John Conyers

Mr. CONYERS

Mr. CONYERS. Mr. Speaker, 30 years ago, Selma, AL captured the attention of people around the world. At a time when there were 6 African-American Members of Congress and thousands of disenfranchised people in this country, 500 peaceful marchers were brutally attacked at the Edmund Pettus Bridge by State troopers for dramatizing the need for voting rights legislation. All Americans, black, white, and every color, benefited from the conviction of these bold marchers. Dr. Martin Luther King once suggested in a Detroit speech that if you haven't found a cause worth dying for, you haven't found anything to live for. These brave members of the civil rights movement, found their cause in a simple act of conscience. For this they suffered the brutality of Bloody Sunday and experienced the joy of seeing the Voting Rights Act become law on August 6, 1965. The struggle for voting rights was not over, far from it. The Reagan Justice Department in cases involving Mississippi, Louisiana, North Carolina, and Virginia supported the annexation of areas designed to dilute black voting strength. In 1985 they initiated a series of criminal prosecutions against civil rights workers in the five black majority counties in Alabama. Eight of the very people who led the march from Selma to Montgomery were indicted for voter fraud. Thrity years later, our hard won victories are still under attack. States are refusing to implement the motor-voter law, the drawing of majority minority districts is under fire and affirmative action is in jeopardy. Frederick Douglass, a crusader in the fight against slavery who died 100 years ago, said something once that still applies today, ``where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress rob, and degrade them, neither persons nor property will be safe.'' We must never forget the legacy of struggle, survival and perseverance left to us by our African-American forebears. It is forged on a vision of freedom, equality, and opportunity that we must preserve for our children. Our memory of these individuals should only serve to fuel our fires as we attempt to preserve the rights of all Americans to participate in the political process. We must be as courageous as the marchers were on that Sunday morning in 1965 and meet the challenge head on.

Mr. CONYERS

Mr. CONYERS. If I could remind the gentleman, we have already read the statute on the floor. It includes as a predicate offense securities violations. It is in plain English, and it was there from the first day that RICO was enacted into law, having passed this Congress. However, my point is, would the gentleman preclude Mafia activities with securities from being a prosecutable offense under RICO? Because when we take RICO away, we are taking away the opportunity to prosecute Mafia involvement with securities.

Mr. CONYERS. Mr. Chairman, I thank the gentleman for yielding. Mr. Chairman, about the gentleman's concern, does he know that alleged Mafia links in securities cases would not be prosecutable under RICO? Is that part of his intention in repealing RICO, as applies to securities?

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

Mr. CONYERS. Mr. Chairman, I rise in opposition to the amendment offered by the gentleman from California [Mr. Cox]. Mr. Chairman and members of the committee, this amendment, we must never forget, has arrived here by extraordinary means. It was accidentally, like when you sweep up trash at night in the Committee on the Judiciary. This little slip of paper called RICO fell to the ground in a corner. Nobody noticed it, and, therefore, we have a whole securities bill that went to the Committee on Rules, was dealt with, and then the Committee on Rules came back again and said, ``Oh, we overlooked civil RICO, and we have an amendment, not to modify it as applies to securities, which has been the main use of civil RICO in securities ever since RICO was started. We said we will not pare it down, we will not deal with the other amendments that have always applied to RICO before in the Committee on the Judiciary without so much as mentioning this name RICO. We now have a measure in one sentence that will remove it from all securities legislation from this point on. Are you aware of the magnitude of what it is we are proposing to do here as the first amendment to this legislation on the floor? We are now saying that the fact that RICO was used in all of the major fraud cases, that we have now reached the point on the basis of a Supreme court case that goes back 10 years to say that now RICO is so abused we must now get rid of it. Remember, the last time I saw an idea about RICO was when the former gentleman from New Jersey [Mr. Hughes] developed a gatekeeper concept, in which we would filter through under a very strict set of principles which cases might make it to a RICO suit. But now--and I disagreed with that. But the gatekeeper concept was a very modest one. It kept RICO alive in terms of civil litigation. It was much more carefully crafted than a blanket exemption from RICO in all securities cases. What we are saying is that all of the major fraud cases in which RICO busted people who were bilking millions of dollars, sometimes billions of dollars, is now going to be thrown in the trash heap, and we will not need it anymore. That is why those who want to preserve RICO includes the Association of Attorneys General, the National Association of Insurance Commissioners, the U.S. Conference of Mayors, the North American Securities Administration associations. It is very clear that public prosecutors and regulators are aghast at the Cox amendment and the implications of what it has in store in us trying to police this very tricky, complex area of money crimes that is now still as much a problem has it has always been. Civil RICO, with their treble damages, which frequently are used for great leverage purposes, can recover money which pay attorney fees and are a vital remedy that should not be diminished in any way. RICO is critical in the fight against savings and loan fraud, bank and insurance and financial crimes. Using civil RICO, the victims of white collar crime can sue these malfeasors for triple their losses, and it is frequently the only effective means for victims. Do not throw the baby out with the bath water. There has never been a minute's hearing in any of the committees of jurisdiction, certainly not Judiciary, and I really must say that this is the most outrageous proposal in terms of securities regulation that I have ever heard. Vote down the Cox amendment.

Mr. CONYERS. Well, may I just respond to the gentleman? Could we inadvertently leave it out when there were no hearings on it? It was mentioned in the bill, but there were a lot of things mentioned in the bill. On this pretext, anything that was not put in the bill could have been accidentally left out. The problem that we have is that the gentleman's amendment is asking the Congress in broad daylight to believe that the biggest amendment for fighting civil fraud that has ever been put on the books was accidentally left out. I guess we accidentally did not have any hearings. I guess there accidentally were not any witnesses. I guess this was all an accident that needs to be corrected right now. If it was an accident, let us go back and do it correctly. The provision of this amendment is broader than any attempt at a modification of RICO, and the gentleman knows it.

Mr. CONYERS. Mr. Chairman, I thank the gentleman from Massachusetts for yielding to me and commend him on the excellent job that he has done today and through the years on this very important subject. Ladies and gentlemen, the committee report explaining why this legislation is needed talks about the typical case of high-growth, high-technology stock which experiences a sudden change in price, thereby giving rise to securities lawsuits and a claim for damages by shareholders. But that is not the type of lawsuit that would be affected by the one killer amendment by the gentleman from California who will offer it very soon in this debate. By blocking all possibility of civil RICO lawsuits for securities fraud, the Cox amendment would incredibly harm plantiffs such as the elderly bondholders who were cheated out of their life's savings by Charles Keating in the Lincoln Savings and Loan debacle. It would deny any effective remedy for the thousands of depositors of the Bank of Credit and Commerce International, the notorious BCCI, which regulators from 62 countries united to shut down because of the bank's fraudulent practices. Why an amendment of such a broad sweep that it would prevent lawsuits against some of the biggest white-collar criminals in the Nation's history, even though the sponsors of the amendment may not have intended such a result? The answer is this amendment was hastily put together without the benefit of any hearings or debate in any committee or the possibility of a markup where there could have been important improvements, and now within an 8-hour ambit, we are asked to consider the revocation of the greatest single crime-fighting bill provision, RICO, on the law books today. It is a shame for what is going on now.

Mr. CONYERS

Mr. CONYERS. Mr. Speaker, I thank the gentleman from Texas [Mr. Frost] of the Committee on Rules for according me this time, and I rise on this rule to point out with strong vehemence my opposition to this last minimum effort to completely undercut the jurisdiction of the Committee on the Judiciary and allow the majority to offer an amendment to H.R. 1058 that would end civil RICO lawsuits for securities fraud. legislation would now be brought to an end with one sentence that has never been examined in either the former Committee on Commerce, the present Committee on the Judiciary, in any subcommittees or full committees. As a matter of fact, it was not even on this rule. It was through a remeeting that this rule even allowed it to be joined, and this is one of the great protections against fraud that exists in our law today. It is absolutely incredible that the RICO amendment that is included in here is broader than any RICO amendment that Congress has ever considered before. The previous attempts at this legislation have failed, and those attempts do not ever go as far as this sweeping amendment that we are considering with such a short amount of time. We need more time. We could use the whole time for this bill on RICO alone, and it is with great regret that I have to make these points about a very important part of this rule.

Mr. CONYERS

Mr. CONYERS. Mr. Speaker, I demand a recorded vote.

Mr. CONYERS. Mr. Speaker, in closing, the loser pays is a phrase that appeals to everyone who has heard it. It removes itself to anecdotes about court cases that appeared or produced an absurd or abusive outcome, but government by anecdote can produce disastrous policy. Although the Contract With America claims that the loser pays provision is intended to penalize frivolous lawsuits and discourage the filing of weak cases, it is almost certain to have adverse consequences which limit access to justice. The Harman amendment to recommit essentially cushions some of the worst features that now exist in the bill, and, as I have said before, it duplicates the bill on securities litigation by adopting the very same standard. Please support the motion to recommit this bill.

Mr. CONYERS. I yield to the gentlewoman from California.

Mr. CONYERS. Mr. Speaker, this has been a long 2 days on a bill that has presented a lot of problems to people. I am, on the motion to recommit, introducing a concept that was presented by the gentlewoman from California [Ms. Harman] which would limit the so-called loser pays provisions to those cases where the settlement offer was reasonable and made in good faith. This is the same standard being adopted in the context of the Republican bill on securities litigation, H.R. 1058. This is the precise language in the Republican bill on securities scheduled to be on the floor shortly. I would hope that my Republican colleagues would be able to see the logic of extending the same standard to injured tort victims as they do to stockholders. If someone loses a limb in a product liability case, they should have the same access to justice as an investor who has received fraudulent information. The English rule, which requires losers to pay the legal fees of winners, which I had not thought would ever be popular in America, since we have the American rule, would substantially eliminate justice for the middle class members of our society. As in England, those without a significant financial cushion will simply be unable to afford the risks of losing litigation.

Mr. CONYERS. I certainly am, Mr. Speaker.

Mr. CONYERS. Mr. Speaker, I offer a motion to recommit.

Mr. CONYERS. I am pleased to support it and accept it on our side, and I hope that because of the limited debate opportunity that the gentleman has, that the other side would consider it carefully in terms of accepting it as well.

Mr. CONYERS. Mr. Chairman, I want to commend the gentleman, because in the closing hours on this debate, the gentleman has done as much to improve it as any provision that has been brought. It would be a protection only for small businesses who would be exempt from the loser-pay feature of this bill.

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

Mr. CONYERS. If the gentleman would yield a final time, the gentleman was aware that this was studied by the Judicial Conference, went to the Supreme Court, passed muster there, is working very well. We are talking about December 1993. This is a very premature decision for us without sending it back up the chain of command for rulemaking in the Federal judiciary to snatch the discretionary sanction of the judge away from him after such a short notice. I would urge the gentleman to realize the seriousness of what he is proposing here in opposing this very modest rulemaking sanction that I am modifying. We are not eliminating rule 11. We are just saying the judge would have the discretion that he had as a result of all the work the judges did in 1993.

Mr. CONYERS. I thank the gentleman for yielding. Is he aware that the Judicial Conference studied the rule in 1989 after 16 experts and they made the two changes? First they court's discretion and they created this safe harbor passage for rule 11 motions for 21 days. This has been working very, very effectively and has cured the problem that I was pointing out to you, that there is no question that before that, we had a serious problem of civil rights and religious rights organizations' lawyers being sanctioned. Is the gentleman familiar with the procedure, the change that rule 11 underwent?

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

Mr. CONYERS. Mr. Chairman, this is an amendment which has been referred to indirectly throughout the debate, and it might gather the support of the manager of the bill on the other side. I will present it and hope that it does. I want to thank the gentleman from New York [Mr. Nadler], my colleague on the committee, for his work on a very important part of this bill. This is an amendment that would preserve our citizens' hard-earned right to protect their civil and other constitutional rights including religious rights. What we are doing essentially is exempting civil rights cases, religious cases, and gender cases from the bill in terms of attorney sanctions and payments. This leaves the decision on the merit in the hands of the courts. The people of this country, the Members of this body, have fought too long and hard for religious and civil rights groups in this country to see these precious rights slip away in a little-noticed procedural provision in the Contract With America. My amendment would safeguard these rights by providing that cases involving religious, racial, and gender discrimination can be brought without undue fear of chilling legal sanctions. Importantly, the amendment would allow rule 11 as it currently exists to provide for discretionary court-imposed sanctions to continue to apply in civil rights and religious cases. This contrasts with the mandatory court sanctions which are contained in the bill before us. This is a very important distinction because we have a list of lawsuits and attorneys that have been sanctioned under this measure, in a disproportionately large amount of civil rights cases and religious cases. The attorneys have been brought to heel under rule 11, and we are very, very much afraid of what would happen if we would change this to mandating the court to impose these sanctions. In cases where our citizens have to go to court to protect their constitutional rights, it is imperative that we have as open and fair a court procedure as possible. While rule 11 may have some limited role to play in these cases, it should not have a dominant or overreaching role as would be the case under this bill. I remind the Members of the fire storm that erupted on Capitol Hill as a result of a 1992 Supreme Court decision, in Employment Division versus Smith, where the court discarded decades of free exercise jurisprudence by holding that the free exercise clause does not relieve individuals of obligations to comply with supposedly neutral laws that restrict their freedom of religion. How would this occur? What we would do under H.R. 988 is make it more difficult for courageous citizens to bring legal actions to redeem their constitutional rights. It would mandate that litigants pay the other side's legal fees whenever a legal pleading was somehow shown to be unworthy. It would completely remove any equitable discretion by the courts. It also would create a great amount of contention among the parties. I want to just tell Members a little bit about where rule 11 has come from over the years. We have got a number of studies, but one from the Georgetown Law Journal by Professor Nelken found that 22 percent of the rule 11 motions between 1983 and 1985 were filed in civil rights cases, even though these cases comprised only 7 percent of the civil docket. At Fordham University, there was a study that in all reported cases from 1983 to 1987, rule 11 sanctions against civil rights plaintiffs were imposed at a rate of 17 percent greater than against all other plaintiffs. In other cases, we found that the safe harbor provision in rule 11 now was very important and should be preserved. Please support this civil rights amendment.

Mr. CONYERS. Mr. Chairman, I offer an amendment that has been redesignated the Conyers-Nadler amendment.

Mr. CONYERS

Mr. CONYERS. No, I did not mean to complicate the relationship of the defendant with his client. His recovery would be in a sense, even if it is hourly, which is frequently the case for defense counsel, it would be contingent on the number of hours that he worked. It would be contingent on what part of the trial the case was settled in. All I was doing was just letting what fits the goose fit the gander as well.

Mr. CONYERS. No, I do not. I withdraw the point of order; Mr. Chairman.

Mr. CONYERS. Mr. Chairman, I offer a perfecting amendment to the amendment.