John Conyers

Mr. CONYERS

Mr. CONYERS. I yield to the gentleman from California, the distinguished subcommittee chairman, and the floor manager of the bill.

Mr. CONYERS. You have another provision where we are changing the law from ``may'' to ``shall.''

Mr. CONYERS. Then I take it that the gentleman from California agrees with me that a working person bringing a suit where he thought he had a 70-percent chance of recovery would be under the gun if he had to go into court with the assumption that if he did not win, and he thinks he only has a partial chance of winning, that he would be stuck with attorney fees. Are you telling me that this bill would exonerate him from having to pay the defendant's fees?

Mr. CONYERS. Why are you tightening the rope around the neck of a plaintiff, a working class plaintiff in the first place?

Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I am in possession now of a letter that has been sent to the Speaker of the House from the Attorney General of the United States, Janet Reno, as well as Abner Mikva, counsel to the President, which I will include in the Record. I would like to quote one part of it. First, we believe that fee-shifting provisions such as that in H.R. 988 are unfair, unnecessary, and unwise. That provision would, with limited exceptions, require the court to order one party to pay attorney's fees of another if the former did not secure final judgment more favorable than offered by the latter. While such fee-shifting may be appropriate in some contexts, a blanket fee-shifting rule would work a significant injustice, particularly against parties that have fewer resources. Such a loser pays rule is alien to the American legal system, and we know of no empirical evidence that such a rule would address the primary problems facing our civil justice system, the slow pace and high costs of justice. I hope our colleagues will consider this as we move forward. The letter referred to is as follows: Office of the Attorney General, Washington, DC, March 6, 1995. Hon. Newt Gingrich, Speaker of the House, U.S. House of Representatives, Washington, DC. Dear Mr. Speaker: This week, the House of Representatives is expected to consider legislation that would significantly reform the American legal system. While we believe that our legal system can and should be improved, several provisions that the House is likely to consider are deeply problematic; therefore, we write to express our concerns and reservations about several of those provisions. Our comments divide into three sections, but are by no means exhaustive on this subject. Instead, we focus on provisions that, based on our extensive legal experience, are simply too extreme--provisions that are unfair and tilt the legal playing field dramatically to the disadvantage of consumers and middle-class citizens. First, we believe that fee-shifting provisions such as that in H.R. 988, are unfair, unnecessary, and unwise. That provision would, with limited exceptions, requires a court to order one party to pay the attorney's fees of another if the former did not secure a final judgment more favorable than offered by the latter. While such fee-shifting may be appropriate in some contexts, a blanket fee-shifting rule would work a significant injustice, particularly against parties that have fewer resources. Such a ``loser pays'' rule is alien to the American legal system and we know of no empirical evidence that such a rule would address the primary problems facing our civil justice system--the slow pace and high cost of justice. Second, several of the provisions concerning product liability in H.R. 1075 are also unfair and unjustified. As a general matter, we believe that product liability reform should be enacted by the States, rather than by Congress. This area of law has traditionally been the purview of State courts and legislators; if changes are needed, those changes should generally be left to the States. In fact, product liability is one area in which States truly have served as ``laboratories of democracy''--over the last twenty years virtually every State has significantly reformed its legal system as it relates to product liability. We find certain of the preemptive provisions under consideration particularly puzzling in light of the contemporary and ongoing debate about the extent to which the Federal Government has usurped responsibilities that appropriately belong to the States. On issue after issue, broad bipartisan groups have emphasized the advantages of devolving authority to State and local governments. As in other spheres of government, proponents of Federal restrictions on traditional State and local prerogatives bear a heavy burden of persuasion in justifying new Federal intervention. For several provisions in particular, we believe that that burden has not been met. For example, we believe that the preemption of State law to establish differential treatment of ``economic'' and ``noneconomic'' losses is both unjustified and unsound. This provision (section 107 of H.R. 1075) would severely and unfairly prejudice, among others, elderly citizens, plaintiffs whose losses include pain and suffering, and women who suffer loss of their reproductive ability. We are equally critical of section 201 of H.R. 1075 which establishes an arbitrary formulaic limit on punitive damages. Virtually all parties agree that, in certain rare circumstances, punitive damages are appropriate: occasionally, an award of punitive damages is the only way to bring an offender to justice, or to keep a dangerous product off the market. While every State maintains judicial controls to revise or reverse punitive-damage awards, there is not any a priori basis for fixing a ceiling on the award of punitive damages, measured either by a dollar amount or as a multiple of compensatory damages; instead punitive damages are and should be imposed based on the facts and circumstances of the particular claim. Perhaps most disturbing of all is the fact that section 201 would mandate certain procedural rules in every civil action filed in Federal and State court. This provision--even more than those limited to product liability actions--represents a disturbing and unprecedented federal encroachment on two hundred years of well-established State authority and responsibility. Third, with regard to reforms of the Federal securities laws, we share the concerns articulated by SEC Chairman Levitt. In this Federal regime, congressional activity is more appropriate, and we agree with the Chairman that the securities-litigation system can be improved. Our securities laws must encourage innovation and investment, while at the same time deter white-collar crime and ensure the integrity of the financial markets. The experience of the past decade has shown that taxpayers and honest business people can suffer greatly from fraud and improper behavior. We support reasonable reforms to this system but believe that certain provisions in H.R. 1058 are problematic, while others are manifestly unfair and could lead to inadequate deterrence against financial fraud. We hope to work closely with Congress and the SEC to address these concerns so that sound legislation can be enacted to correct the problem of frivolous suits and enhance the integrity of the securities markets. In closing, we would emphasize that we believe that our civil justice system can and should be reformed--but reform must be fair to all parties and respectful of the important role of the States in our Federal system. We have some ideas that would be constructive. While we oppose the particular provisions mentioned above, we look forward to working with the Congress to develop thoughtful and balanced reform of the American legal system. Sincerely, Janet Reno, Attorney General. Abner J. Mikva, Counsel to the President. What we are suggesting in this bill before us now in terms of whether someone should be punished for bringing a suit that may turn out to be meritorious is that we are saying here that we are going to pass a law in the Congress that says that people with no money must sit on their rights for fear that they will be totally bankrupted in the event they lose the suit. That is precisely what this bill is about that is before us today. And that if they hesitate for a lengthy enough period, the statute of limitations will kick in and brought. What is a working person to do? Forget a person that has no money and cannot even put up anything or lose anything or lose their bank accounts or their home. But what about a working person gambling on pursuing a lawsuit, if he could be exposed to paying both his attorney's fees and the defendant's fees? The answer is obvious, that he is going to hesitate. Why is it that we are going after working people, someone earning $30,000 should now be caught up in the claim that the wave of litigation must now be somehow subsided by making them pay both attorney's fees of all parties in the event that they do not succeed? Let us look at a typical case that might be brought to an attorney's firm. What if a person sought to become a plaintiff and thought that there was a 70-30 percent chance that he would prevail. Under the current law, a person could be very justified in determining to go forward. But under H.R. 988, he would be very prudent to hesitate and perhaps decide not to go, because he is not going to win. He may not win. And why should he risk this huge loss under these circumstances?

Mr. CONYERS. Mr. Chairman, I would ask now much time we have remaining on both sides.

Mr. CONYERS. Mr. Chairman, I yield 6 minutes to the gentleman from Virginia [Mr. Scott].

Mr. CONYERS. Yes, I would be delighted to support this amendment. I thank the gentleman for accepting it.

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

Mr. CONYERS

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

Mr. CONYERS. I yield to the gentleman from Louisiana.

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

Mr. CONYERS. I yield to the gentleman from Virginia.

Mr. CONYERS. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, I rise in support of the amendment, and would observe that we had a debate on a 30-percent threshold, that for some reason did not generate nearly as much resistance as the debate now on the 20- percent threshold. For some reason, the later we go in the evening, the more emotional the debate becomes. But this was thought to be a compromise effort coming down from 30-percent. The resistance seems to be growing the longer that we go on with the discussion. I want to commend the gentleman from California [Mr. Mineta], because what he has done is very important. It signals the possibility of bipartisan agreement on a very important part of this bill. I would urge that we still consider strong support of the bill.

Mr. CONYERS. You have come a long way, baby, and maybe you can keep on moving down the road. We think 30 percent is pretty low.

Mr. CONYERS. Did I understand you to say that you were originally at 1 percent and you went to 10 percent?

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

Mr. CONYERS. I thank the gentleman. I would say, in closing, that this corrects a very serious problem that is in the bill. Ten percent is, frankly, shocking. I think this makes it more attractive. There are still a lot of problems, but I want to compliment the gentleman from Florida for bringing this forward, and I hope that bipartisan support would carry this amendment through to a successful conclusion.

Mr. CONYERS. I yield to the gentleman from Virginia.

Mr. CONYERS. I yield to the gentleman from Minnesota.

Mr. CONYERS. I compliment the gentleman, and I wish I could tell him we accept the amendment on this side, but I do not have that authority.

Mr. CONYERS. And that would reduce a number of, a large number, of claims that might be, while they may not be called frivolous, they certainly might not have the merit that the 30 percent threshold would have?

Mr. CONYERS. And that changes the 10 percent that is presently in the bill?

Mr. CONYERS. I yield to the gentleman from Florida.

Mr. CONYERS. Mr. Chairman, I rise to strike the requisite number of words. I want to make sure we are talking about the 10 percent threshold going to 30 percent?