Howard Berman

Mr. BERMAN

Mr. BERMAN. Mr. Chairman, I am curious. First of all, was title II of this bill, the preemption of punitive damages in nonproduct liability cases, part of the Republican contract that you were involved in drafting?

Mr. BERMAN. Was that in the contract?

Mr. BERMAN

Mr. BERMAN. Mr. Speaker, will the gentleman yield on this?

Mr. BERMAN

Mr. BERMAN. Mr. Speaker, we are honored to pay tribute to Judge Judith M. Ashmann, supervising judge of Los Angeles Superior Court's North Valley district, who has been named Judge of the Year by the San Fernando Valley Bar Association. Judge Ashmann, a friend for many years, has a distinguished legal career, including her tenure on the superior court bench, nearly 6 years spent as a municipal court judge in Van Nuys and a decade working in the city, State and Federal attorney offices. Last year, in the aftermath of the devastating Northridge Earthquake, Judge Ashmann had her finest hour. The San Fernando courthouse suffered severe damage, rendering it uninhabitable. Without quick action by Judge Ashmann, the result could have been chaos. But she kept her cool under fire, supervising the orderly transfer of judicial duties to other locations, including trailers outside the Van Nuys courthouse. At the same time, Judge Ashmann embarked on an ambitious, time-consuming but absolutely essential project to eliminate the backlog of civil cases created by the earthquake, the most expensive natural disaster in American history. During a 2-week period, teams of volunteer attorneys and judges assembled by Judge Ashmann disposed of more than 1,000 cases in San Fernando Valley courts. Along with community leaders, Judge Ashmann has been responsible for restoring a sense of normalcy to the earthquake zone. Mr. Speaker, we ask our colleagues to join us today in saluting Judge Judith Ashmann, who combines a sound legal mind with exceptional qualities of leadership. She is an inspiration to all of us.

Mr. BERMAN

Mr. BERMAN. Mr. Chairman, will the gentleman yield on his reservation?

Mr. BERMAN. Just noting in the hope that the debate on this amendment and the amendment to the amendment are winding down, I would just like to use the gentleman's time if I might to restate the purpose of the Berman amendment. The base bill and the Goodlatte amendment do not take into account the merits of the case or the ability of either party. It does not seek to spread the risks equally. It essentially punishes the person who has less resources vis-a-vis the person or corporation who has greater resources. The McHale substitute has the benefit of actually getting at what the proponents of this bill have been talking about, which is weeding out the frivolous case. So because the McHale substitute seeks to get at the frivolous lawsuit, even though it is cast in a fashion that is different than I would have drafted it, I think it makes a better proposal than the Goodlatte proposal. So the Berman amendment simply says McHale in place of Goodlatte, not McHale in addition to Goodlatte.

Mr. BERMAN. Mr. Chairman, will the gentleman yield?

Mr. BERMAN. I thank the gentleman from Texas for yielding to me. First of all, the gentleman from Virginia [Mr. Goodlatte] says what we are trying to do is encourage settlements, avoid going to jury trials and the expense of that. So we are trying to put some risk on both parties. But nowhere in this bill is there any effort on to equate the risks. The middle-class plaintiff or middle-class defendant or small business man is treated exactly the same as the multibillion- dollar corporation. Shifting fees, shifting fees from General Motors to a plaintiff is not a massive deterrent to General Motors aggressively litigating and seeking to throw whatever smoke it can up to defeat a legitimate claim. Shifting fees from the average plaintiff to General Motors means that case will never be brought, that is what this is about. This means no case will be brought under the Federal diversity jurisdiction, and so the problem with the McHale amendment, in addition to the Goodlatte amendment, is, as long as the Goodlatte language stays in this bill, plaintiffs are not going to utilize their rights under the Federal diversity statute. It would have been better to repeal it because this way you are saying plaintiffs cannot utilize it but if a defendant thinks he can gain from it, he can remove it. You do not even have the fairness in your language to eliminate the ability to remove if it is not in the Federal court. It is all defendant-oriented. It does not deal with the frivolous case. The McHale amendment at least focuses on that. That is why I think that should be in place instead of the Goodlatte amendment.

Mr. BERMAN. It is not simply the losing of the case. You can lose by winning under the Goodlatte scenario. That is why I prefer the McHale approach instead of the Goodlatte scenario, and let me explain why. A situation, a diversity case, four or five corporate defendants, a plaintiff brings an action, he seeks, based on medical injuries and loss of wages and pain and suffering, to collect a million dollars. Defendant three of the five defendants offers $80,000. He has no other offers. He thinks $80,000 will not even cover reimbursement for one- third of his medical bills. He refuses that offer. The case goes to trial. He gets a judgment; he gets a judgment for $1 million, exactly what he sought in his initial pleadings. However, under the elimination of join liability, that is coming in the very next bill, the judge apportions, and the jury apportions, liability where the one defendant who made an $80,000 offer is found only to be 7.5 percent liable and, therefore, only obligated to pay $75,000. Now, a huge amount of that particular defendant's attorneys' fees are shifted to the plaintiff even though he got exactly what he wanted, because it was not until the time of trial that he had a sense of how the different negligent defendants would be apportioned. You lose when you win under the Goodlatte scenario. It is not even about frivolous cases, not about nonmeritorious cases. It is about meritorious cases where the apportionment of damages is slightly different as it almost always will be than the plaintiff originally thought.

Mr. BERMAN. Mr. Chairman, will the gentleman yield?

Mr. BERMAN. Mr. Chairman, I appreciate the gentleman's suggestion. If he will continue to yield, I think I can improve the bill by taking the gentleman's effort to address the issue of frivolous litigations, which I keep hearing from the sponsors of the bill and the proponents of the contract was the purpose of their amendment, and in the belief that the gentleman's amendment comes closer to achieving that goal than their amendment, without the negative impacts on the meritorious case brought by the plaintiff who might not have the resources to cover attorneys' fees, and who has every good intention in bringing that action, I think the gentleman's amendment meets the objectives much more clearly than the bill does with the present system, and so I want to see the gentleman's amendment become the basic heart of the bill. And that is the purpose, if I may just use your time to illustrate the problem, under the Goodlatte amendment, it you accept that the next bill coming down the pike, the product liability bill, eliminates joint and several liability, you get into a situation where a plaintiff brings a case against, say, three defendant corporations, and one of the defendant corporations he is suing, let us say, for $1 million, and one of the defendant corporations says, ``I will give you $200,000.''

Mr. BERMAN. Mr. Chairman, it is the rhetoric and the arguments of the proponents of the basic bill, all fit into the context of frivolous actions, desire to deter frivolous actions. The gentleman's amendment strikes at that; their amendment does not. Let me give an example.

Mr. BERMAN. Mr. Chairman, the gentleman`s amendment is focused on the frivolous, nonmeritorious case and trying to deal early on in the process to avoid massive expenses that come when a frivolous case is brought.

Mr. BERMAN. Mr. Chairman, will the gentleman yield?

Mr. BERMAN. It substitutes the McHale language for the Goodlatte language; yes.

Mr. BERMAN. I will say to the gentleman, yes, it does.

Mr. BERMAN. I am happy to yield to the gentleman from California.

Mr. BERMAN. Mr. Chairman, the debate which preceded the introduction of the amendment by the gentleman from Pennsylvania [Mr. McHale] discussed the unwillingness of the proponents to have their language meet their rhetoric, to deal with the non-meritorious frivolous claims. The gentleman from Pennsylvania [Mr. McHale] has come up with an amendment which seeks to do that. White I have some concerns about the entire structure of the amendment and to what extent it moves in place of the Federal Rules of Civil Procedure or might have other provisions which are inconsistent with rule XI, the fact is the amendment of the gentleman from Pennsylvania [Mr. McHale] does deal with the rhetorical arguments in favor of the sponsors, that the sponsors of this bill have been using. Therefore, I thought the appropriate thing to do in this case was offer an amendment which simply makes the McHale amendment to deal with actions in the case of frivolous lawsuits the core of this bill. Let us, if we want to address the issue of frivolous cases, an explosion of frivolous cases, the cases which have no merit and the ability of the court to deal with that effectively, let us not punish the poor plaintiff, let us not punish the plaintiff who has a decent case and believes in good faith that he or she can win that case. Let us not punish the plaintiff who receives a judgment that is $1,000 less than the last offer happens to be against that particular defendant by making massive shifts of legal fees from the defendant to the plaintiff without regard to the plaintiff's ability to pay. That is, let us take the McHale amendment and let us move that ahead as the core part of this bill.

Mr. BERMAN. Mr. Chairman, all this amendment does is take the amendment offered by the gentleman from Pennsylvania and replace section 2 with his amendment. In other words, makes his amendment into the base, the core of the bill. In other words, going from the offer, the counteroffer, loser pays notion to the frivolous action notion.

Mr. BERMAN. Mr. Chairman, I offer an amendment to the amendment.

Mr. BERMAN. Is waning because it does not replace section 2, it is in addition to section 2. So all of the problems of meritorious cases brought by relative poor plaintiffs in situations where maybe they even win----

Mr. BERMAN. I think the gentlewoman from Colorado makes a good point. My initial excitement and positive interest in your amendment----

Mr. BERMAN. Mr. Chairman, will the gentleman yield?

Mr. BERMAN. Reclaiming my time, that is not correct. The only thing you can recover are court costs. That is a small, small percentage of the potential liability that comes when you add attorney's fees.

Mr. BERMAN. To reclaim my time, the gentleman shows that, even as a State justice, he is quite familiar with Federal law. I actually was too generous in my comment. We not only have limited the diversity jurisdiction for plaintiffs by this provision, and wiped it out, but what we have done is said ``Defendants, you have the choice. You can stay in State court or you can take advantage of this draconian rule and remove to Federal court.'' This is such an unjust consequence.