cresting over it.'' \135\
---------------------------------------------------------------------------
\134\ See Jerry Mitchell, ``Jefferson County Ground Zero for
Cases,'' The Clarion-Ledger (June 17, 2001) at A1.
\135\ Tom Wilemon, ``Judicial Probe Looking at Big Jury Awards,''
Sun Herald (July 12, 2003).
LIn recent years, the 22nd Judicial Circuit has
handed out numerous awards of $100 million or
more.\136\
---------------------------------------------------------------------------
\136\ See Betty Liu, ``The Poor Southern County That's Big on
Lawsuits,'' Financial Times (August 20, 2001).
LAnd in June 2003, it was reported that the Federal
Bureau of Investigation was probing possible judicial
corruption in South Mississippi as well as the
multimillion-dollar awards in Jefferson County.\137\
---------------------------------------------------------------------------
\137\ See Tom Wilemon, ``Judicial Probe Looking at Big Jury
Awards,'' Sun Herald (July 12, 2003); Tom Wilemon and Beth Musgrave,
``Indictments Cast Doubt on Trial Lawyers, Mississippi Justice
System,'' Sun Herald (July 26, 2003).
LWest Virginia, particularly Kanawha County.
Litigation activity has increased 53.6% more rapidly in
West Virginia than in the nation as a whole over the
last 10 years.\138\ Current West Virginia Chief Justice
Larry Starcher has been quoted as saying, ``I have a
hard time not being lenient, as a jurist, on behalf of
those people.'' \139\
---------------------------------------------------------------------------
\138\ See West Virginia Chamber of Commerce, Perryman Study,
``Negative Impact On The Current Civil Justice System On Economic
Activity In West Virginia'' (February 2003).
\139\ Court Watch, West Virginia Chamber of Commerce (July 2003).
LPhiladelphia, Pennsylvania (Court of Common
Pleas). The impact of extraordinary awards is most
noticed in Pennsylvania in the healthcare industry,
where, according to The Philadelphia Inquirer,
``hitting the `malpractice lottery' is a made-for-
Philadelphia phrase.'' \140\ According to a 2003 study
by the Pew Charitable Trusts, Pennsylvania is in one of
the worst situations in the nation regarding the
provision of affordable professional medical liability
insurance for physicians and hospitals.\141\ The report
shows that, in Philadelphia, plaintiffs are twice as
likely to win jury trials as in the rest of the nation
and a substantial percentage of cases result in
verdicts greater than $1 million.\142\
---------------------------------------------------------------------------
\140\ Josh Goldstein, ``Malpractice Lawsuits Thrive in City; Still,
Few are Filed, and Few are Decided by a Jury,'' Philadelphia Inquirer
(December 10, 2001) at A1.
\141\ See Randall R. Bovbjerg and Anna Bartow, ``Understanding
Pennsylvania's Medical Malpractice Crisis: Facts About Liability
Insurance, The Legal System, and Health Care in Pennsylvania'' (Pew
Charitable Trusts 2003).
\142\ See id. at 32.
LCity of St. Louis, Missouri. St. Louis City
Circuit Court is reportedly ``the place to be'' if you
are a plaintiff.\143\ Plaintiffs move cases to St.
Louis City because ``St. Louis City is a better
venue,'' according to one St. Louis plaintiffs'
attorney.\144\ Even Missouri Supreme Court Judge
Michael Wolff has recognized that ``[t]he preponderance
of anecdotal evidence is that jurors in the city of St.
Louis are far more favorably disposed toward injured
plaintiffs' claims than are their counterparts in
suburban St. Louis County or in most other counties in
the state.'' \145\
---------------------------------------------------------------------------
\143\ See Roland Klose, ``Venue's on the Menu For Lawyers Trying to
Take a Bite of Doe Run, St. Louis is the Place to Be,'' Riverfront
Times (April 10, 2002); Tim Bryant, ``Question of Merging City, County
Jury Pools is Revived; State Supreme Court Judge Suggested Move Last
Year,'' St. Louis Post-Dispatch (November 27, 2002) at B1 (discussing
the suggestion by Missouri Supreme Court Judge Michael Wolff of joining
the juror pools of St. Louis City and County because plaintiffs'
lawyers are known for trying to get their personal injury cases into
St. Louis City Circuit Court for a more sympathetic jury, to make the
issue of venue less important).
\144\ Id.
\145\ See State ex rel. Linthicum, 57 S.W.3d 855, 859 (Mo. 2001)
(Wolff, J., concurring in part, dissenting in part).
LEagle Pass, Texas. According to the San
Antonio Express-News, ``L. Wayne Scott, a professor at
St. Mary's University Law School . . . who has mediated
civil cases in Eagle Pass, estimates defendants there
are roughly 10 times more likely to lose than in
conservative Dallas and two or three times more likely
to fall than in San Antonio . . . Indeed, the prospect
of facing a jury in Eagle Pass--where Mayor Joaquin L.
Rodriguez also is one of the city's top plaintiff's
attorneys--frequently makes companies more willing to
settle and in higher amounts than they would agree to
in other venues.'' Local plaintiff's attorney Earl
Herring says that a case worth $10,000 in Eagle Pass
would be ``worth $500 in Uvalde.'' \146\
---------------------------------------------------------------------------
\146\ Greg Jefferson, ``Eagle Pass Remains Known as Plaintiff's
Attorney Paradise,'' The San Antonio Express News (November 2, 2003).
---------------------------------------------------------------------------
Amendments Adopted at Committee
Two amendments were adopted at Committee. The first,
offered by Mr. Keller, applies a ``three strikes and you're
out'' rule to attorneys who commit Rule 11 violations in
Federal district court. The amendment provides that whenever a
Federal district judge determines an attorney has violated Rule
11 of the Federal Rules of Civil Procedure three or more times
within that Federal district court, the court shall suspend
that attorney from practice of law in that Federal district
court for 1 year, and may suspend that attorney from practice
of law in that Federal district court for any additional period
the court considers appropriate. Under such provision, an
attorney has the right to appeal any such suspension, and such
suspension shall not take place pending such appeal. Further,
to be reinstated to the practice of law in a Federal district
court after completion of such suspension, the attorney must
first petition the court for reinstatement under such
procedures and conditions as the court may prescribe.
A second amendment, offered by Mr. Scott, imposes mandatory
civil sanctions that are comparable to those available under
Rule 37 \147\ of the Federal Rules of Civil Procedure, in
addition to other civil sanctions otherwise applicable, for the
willful and intentional destruction of documents sought in
\148\ a pending civil court proceeding, and highly relevant to
such proceeding, with the willful intent to obstruct such
proceeding. The amendment applies its rule to proceedings in
both state and Federal court.
---------------------------------------------------------------------------
\147\ Rule 37 of the Federal Rules of Civil Procedure already
imposes mandatory sanctions for failure to comply with required
discovery disclosures, following an opportunity to be heard. See Fed.
R. Civ. P. 37(a)(4) (``Expenses and Sanctions''). All courts also
already have inherent powers to sanction parties for abusive practices,
including willful transgressions of discovery procedures, such as
document destruction. See, e.g., Capellupo v. FMC Corp., 126 F.R.D.
545, 550 (1989) (``[T]he Court relies on its inherent power to regulate
litigation, preserve and protect the integrity of proceedings before
it, and sanction parties for abusive practices.'') (citing cases);
Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (``It has long been
understood that certain implied powers must necessarily result to our
Courts of justice from the nature of their institution, powers which
cannot be dispensed with in a Court because they are necessary to the
exercise of all others.'') (citations and quotations omitted).
Generally, sanctions are appropriate when a party destroys discoverable
material which the party knew or should have known was relevant to
pending, imminent, or reasonably foreseeable litigation. See Jamie S.
Gorelick et al., Destruction of Evidence Sec. 3.8, at 88 (1989). Rule
37 also allows the court to forego sanction (defined as ``pay[ment] to
the moving party [of] the reasonable expenses incurred in making the
motion [for sanctions], including attorney's fees'') under various
circumstances, including if the nondisclosure was ``substantially
justified,'' or ``other circumstances make an award of expenses
unjust.'' Fed. R. Civ. P. 37(a)(4)(A). The amendment adopted by the
Committee requires the sanctions be ``commensurate'' with those in Rule
37 and therefore under the amendment the same standards and safeguards
for applying sanctions under Rule 37, or substantially similar state
procedures, must be applied.
\148\ The term ``sought in'' as used in the amendment means sought
pursuant to the rules of the relevant Federal or state court
proceeding.
---------------------------------------------------------------------------
RESPONSE TO JUDICIAL CONFERENCE LETTER ON H.R. 4571,
THE LAWSUIT ABUSE REDUCTION ACT
On July 9, 2004, the Judicial Conference of the United
States sent a letter to the Committee regarding H.R. 4571.\149\
---------------------------------------------------------------------------
\149\ Letter from Leonidas Ralph Mecham, Secretary, United States
Judicial Conference, to Chairman F. James Sensenbrenner, Jr. (July 9,
2004) (``Judicial Conference Letter'').
---------------------------------------------------------------------------
The letter states that Section 2 of H.R. 4571 would
reinstitute provisions to Rule 11 that were removed in 1993,
and that such provisions were removed ``because of the serious
problems it engendered during a 10-year period of operation.''
\150\ This assertion is contradicted by the Judicial
Conference's Advisory Committee on Civil Rules's own survey.
That committee undertook a review of Rule 11, in its pre-1993
form, and asked the Federal Judicial Center to conduct an
empirical study of its operation and impact. The survey of 751
Federal judges found that an overwhelming majority of Federal
judges believed that Rule 11 did not impede development of the
law (95%); the benefits of the rule outweighed any additional
requirement of judicial time (71.9%); the 1983 version of Rule
11 had a positive effect on litigation in the Federal courts
(80.9%); and the rule should be retained in its then-current
form (80.4%).\151\ Indeed, the letter from the Judicial
Conference admits as much with the cursory statement that ``The
1991 Federal Judicial Center Survey noted that most Federal
judges believed that the 1983 version of Rule 11 had positive
effects.'' \152\
---------------------------------------------------------------------------
\150\ Judicial Conference Letter, at 1.
\151\ Federal Judicial Center Final Report on Rule 11 to the
Advisory Committee on Civil Rules of the Judicial Conference of the
United States (May 1991).
\152\ Judicial Conference Letter, at 2.
---------------------------------------------------------------------------
Despite this survey conducted at the behest of the Judicial
Conference itself, the letter cites four ``serious problems''
caused by the 1983 amendments to Rule 11.
The first is that the 1983 amendments to Rule 11 resulted
in ``creating a significant incentive to file unmeritorious
Rule 11 motions by providing a possibility of monetary
penalty.'' \153\ In response, first, any unmeritorious Rule 11
motion could itself result in sanctions (and thereby be
deterred) under Rule 11.\154\ Second, yet another survey
conducted by the Federal Judicial Center contradicts the
assertion that the option of monetary penalties under Rule 11
caused problems. A survey conducted by the Federal Judicial
Center in June, 1995, consisting of 148 Federal judges and over
1,000 trial attorneys found that the 1993 amendments that
discouraged monetary compensation for victims of frivolous
lawsuits were a bad idea. In that survey, two-thirds of judges
(66%), defense attorneys (63%), and other attorneys (66%), and
even a substantial portion of plaintiff's attorneys (43%),
supported restoring Rule 11's compensatory function once
again.\155\
---------------------------------------------------------------------------
\153\ Id. at 2.
\154\ See Berger v. Iron Workers, 843 F.2d 1395 (D.C. Cir. 1988)
(affirming in part per curiam 7 Fed. Rules Serv. 3d 306 (D.D.C. 1986))
(imposing sanctions for filing inappropriate Rule 11 motions).
\155\ See John Shapard et. al., Federal Judicial Center, Report of
a Survey Concerning Rule 11, Federal Rules of Civil Procedure at 5.
---------------------------------------------------------------------------
The second problem the Judicial Conference letter cites is
that the 1983 amendments to Rule 11 resulted in ``engendering
potential conflict of interest between clients and their
lawyers, who advised withdrawal of particular claims despite
the clients' preference.'' \156\ In response, it is entirely
appropriate that an attorney advise withdrawing claims a client
wants to make when those claims are frivolous.
---------------------------------------------------------------------------
\156\ Judicial Conference Letter, at 2.
---------------------------------------------------------------------------
The third problem the Judicial Conference letter cites is
that the 1983 amendments to Rule 11 resulted in ``exacerbating
tensions between lawyers.'' \157\ In response, whatever
tensions the amendments may have caused lawyers, the threat of
frivolous lawsuits today has created a legal culture of fear
that has come to permeate all of American society, threatening
common sense judgments everywhere, from churches, to
playgrounds, to schools, to doctors' offices, to small
businesses nationwide, and everywhere in between. Surely if
restoring teeth to Rule 11 results in some tension between
lawyers, it is justified by helping to allow all Americans to
live their lives free of the constant fear that their every
innocent move could result in a devastating frivolous lawsuit.
---------------------------------------------------------------------------
\157\ Id. at 2.
---------------------------------------------------------------------------
The fourth problem the Judicial Conference letter cites is
that the 1983 amendments to Rule 11 resulted in ``providing
little incentive, and perhaps a distinct disincentive, to
abandon or withdraw a pleading or claim--and thereby admit
error--that lacked merit after determining that it no longer
was supportable in law or fact.'' \158\ In response, the
argument that mandatory sanctions deter offenders from
retracting offending conduct is no more persuasive than the
argument that stealing again and again should be allowed,
provided each time the thief gets caught he or she returns the
stolen goods; except in this case the argument is even weaker,
since under the current Rule 11, the money victims of frivolous
lawsuits are forced to spend to defend themselves, or to
prepare to defend themselves, against frivolous claims is not
even returned when an attorney is called to the carpet for
filing a frivolous pleading: rather, such attorney need only
withdraw the pleading and suffer no penalty whatsoever.
---------------------------------------------------------------------------
\158\ Id. at 2.
---------------------------------------------------------------------------
The letter from the Judicial Conference also states that,
if Section 3 of H.R. 4571 is enacted, it ``could affect the
cost and duration of a very large number of civil actions in
state courts.'' \159\ In response, Section 3 of H.R. 4571 is
not likely to be abused for several reasons. Any party that
does not fear sanctions under Rule 11 will only request that a
state court rule on whether the case affects interstate
commerce in rare circumstances. This is because, first, no one
is required under H.R. 4571 to make such a request to a state
court if they do not want to, and second, because the burden
will be on any party who decides to move for a determination
that the case ``affects interstate commerce'' to show just
that, and that will not be an easy case to make, especially in
smaller cases. The end result will be that motions will be made
under Section 3 of H.R. 4571 only in those cases in which large
amounts of money are at stake with clear interstate effects and
only by those parties who have very strong reasons to believe
the court system is being abused by a party filing frivolous
pleadings. In such cases, it is entirely appropriate that a
Federal rule sanctioning lawsuit abuse be available. Section 3
of H.R. 4571 would serve national economic interests by
focusing attention on the employment costs of frivolous
litigation. The provision would provide that the interstate
economy, including workers and jobs, when potentially
negatively affected, should be protected by a rule prohibiting
frivolous claims.
---------------------------------------------------------------------------
\159\ Id. at 3.
---------------------------------------------------------------------------
Finally, the Judicial Conference letter states that H.R.
4571 is ``inconsistent with the longstanding Judicial
Conference policy opposing direct amendment of the Federal
rules by legislation.'' \160\ However, Congress has never
relinquished its constitutional authority to create and alter
the rules of Federal court procedure,\161\ and it has a duty to
do so to address pressing problems, in this case the threat of
frivolous lawsuits that affect all aspects of American society.
---------------------------------------------------------------------------
\160\ Id. at 1.
\161\ See U.S. Const. Art. I, Sec. 8, cl. 9; Art. III, Sec. 1, cl.
1; Art. III, Sec. 2, cl. 2.
---------------------------------------------------------------------------
Hearings
The full Committee on the Judiciary held a hearing on H.R.
4571 and the issue of ``Safeguarding Americans from a Legal
Culture of Fear: Approaches to Limiting Lawsuit Abuse'' on June
22, 2004. Testimony was received from Victor Schwartz, General
Counsel, American Tort Reform Association; Philip Howard,
Chair, Common Good; Karen R. Harned, Executive Director,
National Federation of Independent Business; and Theodore
Eisenberg, Professor of Law, Cornell Law School, with
additional material submitted by individuals and organizations.
Committee Consideration
On September 8, 2004, the Committee met in open session and
ordered favorably reported the bill H.R. 4571 with amendment by
a recorded vote of 18 yeas to 10 nays, a quorum being present.
Vote of the Committee
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee notes that the
following rollcall votes occurred during the committee's
consideration of H.R. 4571 .
1. Mr. Keller offered an amendment that would require the
suspension of attorneys from practice when they commit 3 or
more Rule 11 violations in Federal court. The Keller amendment
was amended by a Berman second degree amendment that provided
for attorney appeals which was adopted by voice vote. By a
rollcall vote of 20 yeas to 6 nays, the Keller amendment, as
amended, was agreed to.
ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................ X
Mr. Coble....................................................... X
Mr. Smith....................................................... X
Mr. Gallegly....................................................
Mr. Goodlatte................................................... X
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon......................................................
Mr. Bachus...................................................... X
Mr. Hostettler.................................................. X
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter...................................................... X
Mr. Feeney...................................................... X
Mrs. Blackburn.................................................. X
Mr. Conyers.....................................................
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee.................................................
Ms. Waters......................................................
Mr. Meehan......................................................
Mr. Delahunt.................................................... X
Mr. Wexler......................................................
Ms. Baldwin..................................................... X
Mr. Weiner......................................................
Mr. Schiff...................................................... X
Ms. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 20 6
----------------------------------------------------------------------------------------------------------------
2. Mr. Nadler offered an amendment that would have mandated
that state courts follow certain procedures before sealing
records or subjecting them to a protective order. By a rollcall
vote of 8 yeas to 17 nays, the amendment was defeated.
ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................ X
Mr. Coble....................................................... X
Mr. Smith....................................................... Pass
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon......................................................
Mr. Bachus...................................................... X
Mr. Hostettler.................................................. X
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter...................................................... X
Mr. Feeney...................................................... X
Mrs. Blackburn..................................................
Mr. Conyers.....................................................
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee.................................................
Ms. Waters......................................................
Mr. Meehan......................................................
Mr. Delahunt.................................................... X
Mr. Wexler......................................................
Ms. Baldwin..................................................... X
Mr. Weiner......................................................
Mr. Schiff...................................................... X
Ms. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 8 17 1 pass
----------------------------------------------------------------------------------------------------------------
3. Motion to report H.R. 4571, as amended, was agreed to by
a rollcall vote of 18 yeas and 10 nays.
ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................ X
Mr. Coble....................................................... X
Mr. Smith....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon......................................................
Mr. Bachus...................................................... X
Mr. Hostettler.................................................. X
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter...................................................... X
Mr. Feeney...................................................... X
Mrs. Blackburn.................................................. X
Mr. Conyers.....................................................
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee.................................................
Ms. Waters......................................................
Mr. Meehan......................................................
Mr. Delahunt.................................................... X
Mr. Wexler...................................................... X
Ms. Baldwin..................................................... X
Mr. Weiner......................................................
Mr. Schiff...................................................... X
Ms. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 18 10
----------------------------------------------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee reports that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 4571, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
September 13, 2004.
Hon. F. James Sensenbrenner, Jr.,
Chairman, Committee on the Judiciary, House of Representatives,
Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4571, the Lawsuit
Abuse Reduction Act of 2004.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Lanette J.
Walker (for federal costs), and Melissa Merrell (for the state
and local impact).
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
H.R. 4571--Lawsuit Abuse Reduction Act of 2004
H.R. 4571 would amend Rule 11 of the Federal Rules of Civil
Procedure to require courts to impose appropriate sanctions on
attorneys, law firms, or parties who file frivolous lawsuits
and to require them to compensate parties injured by such
conduct. (Courts currently may, but are not required to, impose
such sanctions.) In addition, the bill would require certain
personal injury claims to be filed in a court where the person
bringing the claim lives, where the alleged injury occurred, or
where the defendant's business is located.
Under the legislation, any monetary sanction imposed under
Rule 11 would be between the parties to the suit. Thus, CBO
estimates that enacting the legislation would result in no cost
or savings to the federal government. H.R. 4571 would not
affect direct spending or revenues.
H.R. 4571 contains an intergovernmental mandate as defined
in the Unfunded Mandates Reform Act because it would preempt
certain state laws governing court procedures. Specifically, it
would require state judges to determine whether certain
liability lawsuits affect interstate commerce and apply federal
civil procedures for frivolous lawsuits to those cases. CBO
estimates that the cost of complying with that mandate would be
minimal and well below the threshold established in that act
($60 million in 2004, adjusted annually for inflation). The
bill contains no new private-sector mandates.
The CBO staff contacts for this estimate are Lanette J.
Walker (for federal costs), and Melissa Merrell (for the state
and local impact). This estimate was approved by Robert A.
Sunshine, Assistant Director for Budget Analysis.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
4571 would (1) restore mandatory sanctions for filing frivolous
lawsuits in violation of Rule 11 of the Federal Rules of Civil
Procedure, (2) remove Rule 11's ``safe harbor'' provision that
currently allows parties and their attorneys to avoid sanctions
for making frivolous claims by withdrawing frivolous claims
after a motion for sanctions has been filed, (3) allow monetary
sanctions, including attorneys' fees and compensatory costs,
against any party making a frivolous claim, (4) allow sanctions
for abuses of the discovery process (the process by which
lawyers on each side request information from the other side
prior to trial), (5) apply Rule 11's provisions to state cases
a state judge finds affect interstate commerce, (6) require
that personal injury cases be brought only where the plaintiff
resides, where the plaintiff was allegedly injured, or where
the defendant's principal place of business is located; (7)
apply a ``three strikes and you're out'' rule to attorneys who
commit Rule 11 violations in Federal district court; and (8)
impose mandatory civil sanctions for willful and intentional
document destruction willfully intended to obstruct a pending
court proceeding.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in article I, Sec. 8 of the Constitution.
Section-by-Section Analysis and Discussion
The following discussion describes H.R. 4571 as reported by
the Judiciary Committee.
Sec. 1. Short title. This section provides that the Act may
be cited as the ``Lawsuit Abuse Reduction Act of 2004.''
Sec. 2. Attorney Accountability. This section would restore
mandatory sanctions for filing frivolous lawsuits in violation
of Rule 11; remove Rule 11's ``safe harbor'' provision that
currently allows parties and their attorneys to avoid sanctions
for making frivolous claims by withdrawing frivolous claims
after a motion for sanctions has been filed; allow monetary
sanctions, including attorneys' fees and compensatory costs,
against any party making a frivolous claim; and allow sanctions
for abuses of the discovery process (the process by which
lawyers on each side request information from the other side
prior to trial).
Sec. 3. Applicability of Rule 11 to State Cases Affecting
Interstate Commerce. This section applies Rule 11's provisions
to state cases a state judge finds affect interstate commerce,
including by costing jobs in other states.
Sec. 4. Prevention of Forum-Shopping. Subsection (a) of
this section requires that personal injury cases be brought
only where the plaintiff resides, where the plaintiff was
allegedly injured (or where the circumstances giving rise to
the injury allegedly occurred) or where the defendant's
principal place of business is located. Subsection (b) of this
section provides that if a person alleges that the injury or
circumstances giving rise to the personal injury claim occurred
in more than one county (or Federal district), the trial court
shall determine which State and county (or Federal district) is
the most appropriate forum for the claim. If the court
determines that another forum would be the most appropriate
forum for a claim, the court shall dismiss the claim. Any
otherwise applicable statute of limitations shall be tolled
beginning on the date the claim was filed and ending on the
date the claim is dismissed under this subsection. Subsection
(c) of this section provides the definition of terms used in
section 4.
Sec. 5. Rule of Construction. This section provides that
nothing in section 3 or in the amendments made by section 2
shall be construed to bar or impede the assertion or
development of new claims or remedies under Federal, State, or
local civil rights law.
Sec. 6. Three-Strikes Rule for Suspending Attorneys Who
Commit Multiple Rule 11 Violations. This section provides that
whenever a Federal district judge determines an attorney has
violated Rule 11 of the Federal Rules of Civil Procedure three
or more times within that Federal district court, the court
shall suspend that attorney from practice of law in that
Federal district court for 1 year, and may suspend that
attorney from practice of law in that Federal district court
for any additional period the court considers appropriate.
Under such provision, an attorney has the right to appeal any
such suspension, and such suspension shall not take place
pending such appeal. Further, to be reinstated to the practice
of law in a Federal district court after completion of such
suspension, the attorney must first petition the court for
reinstatement under such procedures and conditions as the court
may prescribe.
Sec. 7. Enhanced Sanctions for Document Destruction. This
section provides that provides for mandatory civil sanctions
that are commensurate with those available under Rule 37 of the
Federal Rules of Civil Procedure, in addition to other civil
sanctions otherwise applicable, for the willful and intentional
destruction of documents sought in a pending civil court
proceeding, and highly relevant to such proceeding, with the
willful intent to obstruct such proceeding. The amendment
applies to proceedings in both state and Federal court.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
RULE 11 OF THE FEDERAL RULES OF CIVIL PROCEDURE
Rule 11. Signing of Pleadings, Motions, and Other Papers;
Representations to Court; Sanctions
(a) * * *
* * * * * * *
(c) Sanctions.--[If, after notice and a reasonable
opportunity to respond, the court determines that subdivision
(b) has been violated, the court may, subject to the conditions
stated below, impose an appropriate sanction upon the
attorneys, law firms, or parties that have violated subdivision
(b) or are responsible for the violation.] If a pleading,
motion, or other paper is signed in violation of this rule, the
court, upon motion or upon its own initiative, shall impose
upon the attorney, law firm, or parties that have violated this
subdivision or are responsible for the violation, an
appropriate sanction, which may include an order to the other
party or parties to pay for the reasonable expenses incurred as
a direct result of the filing of the pleading, motion, or other
paper, that is the subject of the violation, including a
reasonable attorney's fee.
(1) How initiated.--
(A) By motion.--A motion for sanctions
under this rule shall be made separately from
other motions or requests and shall describe
the specific conduct alleged to violate
subdivision (b). It shall be served as provided
in [Rule 5, but shall not be filed with or
presented to the court unless, within 21 days
after service of the motion (or such other
period as the court may prescribe), the
challenged paper, claim, defense, contention,
allegation, or denial is not withdrawn or
appropriately corrected.] Rule 5. If warranted,
[the court may award] the court shall award to
the party prevailing on the motion the
reasonable expenses and attorney's fees
incurred in presenting or opposing the motion.
Absent exceptional circumstances, a law firm
shall be held jointly responsible for
violations committed by its partners,
associates, and employees.
* * * * * * *
(2) Nature of sanction; limitations.--A sanction
imposed for violation of this rule [shall be limited to
what is sufficient to deter repetition of such conduct
or comparable conduct by others similarly situated.
Subject to the limitations in subparagraphs (A) and
(B), the sanction may consist of, or include,
directives of a nonmonetary nature, an order to pay a
penalty into court, or if imposed on motion and
warranted for effective deterrence, an order directing
payment to the movant of some or all of the reasonable
attorneys' fees and other expenses incurred as a direct
result of the violation.
[(A) Monetary sanctions may not be awarded
against a represented party for a violation of
subdivision (b)(2).
[(B) Monetary sanctions may not be awarded
on the court's initiative unless the court
issues its order to show cause before a
voluntary dismissal or settlement of the claims
made by or against the party which is, or whose
attorneys are, to be sanctioned.] shall be
sufficient to deter repetition of such conduct
or comparable conduct by others similarly
situated, and to compensate the parties that
were injured by such conduct. The sanction may
consist of an order to pay to the party or
parties the amount of the reasonable expenses
incurred as a direct result of the filing of
the pleading, motion, or other paper that is
the subject of the violation, including a
reasonable attorney's fee.
* * * * * * *
[(d) Inapplicability to Discovery.--Subdivisions (a)
through (c) of this rule do not apply to disclosures and
discovery requests, responses, objections, and motions that are
subject to the provisions of Rules 26 through 37.]
Agency Views
Markup Transcript
BUSINESS MEETING
WEDNESDAY, SEPTEMBER 8, 2004
House of Representatives,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice, at 10:00 a.m., in
Room 2141, Rayburn House Office Building, Hon. F. James
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
Chairman Sensenbrenner. The Committee will be in order, a
working quorum is present and pursuant to notice I will now
call up the bill H.R. 4571, the ``Lawsuit Abuse Reduction Act
of 2004'' for purposes of mark up and move its favorable
recommendation to the House. Without objection, the bill will
be considered as read and open for amendment at any point. And
the Chair recognizes the gentleman from Texas, Mr. Smith, for 5
minutes to explain the bill.
[The bill, H.R. 4571, follows:]
Mr. Smith. Mr. Chairman, I am not sure my speaker is
working. Oh, there it is. Mr. Chairman, frivolous lawsuits harm
our economy and threaten to bankrupt business owners. This is
especially true of small business owners who do not have the
money to fund prolonged lawsuits. The alarming spread of
frivolous lawsuits has made a mockery of our legal system. For
example, frivolous suits are brought despite no evidence that
shows negligence on the part of the defendant. These are
nuisance lawsuits but costly to the defendants. Of course many
Americans have legitimate legal grievances from someone wrongly
disfigured during an operation, to a company responsible for
contaminating a community's water supply. Americans deserve
their day in court. No one who deserves justice should be
denied justice. However, the gaming of the system by some
lawyers makes the cost of doing business rise and draws down
the integrity of the judicial system.
Let me give some examples. The chief executive officer of
San Antonio's Methodist Children's Hospital was sued after he
stepped into a patient's hospital room and asked how he was
doing. Of course the jury cleared him of any wrongdoing. A
Pennsylvania man sued the Frito Lay Company claiming that
Doritos chips were inherently dangerous after one stuck in his
throat. After 8 years of costly litigation, the Pennsylvania
Supreme Court threw out the case, writing that there is, quote,
a common sense notion that it is necessary to properly chew
hard foodstuffs prior to swallowing. End quote.
In a New Jersey Little League game a player lost sight of a
fly ball hit to him because of the sun. He was injured when the
ball struck him in the eye. The coach was forced to hire a
lawyer after the boy's parents sued and the coach had to settle
the case for $25,000.
Today almost any party can bring any suit in practically
any jurisdiction. That is because plaintiffs and their
attorneys have nothing to lose. All they want is for the
defendant to settle. This is legalized extortion. It is lawsuit
lottery.
Some Americans have filed lawsuits for reasons that can
only be described as absurd. They sue a theme park because its
haunted houses are too scary. They sue the Weather Channel for
an inaccurate forecast. And they sue McDonald's claiming a hot
pickle dropped from a hamburger caused a burn and mental
injury.
Our national motto might as well be, when in doubt file a
lawsuit. It is always someone else's fault. Defendants on the
other hand can unfairly lose their careers, their businesses
and their reputations; in short, they can lose everything.
This is not justice and there is a remedy. Change Federal
Rule of Civil Procedure 11. The Lawsuit Abuse Reduction Act
requires judges to sanction plaintiffs who file frivolous
lawsuits merely to extort financial settlements as well as
defendants who unnecessarily prolong the process. Under H.R.
4571 if either party feels they have been subject to a
frivolous claim or pleading, they can file a motion with the
court for sanctions. If the judge determines that the claim was
frivolous then the sanctions imposed can include an order to
pay the attorney's fees of the party who was the victim of the
frivolous claim.
In addition, this legislation removes the provision that
currently allows an attorney to file a frivolous pleading and
then withdraw it within 21 days. Attorneys now have no
incentive to avoid filing frivolous pleadings because they can
simply withdraw the pleading to avoid sanctions.
Also if the State judge determines that a frivolous lawsuit
has an impact on interstate commerce the judge could sanction
the litigants by using Rule 11.
Finally, this legislation prevents forum shopping. It
requires that personal injury claims only be filed in the
State, county or Federal district where the plaintiff resides,
where the injury occurred, or in the State or county where the
defendant's principal place of business is located. This
provision addresses the growing problem of attorneys who shop
around the country for judges who routinely award plaintiffs
excessive amounts.
I might add, Mr. Chairman, that the presidential and vice
presidential candidates all agree that we would be a better and
a more prosperous America if we discouraged frivolous lawsuits.
The Lawsuit Abuse Reduction Act is sensible reform that will
help restore confidence in America's justice system.
Mr. Chairman, I will yield back.
Chairman Sensenbrenner. Who wishes to give the Democratic
opening statement?
Mr. Scott. I have----
Chairman Sensenbrenner. The gentleman from Virginia, Mr.
Scott.
Mr. Scott. Mr. Chairman, I have an amendment when the time
comes.
Chairman Sensenbrenner. Okay. Without objection, all
Members may place opening statements in the record at this
point. Are there amendments? The gentleman from Florida, Mr.
Keller.
Mr. Keller. Mr. Chairman, I have an amendment at the desk.
Chairman Sensenbrenner. The Clerk will report the
amendment.
The Clerk. Amendment to H.R. 4517 offered by Mr. Keller of
Florida. At the end of the bill insert the following new
section. Section.
[The amendment follows:]
Mr. Keller. Mr. Chairman, I would ask unanimous consent
that the amendment be considered as read.
Chairman Sensenbrenner. Without objection, so ordered and
the gentleman is recognized for 5 minutes.
Mr. Keller. Thank you, Mr. Chairman. I am offering a three
strikes and you are out amendment to deal with frivolous
lawsuits. I would like to begin by quoting from Senator John
Edwards of North Carolina and I am holding here an article that
he wrote for Newsweek magazine on December 15, 2003, where he
said, quote, frivolous lawsuits waste good people's time and
hurt the real victims.
That is why I have proposed to prevent them. Lawyers who
bring frivolous cases should face tough mandatory sanctions
with a three strikes penalty.
Also, in The Washington Post, on May 20, 2003, Senator John
Edwards of North Carolina wrote an editorial where he said,
quote, lawyers who file frivolous cases should face tough
mandatory sanctions. Lawyers who file three frivolous cases
should be forbidden to bring another suit for the next 10
years.
In other words, three strikes and you are out. On the good
advice of Senator Edwards, I have prepared a three strikes and
you are out amendment. If an attorney were to be found by a
particular Federal District Court to have filed three frivolous
lawsuits, this amendment would automatically suspend that
attorney from practicing law in that particular Federal
District Court for 1 year, and require that that attorney
petition for reinstatement after that year under such
procedures and conditions as that court may prescribe. This is
an automatic 1-year suspension, less severe than even what John
Edwards proposed of 10 years.
And so I would ask my colleagues in the spirit of
bipartisanship and the good advice of myself and Senator John
Edwards to accept this amendment, and I yield back the balance
of my time.
Chairman Sensenbrenner. The gentleman from California, Mr.
Berman.
Mr. Berman. I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Berman. I had two questions of the author of the
amendment. It seems on its surface like a good amendment. But
is a finding by a Federal judge of a Rule 11 violation, that
the suit or the motion is frivolous, is that an appealable
decision?
Mr. Keller. It would be governed under the existing rules
of Rule 11.
Mr. Berman. I am sure it would. Is it appealable?
Mr. Keller. I don't know. Do you know?
Anything that you would normally be able to appeal under
Rule 11 you would be able to appeal. Anything that you wouldn't
be able to appeal under Rule 11 you wouldn't be able to appeal.
We are not changing any appellate rules. It is a much
narrower----
Mr. Berman. I am asking a factual question. If you don't
know the answer, I understand because I don't know the answer
and that is why I am asking. Is it----
Chairman Sensenbrenner. Will the gentleman yield?
Mr. Berman. Sure.
Chairman Sensenbrenner. Final orders are appealable under
the Federal Rules of Civil Procedure and my guess is that if a
Rule 11 violation has been found to occur the court would
dismiss the action and impose sanctions in Rule 11 and that
would be a final order.
Mr. Berman. That is what I would have thought and I
appreciate the clarification.
Mr. Watt. Would the gentleman yield?
Mr. Berman. I would be happy to yield.
Mr. Watt. Unfortunately, it is not quite that clear. If the
decision results in a final order of dismissal, the case would
be appealable. But this amendment seems to go far beyond that
to deal with discovery violations, argument violations, and
those things are interlocutory decisions by a court, and quite
often don't get resolved at all on any final basis. The case
goes on. That order or decision having been entered on a
procedural basis, the case goes on. The case may get appealed
at some point, but seldom would that be the grounds for appeal,
nor would it be appealable on an interlocutory basis, so--it is
his time.
Mr. Berman. I would be happy to yield. Let me just--I am
not so concerned whether there is interlocutory appeal. I am
just trying to deal with the factual--the situation where a
particular judge in a particular case on three different
occasions in that case, for reasons perhaps of animus towards
the counsel has made a Rule 11 finding. At some point is that
subject to being reversed on appeal? Not necessarily before the
end of the case, but in other words, would the attorney be
suspended from practice before he would have a chance to
contest the abuse of discretion, the finding that there was a
Rule 11 violation?
Mr. Watt. The point that I am making is that seldom would
there be an appeal on a procedural motion of that kind because
the case would continue. Suppose you have a finding that a
frivolous argument is made. The case continues.
Mr. Berman. Sure.
Mr. Watt. And that one item never gets appealed because the
case goes on. You can't stop the case right there in the middle
of that particular thing, take an appeal of that order.
Mr. Berman. I understand.
Mr. Watt. Because it is an interlocutory order.
Mr. Berman. I guess the question for the author of the
amendment, Rick, if--would you be willing to adjust your
amendment to ensure that before the suspension is affected the
lawyers had a chance to have a review of the finding three
times--it could occur in one case. This applies, as somebody
mentioned, to discovery motions, to other kinds of pleadings,
and just--it would keep--essentially would keep the thrust of
your amendment, but allow their, the actual suspension to be
delayed until such time as the counsel has had a chance to
review that finding on appeal.
Mr. Keller. Let me tell you where I share your sympathies
and let me tell you what my concerns are about what you are
asking. Okay, the idea that an attorney is about to be barred
from practicing in a particular Federal District Court for 1
year because a judge has found three separate times.
Chairman Sensenbrenner. The gentleman's time has expired.
Mr. Berman. I would ask unanimous consent for 2 additional
minutes.
Chairman Sensenbrenner. Without objection.
Mr. Berman. Okay.
Mr. Keller. Will the gentleman yield?
Mr. Berman. Yes.
Mr. Keller. I understand at that point, when it is final he
should be allowed to appeal, and it is my understanding from
talking with staff that he would have that existing right under
Rule 11. But the reason I am concerned about broadening this, I
made this so narrow, specifically to come within the confines
of what Senator Edwards was talking about and to avoid
controversy, that if we are now talking about changing the
Federal Rules of Civil Procedure with respect to an appellate
rights under Rule 11 I think would unnecessarily broaden the
amendment and make it more controversial than less
controversial.
Mr. Berman. Reclaiming my time, I am not suggesting
changing the appellate rights. I am suggesting that the
suspension not be implemented until the appeal of that--of the
finding is deferred. Obviously, if three such findings could
occur in one case, you don't intend that in the middle of that
case even though it has not resulted in the dismissal of the
case. It is about a specific pleading, it is about a specific
discovery request----
Mr. Keller. Will the gentleman yield?
Mr. Berman. Yes.
Mr. Keller. Because right now I don't see any case law that
would cause me concerns about the appellate rights, I am not
willing to amend it at this point. If after this amendment is
adopted between now and the time it comes to the floor there is
a reason to adjust it in the spirit of fairness I will
certainly work with you and ask for a manager's amendment.
Mr. Berman. Okay. And then my second question, I notice you
only apply this to Federal actions. You don't seek to control
what States do with attorneys who engage in frivolous motions
and frivolous suits.
Mr. Keller. That is correct.
Mr. Berman. In State courts. What was your reason for not
doing that?
Mr. Keller. Well, and not only is it Federal action, it is
a particular Federal district court like in Florida. If you
have three frivolous suits in the middle district court that
would apply. If you have two in the middle and one in the south
it wouldn't apply. The reason is I wanted it narrow and clean.
Customarily the practice of disciplining and suspending
attorneys and barring them is a State issue, and I----
Chairman Sensenbrenner. The time of the gentleman has
expired.
Mr. Keller. That should be the case.
Chairman Sensenbrenner. Has once again expired.
Mr. Coble. Mr. Chairman.
Chairman Sensenbrenner. Gentleman from North Carolina, Mr.
Coble.
Mr. Coble. Mr. Chairman, move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Coble. And Mr. Chairman, I will not consume 5 minutes.
I think the gentleman from Florida's amendment and the bill
comes under the heading of reform, and on reform, particularly
as it applies to capping damages, I have consistently voted
against capping damages, Mr. Chairman, because I believe
philosophically damages should be exclusively reserved for
juries. This bill, however, is a different cat. And I am
inclined to--while I support the bill and I am inclined to
support the gentleman from Florida's amendment on the ground
that, as he pointed out in his statement, frivolous lawsuits
serve no good purpose and create inestimable mischief. I want
to ask the gentleman from Florida a question to be sure I am
reading this correctly.
Mr. Keller. Yes, sir.
Mr. Coble. Rick, this--you have separated this as to
district. In North Carolina, for example, we have three Federal
districts.
Mr. Keller. That is right.
Mr. Coble. They would not be cumulative. If I brought a
frivolous lawsuit in the Eastern District, for example, and two
in the middle district I would not be penalized at that point.
Am I correct about that?
Mr. Keller. That is correct, sir.
Mr. Coble. Very well. I support the bill and the amendment,
Mr. Chairman. Yield back.
Mr. Watt. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from North Carolina,
Mr. Watt.
Mr. Watt. I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Watt. I thank the Chairman for the time. I would just
say to the gentleman that it does appear that he has tried to
narrow this, but in the process of trying to narrow it he
really has the potential of creating a very serious problem
because you are talking about a potential interaction between
one particular judge in one case and a lawyer in that case and
nobody outside that case, so basically you end up with a
situation where a judge who has a particular animus, either
toward the case that the lawyer has filed or toward a
particular lawyer, is going to be the final and sole arbiter of
whether that lawyer gets disbarred. And I will give you a real
life example so that you will know exactly what my concern is
with this amendment, and hopefully Mr. Coble would know this
also.
In a civil rights case in North Carolina a particular
judge, because he didn't like the civil rights case, not
because the lawyers were out of line in any way, decided that
he was going to do everything that he could to frustrate that
case. This amendment leaves that judge as the final and sole
arbiter of whether a lawyer gets disbarred in that case. That
is not something that you should be doing. And because these
are procedural findings, not substantive findings on the final
outcome of a case, they are not appealable immediately so that
the lawyer could actually be disbarred before the case even
gets resolved in the final analysis by any court of appeal.
There is no parallel judge in that judicial district who could
overrule one particular judge because there is no way to appeal
over to another judge. There is no appellate judge who can
review this because it is an interlocutory procedural order.
And you have set up a situation where one lawyer, one judge
with a particular animus in a case, can ruin the whole legal
career of a lawyer without any possibility of appeal, and that
is just going way overboard and I don't think--I mean, I can't
support that.
Mr. Keller. Will the gentleman yield?
Mr. Watt. Yeah, I am happy to yield to you.
Mr. Keller. We are not talking about disbarring anybody. We
are talking about a 1-year suspension and it is far narrower
with the----
Mr. Watt. Well, I suppose you think that is not important
to a particular lawyer who practices in one judicial district
that is equivalent to a disbarment of that lawyer, and the
abuse is even more pronounced in this case because it typically
is going to be some lawyer who----
Mr. Keller. Will the gentleman yield?
Mr. Watt. --who is constantly bringing cases that some
judge doesn't like and if the judge sees the opportunity to get
rid of that lawyer for a year, then the next year they are
going to come back and do the same thing and they will be gone
for a second year. And in many States lawyers don't practice in
but one judicial district as a practical matter. So you can
talk about this as some theoretical rhetorical issue, but this
is a practical problem that you have created that gives a judge
absolute final authority to say to a lawyer you can't practice
in my court this year and when you come back next year I am
going to start it over again because I will find you did
something frivolous in that case.
I am happy to yield to the gentleman.
Mr. Keller. Well, thank you. And I may not have enough time
here.
Chairman Sensenbrenner. The gentleman's time has expired.
For what purpose does the gentleman from Wisconsin, Mr. Green,
seek recognition?
Mr. Green. Move to strike the last word, Mr. Chairman.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Green. Mr. Chairman, in listening to the comments of my
colleague on the other side of the aisle, I am sure that
Senator Edwards considered such things and maybe he decided
that the quickest way to avoid the problems the gentleman
raises is not to file frivolous claims. I yield the balance of
my time to the gentleman from Florida.
Mr. Watt. Will the gentleman yield to me for just one
response?
Mr. Keller. I thank the gentleman for yielding.
Chairman Sensenbrenner. The time belongs to the gentleman
from Wisconsin.
Mr. Keller. Mr. Watt, I am not under any pretense that
whatever I am going to say is going to convince you here. But
just to respond to a couple of issues, first, another lawyer
from North Carolina, Senator Edwards, wanted to ban you for 10
years from filing lawsuits anywhere. We are talking about a
suspension of 1 year in that particular district court. Now,
your objection to that, saying, well, maybe a judge may not
like you and what if this judge on three separate occasions
found that not only is he going to grant this motion for
summary judgement against the plaintiff attorney's client. He
is also going to enter a Rule 11 and wouldn't that be awful
because one particular judge doesn't like an attorney and
therefore this is a bad situation. I would respond to just
bring you to the real world, and you and I both practice law.
You may be a plaintiff's attorney who does civil rights cases,
I may be a defense attorney who does civil rights cases, and in
any particular Federal District Court there is going to be some
judges that are going to be more likely to grant a summary
judgement and some more that are likely to let it go to jury
trial. So in any particular case you may have a judge who
doesn't like you, you feel, or who is too tough in granting
dismissals or summary judgments and once you have the final
order entered that can be appealed. The likelihood that you
will have three separate judicial findings that there was a
frivolous case filed and then they are upheld on appeal, and
the person is only suspended for 1 year, that that being
unjust, I think is relatively remote. The likelihood of
preventing frivolous lawsuits because they will think twice
about filing suits is relatively great.
So I think the benefits outweighs whatever risk you are
bringing, and I would just point out that it is a lot narrower
and more focused than the other Member of Congress from North
Carolina, and I would urge my colleagues to support this
motion.
Mr. Watt. Would the gentleman yield?
Mr. Keller. Yes, I would yield. Or I am sorry.
Mr. Green. Yes, I would yield time to the gentleman from
North Carolina.
Mr. Watt. I would just say you are in the Judiciary
Committee practicing politics. I am in the Judiciary Committee
trying to assess the practical impact. I don't much care what
John Edwards said in some political context, in some other
context that had nothing to do with the point that I am raising
here, had nothing to do with the civil rights case, had nothing
to do with anything else that we are talking about the
practical consequences of the way you have drafted this
amendment. Now, you can either practice national politics, in
which case you know damn well you know you have no intention of
using John Edwards as any kind of an authority on any kind of
issue. You can practice national politics, or you can do what
this Committee is supposed to do, which is to look at the
practical consequences of how these things play out in court.
And my point to you is the practical consequences of your
political posturing can be devastating in the real world in a
real life situation. And if you want to do that, go right
ahead.
Mr. Green. Reclaiming my time, it is a pity if Senator
Edwards was indeed political posturing. I thought he was making
a valid point with respect to our judicial system. I further
yield time to the gentleman from Florida.
Mr. Keller. I thank the gentleman for yielding and at this
time I would ask unanimous consent that the article that
Senator Edwards wrote for Newsweek on December 15, 2003 and the
articles he wrote for The Washington Post of May 20, 2003 be
submitted into the record without objection.
Chairman Sensenbrenner. Without objection.
[The articles referred to follow:]
Mr. Keller. I would also point out that I have to take
Senator Edwards at face value, assuming he was genuine in
wanting to ban frivolous lawsuits, that it wasn't just some
sham political stunt to try to cover the fact that he doesn't
like caps and I take him at his word. I am genuine. He is
genuine. This is a good faith idea, and I ask everyone to vote
for this amendment. Yield back the balance of my time.
Chairman Sensenbrenner. The Chair would admonish all
Members that it is a violation of the rules to call into
question the motivations of Members of either this body or the
other body.
Gentleman from California, for what purpose do you seek
recognition?
Mr. Berman. Mr. Chairman, I have an amendment to the
amendment.
Chairman Sensenbrenner. The Clerk will report the amendment
to the amendment.
The Clerk. Mr. Chairman, I don't have an amendment.
Chairman Sensenbrenner. There is no amendment at the desk.
Mr. Berman. There should be a perfecting amendment offered
by Mr. Berman. It is at the desk right now.
Chairman Sensenbrenner. That is not the desk.
Mr. Berman. It is a desk. It is not that desk.
Chairman Sensenbrenner. Amendments will be submitted to the
Clerk so they can be read by the Clerk. The Clerk will read the
amendment.
The Clerk. Amendment--perfecting amendment offered by Mr.
Berman to the Keller amendment to H.R. 4571. Add the following
new section a(3). (3), an attorney has the right to appeal any
suspension described by this section and the suspension shall
not take place pending such appeal.
[The amendment follows:]
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes in support of his perfecting amendment.
Mr. Berman. Yes, Mr. Chairman, I take Mr. Keller's comments
at face value and in responding to Mr. Watt, he said I don't
think an amendment which says three findings of frivolous
conduct by the attorney approved, supported continued or
maintained after an appeal should allow that attorney to avoid
any suspension, and this simply makes clear that there is an
appeal of the suspension and the suspension doesn't take place
pending the appeal.
Chairman Sensenbrenner. Does the gentleman yield back?
Mr. Keller. Move to strike the last word.
Chairman Sensenbrenner. Does the gentleman yield back?
Mr. Berman. I yield back.
Chairman Sensenbrenner. Gentleman from Florida.
Mr. Keller. I will accept the amendment.
Mr. Berman. Thank you.
Chairman Sensenbrenner. The question is on agreeing to the
Berman amendment to the Keller amendment. Gentleman from--those
in favor will say aye. Opposed no. The ayes appear to have it.
The ayes have it. And the perfecting amendment by Mr. Berman to
the Keller amendment is agreed to.
The question now is on the adoption of the Keller
amendment, as amended.
Gentleman from Virginia, Mr. Scott.
Mr. Scott. Move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Scott. Mr. Chairman, notwithstanding the amendment that
was just adopted, you still have the first two strikes that you
can be placed on the edge even with the frivolous findings. The
suspension of the attorney for one violation may be
appropriate, it may not be appropriate for just a minor
offense. This is not only the filing of the lawsuit, but also
anything that goes on in the middle of the lawsuit, a filing, a
failure to provide information on a timely basis, anything can
result in a Rule 11. And some of the findings of a violation of
Rule 11 may be minor, in fact you may just get a warning.
Three--two warnings early in your career and a third warning 20
years later should not result in--even if the warning is well
taken, should not result as a mandatory, with no discretion,
suspension from practice for a year. I would hope that we would
defeat the bill.
Mr. Keller. Will the gentleman yield?
Mr. Scott. Excuse me. I yield to the gentleman from
Florida.
Mr. Keller. I think it is fine the way it is. And whatever
concerns you may have about injustice, we tried to be
reasonable and accommodate by giving you an immediate appeal.
So I think by taking the last amendment that should alleviate
your concerns.
Mr. Scott. Reclaiming my time, the immediate appeal is for
the third strike, not the first two. And the finding may in
fact be valid. It is just a very minor technical offense for
which a warning would be appropriate, not a 1-year suspension.
I yield to the gentleman from North Carolina.
Mr. Watt. Can I just ask the gentleman a question? Your
amendment says shall determine the number of times that the
attorney has violated that rule in that Federal District Court
during that attorney's career. What is your intention with
respect to--how would you define that Federal court?
Mr. Keller. Will the gentleman yield?
Mr. Watt. Would it be the North Carolina Federal courts?
Would it be the Western District, the Eastern District? Would
it be that particular----
Mr. Keller. Will the gentleman yield?
Mr. Watt. Yeah.
Mr. Keller. I don't know the names of your districts in
North Carolina, but if you----
Mr. Watt. There are three in North Carolina.
Mr. Keller. Okay, let me just use Florida because it also
has three. You have a northern district, a middle district and
a southern district. You would have to be found in the middle
district three times to have violated Rule 11. If you were
found two times in the middle district and one time in the
southern district, this would not apply, the suspension. I am
defining a district court as it reads, that District Court.
I yield back.
Mr. Scott. I yield back.
Chairman Sensenbrenner. The question is on the Keller
amendment, as amended by the Berman amendment. Those in favor
will say aye.
Mr. Smith. May we have a rollcall vote on that?
Chairman Sensenbrenner. Those in favor will say aye.
Opposed no. The ayes appear to have it.
Mr. Smith. May we have a rollcall vote?
Chairman Sensenbrenner. rollcall will be ordered. The
question is on agreeing to the amendment offered by the
gentleman from Florida, Mr. Keller, as modified by the
perfecting amendment of the gentleman from California, Mr.
Berman. Those in favor will as your names are called answer
aye. Those opposed no.
And the Clerk will call the roll.
The Clerk. Mr. Hyde.
Mr. Hyde. Aye.
The Clerk. Mr. Hyde votes aye.
Mr. Coble.
Mr. Coble. Aye.
The Clerk. Mr. Coble votes aye.
Mr. Smith.
Mr. Smith. Aye.
The Clerk. Mr. Smith votes aye.
Mr. Gallegly.
[no response.]
The Clerk. Mr. Goodlatte.
Mr. Goodlatte. Aye.
The Clerk. Mr. Goodlatte votes aye.
Mr. Chabot.
Mr. Chabot. Aye.
The Clerk. Mr. Chabot votes aye.
Mr. Jenkins.
Mr. Jenkins. Aye.
The Clerk. Mr. Jenkins votes aye.
Mr. Cannon.
[no response.]
The Clerk. Mr. Bachus.
[no response.]
The Clerk. Mr. Hostettler.
Mr. Hostettler. Aye.
The Clerk. Mr. Hostettler votes aye.
Mr. Green.
Mr. Green. Aye.
The Clerk. Mr. Green votes aye.
Mr. Keller.
Mr. Keller. Aye.
The Clerk. Mr. Keller votes aye.
Ms. Hart.
Ms. Hart. Aye.
The Clerk. Ms. Hart votes aye.
Mr. Flake.
[no response.]
The Clerk. Mr. Pence.
[no response.]
The Clerk. Mr. Forbes.
Mr. Forbes. Aye.
The Clerk. Mr. Forbes votes aye.
Mr. King.
Mr. King. Aye.
The Clerk. Mr. King votes aye.
Mr. Carter.
Mr. Carter. Aye.
The Clerk. Mr. Carter votes aye.
Mr. Feeney.
Mr. Feeney. Aye.
The Clerk. Mr. Feeney votes aye.
Mrs. Blackburn.
Mrs. Blackburn. Aye.
The Clerk. Mrs. Blackburn votes aye.
Mr. Conyers.
[no response.]
The Clerk. Mr. Berman.
Mr. Berman. Aye.
The Clerk. Mr. Berman votes aye.
Mr. Boucher.
[no response.]
The Clerk. Mr. Nadler.
Mr. Nadler. No.
The Clerk. Mr. Nadler votes no.
Mr. Scott.
Mr. Scott. No.
The Clerk. Mr. Scott votes no.
Mr. Watt.
Mr. Watt. No.
The Clerk. Mr. Watt votes no.
Ms. Lofgren.
Ms. Lofgren. Aye.
The Clerk. Ms. Lofgren votes aye.
Ms. Jackson Lee.
[no response.]
The Clerk. Ms. Waters.
[no response.]
The Clerk. Mr. Meehan.
[no response.]
The Clerk. Mr. Delahunt.
Mr. Delahunt. No.
The Clerk. Mr. Delahunt votes no.
Mr. Wexler.
[no response.]
The Clerk. Ms. Baldwin.
Ms. Baldwin. No.
The Clerk. Ms. Baldwin votes no.
Mr. Weiner.
[no response.]
The Clerk.Mr. Schiff.
Mr. Schiff. Aye.
The Clerk. Mr. Schiff votes aye.
Ms. Sanchez.
Ms. Sanchez. No.
The Clerk. Ms. Sanchez votes no.
Mr. Chairman.
Chairman Sensenbrenner. Aye.
The Clerk. Mr. Sensenbrenner votes aye.
Chairman Sensenbrenner. Members in the chambers who wish to
cast or change their vote. Gentleman from Alabama, Mr. Bachus.
Mr. Bachus. Mr. Chairman, I vote aye.
The Clerk. Mr. Bachus aye.
Chairman Sensenbrenner. Further Members in the chamber who
wish to cast or change their vote? If not, the Clerk will
report.
The Clerk. Mr. Chairman, there are 20 ayes and six noes.
Chairman Sensenbrenner. And the amendment is agreed to. Are
there further amendments.
Mr. Nadler. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from New York, Mr.
Nadler.
Mr. Nadler. Mr. Chairman, I have an amendment at the desk.
Chairman Sensenbrenner. The Clerk will report the
amendment.
The Clerk. Amendment to H.R. 4571 offered by Mr. Nadler. At
the end of the bill insert the following section. Availability
of court records. (a), in general, a court may not order that a
court record be sealed or subjected to a protective order or
that access to that record be otherwise restricted unless the
court makes a finding of fact in writing that identifies the
interest that justifies the order and that determines that the
order is no broader than necessary to protect the interest.
(b), applicability. This section applies to any court record
including a record obtained through discovery whether or not
formally filed with the Court in any Federal or State court.
[The amendment follows:]
Mr. Smith. Mr. Chairman, I reserve a point of order.
Chairman Sensenbrenner. Point of order is reserved. The
gentleman from New York is recognized for 5 minutes.
Mr. Nadler. Thank you, Mr. Chairman. Mr. Chairman, this is
the same amendment I offered to a bill 2 years ago when you
said that you thought it was a very constructive amendment and
you are pleased to support it and I said I would like to take
yes for an answer and the amendment was adopted. But the bill
was not.
What the amendment says is that--well, let's put it this
way. Very often in civil litigation someone may have an unsafe
product or an unsafe procedure, and rather than go to trial
they settle with the plaintiff and they pay the plaintiff a
certain amount of money because the plaintiff was damaged by
this unsafe product, but a condition of the settlement which
the plaintiff agrees to, because he or she is getting the
money, is that the records will be sealed and no one will ever
talk about it. And this perpetuates the situation where the
unsafe product is continued to be marketed and nothing changes.
Now, clearly the--when you are involving health services
the secrecy keeps vital health and safety information out of
the public's reach. It leads to more needless injuries and
deaths caused by defective products. Secrecy orders should not
be enforced unless they meet stringent standards to protect the
public interest. This amendment is tailored to address the
problem. It requires that a judge must make a finding of fact
where a gag order is requested. If the judge finds that the
privacy interest is broader than the public interest because
there may be a legitimate privacy interest, then the judge must
allow the gag order and the secrecy. But if the judge finds
that the public interest and the health and safety of the
situation outweighs the privacy interest claim, then the judge
will not issue or will not approve the gag order. When it comes
to health and safety, public access to medical malpractice
lawsuit materials is absolutely essential. When it comes to
public safety, public access to knowledge that a given product
is unsafe is essential because otherwise it may not be changed.
If the public knows as a result that a given car is unsafe or
whatever, the manufacturer will have pressure to fix it up
rather than simply bear the cost of settlement of litigation
every so often. So this amendment balances the public interest
and knowledge and public knowledge of admitted safety defects
with the privacy interest that a manufacturer or someone else
may actually have and says that the judge decides in each case
that the privacy interest outweighs the public interest and
therefore he will okay the privacy agreement or that the public
safety and health interest outweighs the privacy interest and
therefore he won't. And therefore, I urge my colleagues to vote
for this amendment, and I hope the Chairman will agree with
himself 2 years ago that this is a wise amendment.
Ms. Lofgren. Would the gentleman yield?
Mr. Nadler. Yes, I will.
Ms. Lofgren. I agree with the intent of this amendment and
I think whenever there is litigation that affects health and
safety, product liability issues, you are absolutely correct. A
phenomenon that has occurred in California in the last several
years, however, is impacted potentially by this amendment, and
it is situations where you have competitors who are filing
litigation primarily to discover trade secrets. It has nothing
to do with the kind of litigation you are discussing. And there
has been a lot of discussion in the California legislature
about this very issue, and how to make sure that the real
object of the litigation isn't actually to discover something
that should not be discovered. And I think that if we adopt
this amendment we need to make clear, I would prefer actually
that it be in the amendment but perhaps we could just do it in
report language, that there is a presumption that if it is not
a health and safety issue, but merely a trade secret, that
great deference should be given to protecting trade secret.
Mr. Nadler. Reclaiming my time.
Ms. Lofgren. I certainly would.
Mr. Nadler. If the gentlelady would yield, we give the
judge the discretion in any case where the gentlelady is
describing. The public interest and publicity would not
outweigh the interest in privacy, and that is exactly the way
this amendment is drafted for that reason.
Ms. Lofgren. I understand that. But what we have discovered
in California, and it is really a Silicon Valley issue in large
part, is that in the course of discovery, because the courts
are so overburdened, that it has become a huge issue in terms
of even the judicial calendar and in the discovery issue, which
is why I was struggling to figure out a way to offer an
amendment to this. But I wasn't able to do so. The California
legislature has not in the course of 2 years.
So I just wanted to raise the issue, and perhaps we could
give guidance to the judiciary in our----
Mr. Nadler. Reclaiming my time.
Chairman Sensenbrenner. The gentleman's time has expired.
Does the gentleman wish to pursue his point of order?
Mr. Smith. Mr. Chairman, I do wish to pursue the point of
order.
Chairman Sensenbrenner. Gentleman from Texas will state his
point of order.
Mr. Smith. Okay. Mr. Chairman, let me say at the outset
that this may well be a good amendment and well intentioned.
However, it is not relevant to the underlying piece of
legislation and therefore is not germane. This amendment deals
primarily with the sealing of court records whereas the
underlying legislation deals with frivolous lawsuits. So I
don't believe this particular amendment is germane. It may be
worthy at another time, with another bill, but here it is not
germane and I will----
Mr. Berman. Would the gentleman yield?
Mr. Smith. And I will be happy to yield to the gentleman
from New York.
Mr. Nadler. Are you going to offer this?
Mr. Smith. Or the gentleman from California.
Mr. Berman. If the gentleman would yield.
Chairman Sensenbrenner. The proper procedure on a point of
order is for Members to seek recognition.
Mr. Smith. Okay. I will yield back the balance of my time.
Chairman Sensenbrenner. Gentleman from California.
Mr. Berman. I would just like to say that unfortunately
this bill doesn't simply deal with frivolous lawsuits. It opens
up to--this bill has a provision regulating venue
determinations in State courts having nothing to do with
frivolous lawsuits. This bill goes unfortunately far beyond the
issue of Rule 11 and frivolous lawsuits. And I just think the
Members of the Committee should understand that it has
additional provisions in this bill that have no relationship
either to Rule 11 or frivolous lawsuits and in fact seeks to
decide what historically has always been State law decisions
about which county you can bring a lawsuit in in a personal
injury case for reasons that I truly don't understand and will
look forward to hearing from you as author of it later on.
Chairman Sensenbrenner. Anybody else wish to be heard on
the point of order? Gentleman from New York.
Mr. Nadler. Mr. Chairman, I would suggest--first of all, I
agree with Mr. Berman. The amendment is not out of order for
the reasons that he stated. But I think we can even clarify
that because I am willing to narrow the amendment and simply
say in any case concerning Rule 11 or forum shopping, a court,
et cetera, and that I think would obviate any problem that Mr.
Smith may have.
Chairman Sensenbrenner. Does the gentleman withdraw the
amendment?
Mr. Nadler. I would like to amend the amendment.
Chairman Sensenbrenner. Well, the Chair has to rule on the
point of order first.
Mr. Nadler. I will withdraw the amendment.
Chairman Sensenbrenner. The amendment is withdrawn. Are
there further amendments?
Mr. Nadler. Yes. Mr. Chairman.
Chairman Sensenbrenner. Gentleman from New York.
Mr. Nadler. I have an amendment, the same amendment with
the words ``in any case concerning Rule 11 or forum shopping''
after the words ``In General.''
Chairman Sensenbrenner. The Clerk will report the
amendment.
The Clerk. Amendment to H.R. 4571 offered by Mr. Nadler. At
the end of the bill insert the following: ``section.
Availability of court records. In general.''
[The amendment follows:]
Mr. Nadler. At that point, right after the words ``In
General,'' ``In any case concerning Rule 11 or forum
shopping,'' and then just read the rest.
The Clerk. ``a court may not order that a court record''--
--
Mr. Nadler. Mr. Chairman. I make----
The Clerk. --``be sealed or subjected to a protective order
. . .''
Mr. Nadler. Mr. Chairman, I move to waive the reading of
the rest of the amendment.
Chairman Sensenbrenner. Well, are there copies of the
amendment for Members of the Committee? Because we have never
waived the reading of an amendment----
Mr. Nadler. Then I withdraw the motion.
Chairman Sensenbrenner. Okay. The Clerk will continue to
read.
The Clerk. --``or that access to that record be otherwise
restricted, unless the court makes a finding of fact in writing
that identifies the interest that justifies the order and that
determines that the order is no broader than necessary to
protect that interest.
``(b) Applicability. This section applies to any court
record, including a record obtained through discovery, whether
or not formally filed with the court, in any Federal or State
court.''
Chairman Sensenbrenner. The gentleman from New York is
recognized for 5 minutes.
Mr. Nadler. Thank you, Mr. Chairman. I won't take 5 minutes
because I explained the point of the amendment before. I think
Members of the Committee in the prior year recognized the merit
of the amendment. The Chairman certainly did. And I think that
the addition of these words at the beginning of the amendment,
in any case, limiting its applicability to any case concerning
Rule 11 or forum shopping, should satisfy any validity to the
point of order. I don't think the point of order was valid in
any event because of what Mr. Berman said. But certainly
limiting it to cases concerning Rule 11 or forum shopping
certainly makes it germane to the bill.
I yield back.
Chairman Sensenbrenner. The gentleman yield back.
Mr. Nadler. Yes, I do.
Chairman Sensenbrenner. Gentleman from Texas.
Mr. Smith. Mr. Chairman, if you have accepted this
amendment in past years, I don't have any objection to the
amendment now.
Chairman Sensenbrenner. The gentleman yield back?
Mr. Smith. And I will yield back.
Chairman Sensenbrenner. The question is on agreeing to the
second Nadler amendment. Those in favor will say aye. Opposed
no. The noes appear to have it.
Mr. Nadler. Mr. Chairman, there was one no. I would ask for
the ayes and nays.
Chairman Sensenbrenner. rollcall was ordered. Those in
favor of the amendment offered by the gentleman from New York
will as your names are called answer aye. Those opposed no. And
the Clerk will call the roll.
The Clerk. Mr. Hyde.
Mr. Hyde. No.
The Clerk. Mr. Hyde votes no.
Mr. Coble.
Mr. Coble. No.
The Clerk. Mr. Coble votes no.
Mr. Smith.
Mr. Smith. Pass.
The Clerk. Mr. Smith passes.
Mr. Gallegly.
[no response.]
The Clerk. Mr. Goodlatte.
Mr. Goodlatte. No.
The Clerk. Mr. Goodlatte votes no.
Mr. Chabot.
[no response.]
The Clerk. Mr. Jenkins.
Mr. Jenkins. No.
The Clerk. Mr. Jenkins votes no.
Mr. Cannon.
[no response.]
The Clerk. Mr. Bachus.
[no response.]
The Clerk. Mr. Hostettler.
Mr. Hostettler. No.
The Clerk. Mr. Hostettler votes no.
Mr. Green.
Mr. Green. No.
The Clerk. Mr. Green votes no.
Mr. Keller.
Mr. Keller. No.
The Clerk. Mr. Keller votes no.
Ms. Hart.
Ms. Hart. No.
The Clerk. Ms. Hart votes no.
Mr. Flake.
[no response.]
The Clerk. Mr. Pence.
[no response.]
The Clerk. Mr. Forbes.
Mr. Forbes. No.
The Clerk. Mr. Forbes votes no.
Mr. King.
Mr. King. No.
The Clerk. Mr. King votes no.
Mr. Carter.
Mr. Carter. No.
The Clerk. Mr. Carter votes no.
Mr. Feeney.
Mr. Feeney. No.
The Clerk. Mr. Feeney votes no.
Mrs. Blackburn.
[no response.]
The Clerk. Mr. Conyers.
[no response.]
The Clerk. Mr. Berman.
Mr. Berman. Aye.
The Clerk. Mr. Berman votes aye.
Mr. Boucher.
[No response.]
The Clerk. Mr. Nadler.
Mr. Nadler. Aye.
The Clerk. Mr. Nadler votes aye.
Mr. Scott.
Mr. Scott. Aye.
The Clerk. Mr. Scott votes aye.
Mr. Watt.
Mr. Watt. No.
The Clerk. Mr. Watt votes no.
Ms. Lofgren.
Ms. Lofgren. Pass.
The Clerk. Ms. Lofgren passes.
Ms. Jackson Lee.
[No response.]
The Clerk. Ms. Waters.
[No response.]
The Clerk. Mr. Meehan.
[No response.]
The Clerk. Mr. Delahunt.
Mr. Delahunt. Aye.
The Clerk. Mr. Delahunt votes aye.
Mr. Wexler.
[No response.]
The Clerk. Ms. Baldwin.
Ms. Baldwin. Aye.
The Clerk. Ms. Baldwin votes aye.
Mr. Weiner.
[No response.]
The Clerk.Mr. Schiff.
Mr. Schiff. Aye.
The Clerk. Mr. Schiff votes aye.
Ms. Sanchez.
Ms. Sanchez. Aye.
The Clerk. Ms. Sanchez votes aye.
Mr. Chairman.
Chairman Sensenbrenner. No.
The Clerk. Mr. Sensenbrenner votes no.
Chairman Sensenbrenner. Further Members in the Committee
wish to cast or change their vote? The gentlewoman from
California.
Ms. Lofgren. No.
The Clerk. Ms. Lofgren, no.
Chairman Sensenbrenner. Gentleman from California, Mr.
Gallegly.
Mr. Gallegly. No.
The Clerk. Mr. Gallegly, no.
Chairman Sensenbrenner. Gentleman from Alabama, Mr. Bachus.
Mr. Bachus. No.
The Clerk. Mr. Bachus, no.
Chairman Sensenbrenner. Further Members who wish to cast or
change their votes? Gentleman from Ohio, Mr. Chabot.
Mr. Chabot. Aye.
The Clerk. Mr. Chabot, aye.
Chairman Sensenbrenner. The Clerk will report.
The Clerk. Mr. Chairman, there are 8 ayes, 17 noes.
Chairman Sensenbrenner. The amendment is not agreed to.
Are there further amendments? The gentleman from Virginia,
Mr. Scott.
Mr. Scott. Mr. Chairman, I have an amendment at the desk,
SD-010.XML, with interdelineations.
Chairman Sensenbrenner. The Clerk will report that
amendment.
The Clerk. Amendment to H.R. 4571 offered by Mr. Scott. At
the end of the bill, insert the following: Section 'blank'.
Enhanced sanctions for document destruction.
(a) In General. Whoever willfully and intentionally----
[The amendment follows:]
Chairman Sensenbrenner. Without objection, the amendment is
considered as read. The gentleman from Virginia is recognized
for 5 minutes.
Mr. Scott. Thank you, Mr. Chairman. Mr. Chairman, this
deals with people who willfully and intentionally destroy
documents that are subject to discovery. The bill--the
amendment as originally introduced had criminal sanctions.
Those have been removed and it leaves it to civil, just civil
penalties for destroying documents sought and relevant to the
proceeding.
I would hope that the amendment would be adopted.
Mr. Smith. Mr. Chairman.
Chairman Sensenbrenner. Gentleman from Texas, Mr. Smith.
Mr. Smith. Mr. Chairman, I think this is a good amendment.
I know it is well-intentioned and to the best of my knowledge
the gentleman from Virginia has in fact made the changes that
we suggested. Is that correct?
The only question I have for the gentleman from Virginia
deals with a word in the second sentence of section (a) which
now reads ``whosoever willfully and intentionally influences,
obstructs, or impedes, or endeavors to influence, obstruct, or
impede.'' the word ``endeavors'' could be vague, even
unconstitutionally vague, and if the gentleman is satisfied
with that, I would still support the amendment. But I don't
want the amendment to be found unconstitutional because of too
vague of a word.
Mr. Scott. I would ask unanimous consent that ``endeavors''
be changed to ``attempts.''
Chairman Sensenbrenner. Without objection.
Mr. Scott. And thank the gentleman.
Mr. Smith. And Mr. Chairman, I support the amendment and
recommend that we adopt it.
Chairman Sensenbrenner. The question is on agreeing to the
amendment offered by the gentleman from Virginia, Mr. Scott.
Those in favor will say aye. Opposed aye. The ayes appear to
have it. The ayes have it. The amendment is agreed to.
Are there further amendments? The gentleman from North
Carolina, Mr. Watt.
Mr. Watt. Mr. Chairman, I don't have an amendment. I move
to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Watt. And I won't take 5 minutes, Mr. Chairman. I just
want to express that I think we are making a mistake if we pass
this bill and go back to a situation where we have removed
discretion from judges once again. We have been through this
over and over again. There seems to be a consistent tug of war
between whether we think we as legislators can decide what
procedural consequences should take place in a courtroom
without giving judges any discretion and control over their
courtrooms, or whether judges are better positioned to do that.
I think we have consistently politicized that and that the
right decision was made originally when we went away from this
back in 1993 to give judges more discretion and not make these
penalties mandatory.
Judges have the authority to prevent frivolous lawsuits,
prevent frivolous conduct in their courts, and I think we ought
to allow them to do that. When we cast these broad ``one size
fits all'' rules and make a certain course of action mandatory
in every single case, we are ignoring what is just in cases,
and I think judges are better positioned to know that,
observing the conduct in their courtroom and making good,
judicious decisions about it.
Now, do judges make bad decisions sometimes? Yes, they do,
but I think we are about to make a bad decision by telling
every judge in America that you must have a mandatory
consequence for something that is going on in your case, in
your courtroom. And it may have the reverse effect because it
may make judges less likely to find that there was frivolous
actions around the edges so that they don't get into this
mandatory situation. I think we are seeing that in mandatory
sentencing now, and I think we are making a real serious
mistake to go in this direction.
And I will yield back.
Chairman Sensenbrenner. Gentleman from California, Mr.
Berman, for what purpose do you seek recognition.
Mr. Berman. Move to strike the last word.
Chairman Sensenbrenner. Gentleman is recognized for 5
minutes.
Mr. Berman. Mr. Chairman, I don't entirely agree with my
friend from North Carolina on the subject. I think there is a
great deal of discretion remaining. The court has the
discretion to decide whether or not a particular pleading or
motion is frivolous and by its very nature that involves a
great deal of discretion in the judge. And then, unlike
mandatory sentencing, which provides whole minimum sentences
regardless of the factual situation or of the particular case,
this allows the judge to decide the appropriate sanction. There
is no effort to say that a finding of rule 11 violation has a
minimum financial burden or an automatic suspension or
disbarment.
So I think there is a part of this bill that makes a great
deal of sense, and I also think it answers. I think, giving
Rule 11 teeth deals with the issue of abuse of the process. I
think it is a far better approach than some of the tort reform
measures that I have seen pushed through this Committee. My
concern, and the reason I have to vote no on this bill is
because of the provisions that are unrelated to Rule 11. All of
a sudden, in a bill that is packaged as a bill dealing with
frivolous lawsuits, there are all these rules on venue, not
just in Federal court, but in State courts.
I don't know if a particular State rule on where you can
bring a personal injury action is appropriate or not
appropriate. The notion that we are now going to automatically
amend 50 State laws and rules of State courts on venue for
personal injury actions, even where they are said to involve
interstate commerce, makes no sense to me whatsoever, absent
some compelling case that all 50 of these States have
inappropriate rules that allow what the sponsors call forum
shopping.
What happens in a--let's assume Boeing, the principal
office is in Chicago, the product is manufactured in the State
of Washington, and designed in the State of Washington. A
plaintiff who resides in North Carolina wants to bring a
lawsuit where Boeing has most of its operations in the State of
Washington, where the particular plane was manufactured on a
products liability theory. The notion that that is the
inappropriate place because it is not where the injury
occurred, and it is not where the plaintiff resides, and it is
not where Boeing's principal office is, maybe that is right and
maybe it isn't.
The notion that we are going to, in one fell swoop,
automatically restrict in any other place where you can bring
that action, without any demonstration that it is simply for
the purposes of finding a judge that is plaintiff-oriented,
especially when there is nothing done here to limit the ability
of Defendants to remove to Federal Court any cases, shows, I
think, a bias on one side of an issue and conflict.
So, I would implore the sponsor of the bill, my friend from
Texas, to limit this to sections 1, 2 and 3, and to eliminate
section 4, which opens up a whole can of worms, has nothing to
do with frivolous lawsuits, and seeks to amend personal and
State court personal injury actions in cases involving
interstate commerce in a way that we have no idea what it means
in terms of which county in a particular State you can bring
this action in.
If you proceed with this, I have no doubt you have the
votes to pass it in the House and out of this Committee. But
once again, you will have overreached. You have a good idea,
but you can't resist adding more and more on to it, and this
will be another in a trail of 10 years of bills put out in the
name of reform that never come into law, and they never do,
whether it is class action, medical malpractice, joint and
several liability or all of the dozens of other cases,
elimination of Federal jurisdiction that you try because you,
even when you have a reasonable idea, you add on stuff and go
too far and make it another one-house bill.
Take out Section 4 on forum shopping, make that the subject
of a separate hearing in the appropriate Subcommittee of
Judiciary about whether it is appropriate, and move ahead with
your efforts on Rule 11, and you will have my support.
Mr. Chabot. Will the gentleman yield?
Mr. Berman. I would happy to.
Mr. Chabot. I think the gentleman--the point is most of
these don't become law because they get blocked by the trial
lawyers over in the other body. That is what happens.
Mr. Berman. No. I will give you--if I may reclaim my time.
Chairman Sensenbrenner. The gentleman's time has expired.
Mr. Delahunt. I move to strike the last word.
Chairman Sensenbrenner. Does the gentleman from California
want 2 additional minutes?
Mr. Berman. I would like one additional minute.
Chairman Sensenbrenner. Without objection. You may have 5.
Mr. Berman. I will let Mr. Delahunt seek recognition. With
that offer, I can't----
Chairman Sensenbrenner. Does the gentleman yield back his
additional minute?
Mr. Berman. I do.
Chairman Sensenbrenner. For what purpose does the gentleman
from Massachusetts seek recognition?
Mr. Delahunt. I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Delahunt. I yield to the gentleman from California as
much time as he may consume.
Mr. Berman. To simply characterize it in that fashion, as
trial lawyers defeating the bill in the Senate, that demeans
the integrity of a lot of different people. When you come
forward on medical malpractice legislation, and you make some
cases regarding different aspects of abuse and reasons why
healthcare costs could be contained, but you will not look at
any of the provisions or moderate any of those provisions
regarding what the cap should be or how you should deal with
the collateral source rule.
When you deal with class actions in a fashion that
essentially removes State role and any meaningful fashion
without providing any kinds of balance, you go too far. One day
you will get the message that you keep having one House bill
because you always add stuff on. Deal with the merits of the
forum shopping issue. Why does that need to be in here? You
promote it as a Rule 11 bill in effort to give Rule 11 some
teeth to deal with the frivolous lawsuits and then you have to
add this other section--which raises a whole series of other
questions--which involves really an unprecedented intrusion
into Federalism by seeking to regulate how State laws, State
legislatures and State courts decide venue issues on personal
injury cases handled in State courts.
Why? Why go that far? You are risking a partisan, more of a
partisan fight here and a sure death in the Senate. It isn't
simply because of a particular interest group's lobbying. It is
because you guys never let a reasonable idea be enough. You
always want to push it further, go to an extreme in order to
make a point, a point that I don't think you are making very
well.
I yield back.
Mr. Delahunt. I am reclaiming my time. I would just like to
associate myself with the remarks of the gentleman from
California.
I think there is opportunity, and I think there is
opportunity and I think he has articulated well to address some
of the concerns that have been mentioned by proponents. But,
again, there is simply an overreaching effort here. I am not
going to suggest it is for political motives, but some would
infer that it might be.
Mr. Watt. Would the gentleman yield to me so I can suggest
that?
Mr. Delahunt. I will yield to the gentleman from North
Carolina for purposes of a suggestion.
Mr. Watt. I think it is quite obvious that they would
rather have the issue than a bill that does some constructive
things to reduce frivolous lawsuits----
Mr. Delahunt. Well, reclaiming my time----
Mr. Watt. --instead of blaming that on somebody in the
Senate, but--so, I don't think I am hesitant to suggest that
that is the case.
Mr. Delahunt. Well, reclaiming my time.
As I look down the list of the bills that we are
considering here today, one might describe the agenda as the
frivolous anti-Plaintiff legislative day in the Judiciary
Committee. I mean, we all know what this is about. It is about
an election cycle.
But I really do think that, you know, there are
opportunities are as put forth by Members such as Mr. Berman,
where there could be a consensus and where good sound public
policy could be crafted. The direction that we are going, we
might as well just simply eliminate the jurisdiction of State
courts.
Why don't we just simply file an amendment to the
Constitution, the United States Constitution, repealing--if the
gentleman from North Carolina could help me, what is the States
rights amendment of the U.S. Constitution, because I knew you
were the Chair of that caucus?
Mr. Scott. What is the question again?
Mr. Delahunt. Well, if the gentleman had been listening to
me, I think it is the 10th amendment.
Mr. Watt. I try to tune out all of that, a good portion of
the morning, but go ahead.
Mr. Delahunt. Well, is it the 10th amendment that invests
in States' certain rights, that reserve certain rights?
Mr. Watt. Last time I checked. I think they may have
repealed it by now.
Mr. Delahunt. At least in terms of the Federalism as it
applies to the judicial systems of the States and the Federal
Government, the direction that we have been going in, since I
served in this Committee is de facto elimination, a repeal of
the 10th amendment as it applies----
Chairman Sensenbrenner. The time of the gentleman has
expired.
Mr. Schiff. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from California, Mr.
Schiff, has had very little to say today.
Mr. Schiff. I thank you for not applauding that.
Mr. Chairman, I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Schiff. My colleague from Massachusetts poses the
question of why don't we just stop fooling around and remove
the jurisdiction of the State courts. The problem with that is
we have already moved to remove the jurisdiction of the Federal
courts. We did that last month.
And pretty soon, we will be left with no jurisdiction of
any court. I have often remarked in Committee my concern about
the degradation of relationship between this Congress and the
courts in general. In addition to the concern raised by my
colleague from California, Mr. Berman, over really an
impressive interference with the venue decisions that are made
by the States and in the State courts, I am also troubled by
the intrusion that we are making and the way we are making it
into the Federal courts promulgations of rules over their own
procedures.
We passed in Congress some years ago the rules enabling act
that establish certain procedures for how rules would be
adopted in the Federal courts. Under those congressionally-
mandated procedures, those new rules will, in the first
instance be considered and drafted by the U.S. Judicial
conference, thereafter be submitted for public comment and
reconsideration, then be submitted to the U.S. Supreme Court
for consideration and promulgation, and finally they are sent
to Congress which retains the power to veto any rule before it
goes into effect.
We have bypassed all of that. In fact, in section 2 of this
bill gone way beyond bypassing that; in fact, we are reversing
exactly that process that was actually undertaken. This section
2 of the bill was something that was enacted in 1983, evidently
caused great problems within the judiciary, and then was undone
in 1993. The judicial conference has written to the Congress
with respect to this bill that undoing the rule 1993 Rule 11
amendments, even though no serious problem has been brought to
the judicial conference rules attention would frustrate the
purpose and the intent of the Rules Enabling Act.
Section 2 of H.R. 4571 would effectively reinstate the 1983
version of Rule 11 that proved so contentious and wasted so
much time and energy of the bar and bench. Section 2 indeed, in
some ways, seems to go beyond the provisions that created
serious problems with the 1983 rule. It may cause even greater
mischief. Rule 11 in its present form has proven effective and
should not be revised. That is what the judicial conference has
to say.
Basically, what we are contemplating here, and, frankly,
when I first read this proposal, it struck me at a gut level as
something very worthwhile consideration. I didn't know the
history of it. When you look at the history of it, you read
that this was tried for 10 years and that it spawned a cottage
industry where someone would file the Rule 11 motion, the
opposing counsel would then file the Rule 11 motion on the Rule
11 motion, and you would have litigation over whose Rule 11
motion should succeed. That when there were mandatory
attorneys' fees and mandatory imposition of sanctions, that
basically you end up creating this cottage industry in Rule 11
motions. Revenue, the bench says this was a waste of time. In
fact, the bench said it created more dollars of unnecessary
litigation.
Now that is, I would admit, a kind of counterintuitive
result. I would not have anticipated that. But that has been
the experience of the judiciary, and, to my experience, no one
has contradicted that. No one has said the evidence the
judiciary put forward, the surveys of judges were somehow wrong
in error, missed the point or that the judicial conference now
takes a different point of that.
Mr. Smith. Would the gentleman from California yield.
Mr. Schiff. I would be delighted to yield.
Mr. Smith. I want to point out a couple or surveys that
were done that the gentleman may not be aware of. For example,
in 1990 the judicial conference surveyed 750 Federal judges and
found that 95 percent believed that Rule 11--this is the pre-
1993 rule--did not impede development of the law. 80 percent of
the judges believed the rule should not--excuse me, 80 percent
of the judges believed the rule should have been retained in
its then current form.
Furthermore, they did another poll after the rule was
repealed. This survey was done in 1985 and in that survey, two-
thirds of the judges, two thirds of the defense attorneys, and
66 percent of the other attorneys supported restoring Rule 11's
compensatory function once again. So we may be looking at
different surveys, but clearly the judges themselves felt that
the original revenue was a good rule and regretted changing it.
Chairman Sensenbrenner. The time of the gentleman from
California has expired.
Mr. Schiff. Mr. Chairman, may I request 2 additional
minutes.
Chairman Sensenbrenner. Without objection.
Mr. Schiff. I appreciate the author's comments, but again,
turning to the views expressed by the judicial conference,
``experience with the amended rule since 1993 has demonstrated
a market decline to Rule 11 satellite litigation without any
noticeable increase in the number of frivolous filings.''
In June 1995, the Federal Judicial Center conducted a
survey of 1130 lawyers, 148 judges, on the effect of the 1993
Rule 11 amendments. 580 attorneys, 120 judges responded. The
center found general satisfaction with the amended rule. It
also found that more than 75 percent of the judges and lawyers
would oppose a provision that would require a court to impose a
sanction when the rule is violated. A majority of the judges
and lawyers, both Plaintiffs and Defendant's lawyers believed
that groundless litigation was handled effectively by judges.
So I don't understand the disparity in our statistics. But
I also don't understand why if, the judges do feel, that the
rule should go back to the form it was in before the 10-year
bad experience, that the judicial conference is not
recommending that course, is not initiating the rules, enabling
act procedures.
Why they are opposing Congress bypassing their process and
their point of view. So, again, the gentleman--this doesn't
seem at odds with what we are hearing directly from the
judicial conference. I would be more than interested in having
the judicial conference come and testify and maybe explain the
statistics shortsighting and in preparation for this hearing.
And I thank the gentleman for the additional time and yield
back.
Chairman Sensenbrenner. Are there further amendments?
Mr. Watt. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from North Carolina.
Mr. Watt. I ask unanimous consent that the letter from the
Secretary of the Judicial Conference of the United States,\1\
dated July 9, 2004 from which Mr. Schiff was reading, be made a
part of the record.
---------------------------------------------------------------------------
\1\ See ``Agency Views.''
---------------------------------------------------------------------------
Chairman Sensenbrenner. Without objection.
The gentleman from Texas.
For what purpose do you seek recognition?
Mr. Smith. Mr. Chairman, I have a unanimous consent request
that the letter from the American Tort Reform Organization be
made a part of the record as well as a list, as well of those
organizations requesting the Lawsuit Reduction Act. Those
organizations would include the American Medical Association,
National Association of Manufacturers, National Federation of
Independent Businesses, National Restaurant Association and the
Chamber of Congress.
Thank you, Mr. Chairman.
Chairman Sensenbrenner. Thank you. Without objection.
[The material referred to follows:]
Are there further amendments? If there are no further
amendments. The question occurs on the motion to report the
bill H.R. 4571 favorably as amended.
All in favor say will say aye.
Aye.
Opposed no.
No.
Ayes appear to have it.
Mr. Smith. Mr. Chairman, I would like a rollcall vote.
Chairman Sensenbrenner. rollcall is ordered.
Those in favor of the motion to report H.R. 4571 favorably
as amended will as your name is called answer aye.
Those opposed, no.
And the clerk will call the roll.
The Clerk. Mr. Hyde.
Mr. Hyde. Aye
The Clerk. Mr. Hyde votes aye.
Mr. Coble.
Mr. Coble. Aye.
The Clerk. Mr. Coble votes aye.
Mr. Smith.
Mr. Smith. Aye.
The Clerk. Mr. Smith votes aye.
Mr. Gallegly.
Mr. Gallegly. Aye.
The Clerk. Mr. Gallegly votes aye.
Mr. Goodlatte.
Mr. Goodlatte. Aye.
The Clerk. Mr. Goodlatte votes aye.
Mr. Chabot.
Mr. Chabot. Aye.
The Clerk. Mr. Chabot votes aye.
Mr. Jenkins.
Mr. Jenkins. Aye.
The Clerk. Mr. Jenkins votes aye.
Mr. Bachus.
Mr. Bachus. Aye.
The Clerk. Mr. Bachus votes aye.
Mr. Hostettler.
Mr. Hostettler. Aye.
The Clerk. Mr. Hostettler votes aye.
Mr. Green.
Mr. Green. Aye.
The Clerk. Mr. Green votes aye.
Mr. Keller.
Mr. Keller. Aye.
The Clerk. Mr. Keller votes aye.
Ms. Hart.
Ms. Hart. Aye.
The Clerk. Ms. Hart votes aye.
Mr. Flake.
[no response.]
The Clerk. Mr. Pence.
[no response.]
The Clerk. Mr. Forbes.
Mr. Forbes. Aye.
The Clerk. Mr. Forbes votes aye.
Mr. King.
Mr. King. Aye.
The Clerk. Mr. King votes aye.
Mr. Carter.
Mr. Carter. Aye.
The Clerk. Mr. Carter votes aye.
Mr. Feeney.
Mr. Feeney. Aye.
The Clerk. Mr. Feeney votes aye.
Mrs. Blackburn.
Mrs. Blackburn. Aye.
The Clerk. Mrs. Blackburn votes aye.
Mr. Conyers.
[no response.]
The Clerk. Mr. Berman
Mr. Berman. No.
The Clerk. Mr. Berman votes no.
Mr. Boucher.
[no response.]
The Clerk. Mr. Nadler.
Mr. Nadler. No.
The Clerk. Mr. Nadler votes no.
Mr. Scott.
Mr. Scott. No.
The Clerk. Mr. Scott votes no.
Mr. Watt.
Mr. Watt. No.
The Clerk. Mr. Watt votes no.
Ms. Lofgren.
Ms. Lofgren. No.
The Clerk. Ms. Lofgren votes no.
Ms. Jackson Lee.
[no response.]
The Clerk. Ms. Waters.
[no response.]
The Clerk. Mr. Meehan.
[no response.]
The Clerk. Mr. Delahunt.
Mr. Delahunt. No.
The Clerk. Mr. Delahunt votes no.
Mr. Wexler.
[no response.]
The Clerk. Ms. Baldwin
Ms. Baldwin. No.
The Clerk. Ms. Baldwin votes no.
Mr. Weiner.
[no response.]
The Clerk.Mr. Schiff.
Mr. Schiff. No.
The Clerk. Mr. Schiff votes no.
Ms. Sanchez.
Ms. Sanchez. No.
The Clerk. Mr. Chairman.
Chairman Sensenbrenner. Aye.
The Clerk. Mr. Chairman votes aye.
Chairman Sensenbrenner. Members in the Chamber who wish to
cast or change their votes.
The gentleman from Florida, Mr. Wexler.
Mr. Wexler. No, please.
The Clerk. Mr. Wexler, no.
Chairman Sensenbrenner. Further Members who wish to cast or
change their votes. If not, the clerk will report.
The Clerk. Mr. Chairman, there are 18 ayes and 10 noes.
Chairman Sensenbrenner. Then the motion to report favorably
is agreed to.
Without objection the bill will be reported favorably to
the House in the form of a single amendment in the nature of a
substitute incorporating the amendments adopted here today.
Without objection the Chairman is moved to go to conference
pursuant to House rules. Without objection the staff is
directed to make any technical and conforming changes. That all
Members will be given 2 days as provided by the House rules in
which to submit additional supplementing or minority views.
DISSENTING VIEWS
We strongly oppose H.R. 4571, the so-called ``Frivolous
Lawsuit Reduction Act.''
The legislation will have a significant, adverse impact on
the ability of civil rights plaintiffs to seek recourse in our
courts, will operate to benefit foreign corporate defendants at
the expense of their domestic counterparts, and will massively
skew the playing field against injured victims. This sweeping
overhaul of our civil justice system is being completed on the
thinnest conceivable record of a single cursory hearing and the
basis of a few anecdotes and hypothetical concerns. The
legislation is opposed by numerous civil rights, consumer and
judicial groups, including the United States Judicial
Conference, the NAACP, Public Citizen, the Alliance for
Justice, People for the American Way, the American Association
of People with Disabilities, the Lawyers' Committee for Civil
Rights Under Law, the American Bar Association, the National
Conference on State Legislatures, National Partnership for
Women, National Women's Law Center, the Center for Justice &
Democracy, Consumers Union, National Association of Consumer
Advocates, USAction, U.S. PIRG, and the Legal Defense Fund. For
these and the reasons set forth herein, we dissent from this
legislation.
DESCRIPTION OF LEGISLATION
Section 2 of the bill makes a number of changes to Rule 11
of the Federal Rules of Civil Procedure concerning attorney
sanctions for improper pleadings and motions.\1\ First, it
would revert to the pre-1993 rules by removing a court's
discretion to impose sanctions on improper and frivolous
pleadings (e.g., it makes the sanctions mandatory, rather than
discretionary). Second, it would eliminate the current ``safe
harbor'' provision permitting attorneys to withdraw improper or
frivolous motions 21 days after they are challenged by opposing
counsel.\2\ Third, it would eliminate the provision providing
that the sanction rules do not apply to discovery
violations.\3\
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\1\ Since these changes amend the Federal Rules of Civil Procedure,
they are all subject to modification or revision by the federal
judiciary pursuant to the Rules Enabling Act.
\2\ Currently, no withdrawal right exists for court-initiated
sanctions.
\3\ Such violations are already subject to mandatory sanctions
under Rule 26(f) of the Federal Rules.
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Section 3 of the bill applies this new Federal Rule 11 to
state cases that affect interstate commerce and requires the
judges to make this determination within 30 days after the
filing of the motion for sanctions.
Section 4 of the bill alters both federal and state
jurisdiction and venue rules. It provides that plaintiffs may
``only'' be filed in the state and county (or federal district)
where the plaintiff resides, where the injury took place, or
where the defendant's principal place of business is located.
As such, it eliminates the possibility of a harmed victim
pursuing a corporate defendant where it is incorporated and in
many states where it is found to be doing business. It also
contains a ``most appropriate forum'' provision, which mandates
dismissal of the lawsuit (rather than transfer) if the court
determines another forum ``would be the most appropriate
forum.''
Section 5 of the bill is a rule of construction, stating
that the proposed Rule 11 modifications are not to be construed
to bar or impede the assertion or development of ``new claims
or remedies under the civil rights laws.
Section 6, added to the bill by an amendment offered by Mr.
Keller, requires judges to sanction an attorney if the court
determines that the attorney has violated Rule 11 three times
in his or her entire career (a so-called ``three strikes and
you're out'' provision). The required sanction is suspension
from the practice of law in that district court for at least
one year. This sanction appears to apply retroactively, to
violations that occurred before their new statute takes effect.
Finally, Section 7, added to the bill by an amendment
offered by Mr. Scott, provides for enhanced penalties for
parties who destroy documents concerning a legal proceeding.
I. The Rule 11 and the ``Three Strikes and You're Out'' provision will
have a chilling impact on civil rights actions
By requiring a mandatory sanctions regime that would apply
to civil rights cases, H.R. 4571 will chill many legitimate and
important civil rights actions. This is due to the fact that
much if not most of the impetus for the 1993 changes stemmed
from abuses by defendants in civil rights cases--namely that
civil rights defendants were choosing to harass civil rights
plaintiffs filing a series of rule 11 motions intended to slow
down and impede meritorious cases.
For example, a 1991 Federal Judicial Study: The Federal
Judicial Center's Study of Rule 11 found that ``The incidence
of Rule 11 motions or sua sponte orders is higher in civil
rights cases than in some other types of cases.'' Another study
showed that ``civil rights cases made up 11.4% of federal cases
filed, [and] that 22.7% of the cases in which sanctions had
been imposed were civil rights cases.''\4\
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\4\ Lawrence C. Marshall et. al., The Use and Impact of Rule 11, 86
Nw. U.L. Rev. 943 (1992).
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Another recent study found that ``revisions to Rule 11 (the
1993 amendments) alleviate what was perceived as the rule's
disproportionate impact on civil rights plaintiffs. Under the
1983 version, both the fact that sanctions were mandatory and
that there was a significant risk that a large attorney fee
award would be the sanction of choice were believed to have had
a stifling effect on the fling of legitimate civil rights
claims . . . Furthermore, there is ample evidence to suggest
that plaintiffs and civil rights plaintiffs in particular, were
far more likelythan defendants to be the targets of Rule 11
motions and the recipients of sanctions.'' \5\
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\5\ Ending Illegitimate Advocacy: Reinvigorating Rule 11 Through
Enhancement of the Ethical Duty to Report, 62 OHSLJ 1568, (2001).
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As Professor Theodore Eisenberg, Professor of Law, Cornell
University testified before the House Judiciary Committee, ``A
Congress considering reinstating the fee-shifting aspect of
Rule 11 in the name of tort reform should understand what it
will be doing. It will be discouraging the civil rights cases
disproportionately affected by old Rule 11 in the name of
addressing purported abuse in an area of law, personal injury
tort, found to have less abuse than other areas.'' \6\
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\6\ Uncertain and Certain Litigation Abuses, 2004: Hearings on
``Safeguarding Americans from a Legal Culture of Fear: Approaches to
Limiting Lawsuit Abuse'' Before the Comm. on the Judiciary, 108th Cong.
(2004) (statement of Theodore Eisenberg, Professor, Cornell
University).
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A good example of the effect of this rule on civil rights
cases was cited by the Honorable Robert L. Carter, United
States District Court Judge for the Southern District of New
York, when he stated: ``I have no doubt that the Supreme
Court's opportunity to pronounce separate schools inherently
unequal [in Brown v. Board of Education] would have been
delayed for a decade had my colleagues and I been required,
upon pain of potential sanctions, to plead our legal theory
explicitly from the start.'' \7\
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\7\ Symposium, The 50th Anniversary of the Federal Rules of Civil
Procedure, 1938-1988, The Federal Rules of Civil Procedure as a
Vindicator of Civil Rights, 137 U. Pa. L. Rev. 2179, 2193 (June 1989).
---------------------------------------------------------------------------
The language in the bill that purports to mitigate the
damage to civil rights cases is not sufficient to alleviate our
concerns. Section 5 of the bill states that the proposed Rule
11 changes shall not be construed to ``bar or impede the
assertion or development of new claims or remedies under
Federal, State, or local civil rights law.'' The problem is the
language does not clearly and simply exempt civil rights and
discrimination cases, as should be the case. Determining what a
``new claim or remedy'' is will be a daunting and complex issue
for most courts and clearly does not cover all civil rights
cases in any event.
For similar reasons we object to Section 6, added to the
bill in the markup by Rep. Keller, which provides that if a
court finds that an attorney has violated Rule 11 three times,
the court must suspend the attorney from practice for at least
one year. We object to this provision because like the
Majority's Rule 11 changes, it will have a chilling effect on
civil rights cases. Here the impact could well be worse than
the Rule 11 amendments, because there is no rule of
construction concerning civil rights to mitigate the harm to
any extent. Even more egregiously, as drafted, the three
strikes penalty would appear to apply on a retroactive basis.
This means a civil rights attorney could have his license
suspended for violations that occurred before this penalty
regime even existed.\8\
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\8\ Mr. Keller (R-FL) claims that he offered this provision because
it is based on language offered by Senator Edwards, who introduced a
bill with Senator Durbin providing for a ``three strikes and you're
out'' attorney sanctions regime for medical malpractice cases. S. 1374,
108th Cong. (2004). The problem with this line of argument is that the
Senate Republicans rejected the Edwards proposal. Moreover, the Edwards
proposal specifies that upon the third frivolous filing, the judge is
required to refer the attorney to disciplinary proceedings. It does not
mandate a one-year suspension, but rather leaves that decision to the
State Bar.
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Finally, H.R. 4571 does not provide an attorney with the
ability to appeal a Rule 11 sanction. History has demonstrated
that civil rights lawsuits are extremely unpopular,
particularly in certain parts of the country where some judges
almost automatically consider civil rights cases frivolous. In
such courts, plaintiffs' attorneys would unreasonably be
subject to sanctions, and even suspension, without appeal
contrary to the purpose of Rule 11.
II. The sweeping new forum shopping provision will unfairly benefit
foreign corporations to the disadvantage of their U.S.
competitors and unfairly omits business litigation from its
scope
A. Section 4 will benefit foreign corporations
We are particularly offended by Section 4 of the bill,
which would recast state and federal court jurisdiction and
venue in personal injury cases.
Our most significant concern is that the provision would
operate to provide a litigation and financial windfall to
foreign corporations at the expense of their domestic
competitors. This is because, instead of permitting claims to
be filed wherever a corporation does business or has minimum
contacts, as most state long-arm statutes provide, Section 4
only permits the suit to be brought where the defendant's
principal place of business is located.\9\ This means that it
will be far more difficult to pursue a personal injury or
product liability action against a foreign corporation in the
United States.
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\9\ As a threshold, it is quite problematic even determining how
the forum shopping provision would apply. Depending upon the meaning of
the term ``only'' in the phrase ``may be filed only in the state . .
.,'' the provision could be read as (1) creating a new grant of
jurisdiction and venue, or (2) merely limiting the current rules to the
specified new rules. If it is a new grant of jurisdiction and venue,
the section would serve to authorize suits wherever plaintiffs reside
or were injured, even if there are no minimum contacts with the
defendant. This would lead to an explosion in cases, and would decimate
years of Supreme Court decisions holding that defendants may only be
sued where jurisdiction lies (Pennoyer v. Neff, 20 A.L.R. 3d (1201)) or
where the defendant has minimum contacts (International Shoe Co. v.
Washington, 326 U.S. 310 (1945)). If the provision operates as a limit
on the current rules, it would represent a significant federal
usurpation of state court rules, possibly in violation of the Commerce
Clause and the Tenth Amendment. See e.g., United States v. Morrison,
529 U.S. 598 (2000) and United States v. Lopez, 514 U.S. 549 (1995),
striking down the Violence Against Women Act and the Gun Free School
Zone Act as unconstitutional, holding that Congress lacked the
authority to pass laws that have only an attenuated effect on
interstate commerce.
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Consider the case of a U.S. citizen that is harmed by a
product produced or manufactured by a foreign competitor. If
that foreign company transacts business or has minimum contacts
in a state other than the state of the plaintiff's residence or
where the injury occurred, as if often the case, any suit
against the foreign company would be banned by H.R. 4571. In
other words, the harmed U.S. citizen would have no recourse
against a foreign corporation, whereas he or she would have
recourse against a comparable U.S. corporation. This is unfair
to both the U.S. citizen and all U.S. companies that compete
against the foreign firm. It is hard for us to understand why
the Congress would want to pass a law that grants foreign
companies such a financial windfall at the expense of U.S.
firms.
The bill forces this absurd result because it is drafted
from the premise that every personal injury suit is brought
against a business defendant headquartered in the U.S. In the
real world, of course, this is not the case. The result is that
not only do foreign corporations receive a financial windfall
under the bill, but so does every possible defendant who is not
a U.S. corporation. Thus legal actions brought against
individuals who do not have minimum contacts with the state the
victim resides in or is injured in, but do have contacts with
other states, would be barred by H.R. 4571. Similarly, personal
injury cases brought against aliens, foreign states, and state
and federal officials all would be much harder, if not
impossible, to pursue if H.R. 4571 were to become law.\10\
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\10\ It is instructive to consider Title 28, Section 1391 of the
United States Code, which governs venue in federal courts, provides for
jurisdiction when the action is based on diversity of citizenship or
federal question, and specifies where the suit may be filed if the
defendant is a corporation, if the defendant is an alien, if the
defendant is an officer or employee of the United States or any agency,
acting in his official capacity, or if the defendant is a foreign
state. By contrast, most of these categories of defendants are simply
ignored by Section 4 of H.R. 4571.
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B. Section 4 will place victims at a significant litigation
disadvantage compared with corporate defendants
It is difficult to consider H.R. 4571 as even-handed
litigation reform, when it is drafted to so obviously benefit
corporate defendants.
Consider the operation of subsection (b), requiring a court
to dismiss properly filed legal claims if it determines another
forum would be ``the most appropriate.'' We are aware of no
legal precedent for a court having such open-ended authority to
dismiss lawful actions. The problemsand unfairness with this
provision are many. First, of course, is the ambiguous, open-ended
wording. The legislation gives absolutely no guidance as to what a
court is to take into account in determining which court is ``most
appropriate.'' Is it nexus to the injury? Nexus to the plaintiff? The
defendant? The bulk of other claims? Until this issue is worked out,
significant hardships will no doubt result. While defendants do not
mind waiting, the confusion would work a significant disadvantage to
harmed victims in immediate need of compensation.
Beyond this, mandating dismissal would seem to be an
extreme and costly remedy as compared to simply transferring
the case to another court. It is also unclear from the drafting
whether or not the finding of the first court that a second
court is most appropriate binds the second court under general
rules of preclusion. If it is binding, the first court might
make an egregious error and stick an inappropriate second court
with a case that does not belong there. Or, if the decision is
not binding, then plaintiffs' lawsuits could get bounced around
by a string of courts all asserting that another court is most
appropriate. It is also unclear whether a dismissal is
appealable, which could cause huge delays. Even more
problematic, the provision is unclear as to whether the statute
of limitations would be tolled during such appeal (the statute
is tolled until the claim is dismissed under the bill, but what
about afterwards until a new claim is filed?). The provision
will also cause delays because it requires the state court to
make another time consuming and costly determination before
accepting or dismissing the case. Again, these delays should
not bother a defendant, but what about a victim who may be in
drastic need of medical attention and expenses?
Beyond this, it seems fundamentally unfair for Section 4 to
apply only to personal injury lawsuits when studies show that
business lawsuits are far more prevalent and costly. In fact, a
study by Public Citizen shows that businesses file four times
as many lawsuits as do individuals represented by trial
lawyers.\11\ Another paper, reported by the National Law
Journal in November 2003, showed that of the top ten jury
verdicts rendered thus far that year, 8 of the 10 involved
businesses suing other businesses--accounting for $3.12 billion
of the total $3.54 billion awarded by the ten juries. Only two
of the ten cases were brought by individuals for personal
injuries.\12\ If the Majority believes so strongly in the
efficacy of this forum shopping provision, why are they
unwilling to apply it across the board?
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\11\ America's Litigious Businesses, September 2004, study on file
with Judiciary Committee.
\12\ It is worth noting that Public Citizen's survey of the 100
most recent decisions by federal judges finding Rule 11 violations
found that businesses were almost twice as likely as personal injury
plaintiffs to be sanctioned for engaging in frivolous litigation.
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CONCLUSION
We are happy to work with the Majority in reigning in
frivolous lawsuits, but surely we can go after the frivolous
cases without harming the ability of civil rights actions to be
brought. We are willing to consider the issue of forum
shopping, if it can be documented, but surely we can do better
than passing legislation which so explicitly benefits foreign
corporations at the expense of their U.S. counterparts and so
massively tilts the playing field in favor of defendants. We
urge the Majority to reconsider this ill-timed and ill-
considered legislation.
John Conyers, Jr.
Robert C. Scott.
Maxine Waters.
Tammy Baldwin.
Jerrold Nadler.
Melvin L. Watt.
Sheila Jackson Lee.
Robert Wexler.
Anthony D. Weiner.
Linda T. Sanchez.