Bob Goodlatte

Mr. GOODLATTE

Mr. GOODLATTE. How would that same defendant like to be put in the situation where the plaintiff said, ``I've got a harm here, it's been established, don't worry about how much you give me because this defendant has X number of millions of dollars in insurance coverage.'' point is that we are not allowed to say that the defendant has insurance.

Mr. GOODLATTE. Also look at the parallel that we talked about a moment ago between the plaintiff who has been concerned about--say it is a self-employed individual, been concerned about his family, has bought insurance for the family for years, compared to a plaintiff who has never bought insurance and not because of income, comparable income rates, they have the same injury, that plaintiff without insurance gets to go into court and say, ``Look at all the medical bills I have, give me a big award.'' They do not have that with this. What we are doing is we are setting a public policy against people having insurance.

Mr. GOODLATTE. That is correct.

Mr. GOODLATTE

Mr. GOODLATTE. I thank the gentleman for yielding and commend him for what I think is a very good amendment. In fact, it is an amendment that helps to cure one of the objections raised on the other side to the fact that there is a cap on punitive damages. The cap is important in order to keep juries from becoming legislators. They are not elected. They do a very good job of resolving disputes between individuals, but when you have multimillion-dollar awards, you have a problem with juries imposing rules on society that ought to be imposed by State legislatures. In this case, you are now dealing with the problem that they observe once you impose the cap, and that is that it is discriminatory because they said somebody with a very wealthy background might have high economic losses, they got 3 times that and recover far more than somebody with a poorer background who could only have a $250,000 cap. So I compliment the gentleman because he is saying that everybody up to $250,000 is equal. Once you get beyond $250,000, we have gone already beyond the purpose of punitive damages. They are not to reward an individual or even compensate an individual for loss they get from the economic loss and the noneconomic loss. That is medical bills that they are entitled to be reimbursed for, lost income, pain and suffering, all of that is not affected by punitive damages. So, by saying that 75 percent of the amount above $250,000 will go to the public treasury where it should go because it is, in effect, a fine is a very good idea. And that is exactly the parallel to fines. The standard for punitive damages is a very high one. It is only for people who do serious wrong. So when we impose a fine on people and it is a serious wrong meeting a high standard, it ought to go into that public treasury just as a fine imposed on a criminal wrongdoer. That was exactly the point made by former Supreme Court Justice Lewis Powell, who said that the private windfall aspects of punitive damages aggravates the problems that we have with the whole rack of standards in punitive damages because, unlike fines, which go to the public treasury, punitive damages go to the private plaintiffs. To a limited extent, that is fine, and your bill does it. Beyond that, it goes into the public treasury. I commend the gentleman for a very good amendment.

Mr. GOODLATTE

Mr. GOODLATTE. I thank the chairman for yielding me this time and I think he makes an excellent point. This is a very important amendment to defeat, and the reason it is is that it is going to effectively limit our ability as a country to have a due process, a due course for setting public policy in this country. The problem we have is that only in recent decades has it become popular to offer up through juries multimillion dollar punitive damage awards that have the effect of going well beyond what juries were selected to do. And the jury system in this country is an excellent one. It works very well when it is working to resolve disputes between two or more people in court. But when you arbitrarily have a system in this country where a jury in one community in the country can impose a multimillion dollar punitive damage award and have the effect of changing public policy in this country, sometimes good, sometimes not so good, as in the case of a Mercedes Benz scratch on a vehicle where a multimillion-dollar award is made. And how about this case that Justice Lewis Powell wrote about involving an insurance company that appealed a jury's punitive damage award of $3.5 million on its alleged bad faith failure to pay $1,650.22 on a $3,000 insurance claim. Now where is the predictability and fairness of this to anybody doing business in this country, large business or small, to say that when you have a $3,000 insurance policy, and one of your many thousands of employees screws up and does not pay $1,650, that somebody should be liable for $3.5 million? What kind of windfall is that to the plaintiff in that case? It is absolutely inappropriate and it should not be allowed. That is why these caps are important. The gentlewoman makes a point that there is discrimination in the way this damages will receive more than somebody who has smaller economic damages. In point of fact it could be the reverse, though, because an executive could have very small economic damages and a janitor could have very high medical bills and lost income and so on if it goes for many years. But notwithstanding that point, let me point out this: We can cure this problem by adopting the amendment that is coming up shortly. Why should the plaintiff receive punitive damages in the first place? The plaintiff is rewarded for economic damages. That is the lost income they have. That is the lost future income they have. That is the medical bills they have and other out-of-pocket expenses. In addition, though, they are entitled to noneconomic damages for pain and suffering. This is something that is beyond what the plaintiff has lost, both in terms of their pain and in terms of their actual loss, and it ought to be going to a public good, if it is indeed intended to punish somebody. We can solve this by adopting the Hoke amendment which gives the preponderance of punitive damage awards to the State, to the State Treasury for the general public good. That is what should be done with the punitive damage awards we allow underneath the caps and that will solve the problem of discrimination, because plaintiffs are given compensation based on economic damages and noneconomic damages and not based upon punitive damage awards. That is what Justice Powell pointed out when he wrote that ``Alabama's system,'' that is where that award was made, ``like that employed by other States that permit punitive damages, invites punishment so arbitrary as to be virtually random: In each case, the amount of punitive damages is fixed independently, without reference to any statutory limit or the punishment applied in any other case.'' Jurors award punitive damages cases, they determine the dollar amount between zero and infinity. ``This grant of standardless discretion to punish has no parallel in our system of justice. In the Federal system and in most States criminal fines are imposed by judges,'' and I oppose the amendment.

Mr. GOODLATTE

Mr. GOODLATTE. Mr. Speaker, my fellow Virginian, Congressman Rick Boucher, and I join once again to introduce legislation which would include the counties of Roanoke, Rockbridge, Montgomery, and the contiguous, independent cities of Roanoke, Salem, Radford, Lexington, and Buena Vista as part of the Appalachian Regional Commission. Our bill amends the Appalachian Regional Development Act of 1965 and is identical to legislation we introduced in the 103d Congress which passed the House but was not acted upon by the Senate in the end of the session rush. The Appalachian Regional Commission [ARC] was established in 1965 as a Federal-State partnership in economic and social development. ARC's goals have been to encourage the economic development and growth of the Appalachian region. ARC's mission has been to develop an infrastructure to help Appalachia become economically viable and competitive. It has done so by constructing some 2,100 miles of highways, implementing recycling programs, creating vocational education facilities, and building reliable waste disposal facilities, water, and sewer systems. Already a part of the Appalachian region both geographically and culturally, Roanoke, Rockbridge, and Montgomery Counties were asked to join ARC when it was created over 25 years ago. At that time the local officials decided not to become members. In hindsight, this decision was a mistake, not only for the three counties, but also for the area counties which are members. Many economic development projects require the participation of adjoining counties. Yet, Roanoke, Rockbridge, and Montgomery Counties are excluded from any project funded by the ARC. If the counties and the contiguous independent cities are designated as part of the ARC region there will be an enhanced opportunity to pursue joint programs. The potential for combined efforts in tourism, infrastructure projects, and strengthening competitiveness in attracting new businesses would be tremendous. The three counties which we propose to add are all vital to the ultimate success of the ARC. One of them, Montgomery County, along with the independent city of Radford, is in Mr. Boucher's district to the south of Roanoke County which is the southern most part of my district. Montgomery County, which has a total population of 74,000 people, is geographically part of the Appalachian region. Although it is blessed with an abundance of natural resources and creative people, it is plagued with cyclical unemployment. Despite being home to Virginia Tech and possession the fourth highest concentration of Ph.D.'s per capita in the Nation, 26 percent of all Montgomery County residents aged 25 and over do not have a high school education. In some areas of the county, that figure exceeds 50 percent. Rockbridge County, and the independent cities of Lexington and Buena Vista, which occupy the central portion of my congressional district, are bordered on the west by the counties of Allegheny, Bath, and Highland, and the cities of Clifton Forge and Covington. Lexington is home to the Virginia Military Institute and Washington and Lee University. Despite benefiting from these universities and an impressive tourism industry, the area has been plagued by layoffs and plant closing. Rockbridge is surrounded by counties that are members of ARC and has been cooperating with its neighbors on a number of projects including a regional landfill. Rockbridge continues to explore the concept of regionalism and would like to become involved in the Appalachian Regional Recycling Consortium [ARRC]--an ARC project. However, Rockbridge has been denied involvement in ARRC because it is not a member of ARC. As a result, the recycling effort has suffered because the participating counties are unable to supply a large enough volume of recyclable material to make the program cost-effective. The addition of Rockbridge County to the ARC could help the recycling effort become a reality. Roanoke County and the independent cities of Roanoke and Salem could well be the lynch-pin between success of the ARC and its failure. With a population of approximately 200,000, the Roanoke, Valley has a history of cooperative agreements and joint ventures with surrounding counties. Some of the joint opportunities the Roanoke area governments have pursued include, the further development of tourism and industrial sites along the I-81 and I-581 corridors, educational/vocational training projects, and the enhancement of water and sewer infrastructure. If admitted to the ARC, Roanoke County could combine its resources and economic vitality with its less urban neighbors to help facilitate much-needed ARC regional projects. In addition, for the ARC to ultimately succeed in its mission to provide Appalachia with the infrastructure it needs to develop into an economically viable region, it only makes sense that these three important counties be added to its membership. Their addition will provide an essential sense of regionalism with the countries already within ARC, allowing them to work together to solve the many problems of the area. It's time to realize that city, county and even States lines are becoming less and less a barrier to cooperation. Finally, by designating the Roanoke Valley, Rockbridge County, and Montgomery County as a part of ARC, Congress will be strengthening the partnership between western and southwestern Virginia. I urge my colleagues to support this much needed legislation.

Mr. GOODLATTE

Mr. GOODLATTE. Mr. Speaker, I thank the gentleman for yielding to me, and I thank the chairman of the subcommittee for his fine work on this legislation, and the other side for the very civil way this debate has been conducted. However, Mr. Speaker, I must rise in opposition to this motion to recommit, because it will return us to the situation we gave right now. It will eliminate the opportunity we have to truly say that when you go into Federal court, you have to be responsible, you have to be prepared to take responsibility for your own actions. By giving to the judge the discretion of whether or not to apply attorneys' fees, you will put us back to the situation we have right now with rules like rule 11, which has the effect of saying, ``Yes, we have sanctions, but, gee, maybe we wont't apply them,'' and the evidence is that they have not been applied. one thing, this amendment incorporated in the motion to recommit could allow the court to require that the winning party's legal fees be paid by the losing party's attorney. This is a very wrongheaded concept in American justice. You should not ever drive a wedge between anybody and their lawyer who has all kinds of ethical responsibilities in the representation of their client.

Mr. GOODLATTE. I yield to the gentleman from Michigan.

Mr. GOODLATTE. Mr. Chairman, I move to strike the requisite number of words.

Mr. GOODLATTE. Does the gentleman think that is changed based upon changing it from ``may'' to ``shall''? I mean, if there is a discriminatory predisposition that the gentleman describes, would that not also be likely to occur in a circumstance where the judge has the discretion under the law as it exists now?

Mr. GOODLATTE. Mr. Chairman, if I can follow up because the comments of the gentleman from North Carolina are indeed impressive, is there something about, and this is what troubles me from my side, is there something about an attorney or an individual who misbehaves with one of those cases and incurs sanctions that would differ from somebody, regardless of their background, regardless of their race or age or sex or anything else in any of the other areas where we apply the ``shall'' provision, which is what the amendment does, instead of the ``may'' provision, which is what the gentleman wants to preserve for these particular issues?

Mr. GOODLATTE. I agree with that; but they are two different types of actions. They are mutually exclusive of each other.

Mr. GOODLATTE. I thank the gentleman for yielding. Just a point of winning a law suit and still being required to pay attorney's fees, this would not apply to any of these actions, would it not, because these are all Federal question issues and would not come up under the modified losers pay provisions in the bill which only apply to diversity cases?

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

Mr. GOODLATTE. Reclaiming my time, the representative of the Girl Scouts for the Washington District Council told me and a number of other Members of Congress and others personally that that was the fact. I am not representing that as something I know personally. I am representing it as what was told to me by a representative of the Girl Scouts.

Mr. GOODLATTE. Mr. Chairman, I thank the gentlewoman for her comments. The fact of the matter is, the representative of the Girl Scouts here in the Washington Area District Girl Scout Council told me this personally, 87,000 boxes of cookies sold to raise $120,000 to pay liability insurance before they ever can spend a penny on anything else.

Mr. GOODLATTE. When you take that in all cases and then ask the judge to give more, the history with rule XI sanctions is that it is very, very, very rarely done. And the attorneys know it, and they do not worry about rule XI sanctions because they know that the odds of them being applied to them are very, very remote. If you put this provision in, they are going to know that it is 25 percent. Maybe there is a remote chance of getting more, but it is not going to be 100 percent in the cases that it should be 100 percent in.

Mr. GOODLATTE. Reclaiming my time, I would say to the gentleman that the mechanism I offered to deal with the case where the plaintiff proves the case but has been unreasonable in their settlement negotiations and gives them some relief there would be something that would be tolerable. But 25 percent in all cases regardless of whether or not they are meritorious or not, we know that when discretion is given to judges in these cases----

Mr. GOODLATTE. Mr. Chairman, that being the case, I yield back my time.

Mr. GOODLATTE. I have to say I am not on the committee who produced that bill, so I do not know. You may be correct. If so, I will attempt to change that language in that bill. But the point is here that if we take away the mechanism that has been set up in this bill, we will have eliminated all of the incentives we created to settle cases, all of the incentives we have created to not bring frivolous, fraudulent, or nonmeritorious lawsuits in U.S. district court. The compromise that we have come up with as changed from the original bill is a very, very good effort to control the overload of lawsuits in our courts without having to go back to a system now where there is no pressure on some individuals not to be responsible when they decide to bring an action in court. I strongly urge the defeat of this motion to recommit.

Mr. GOODLATTE. I yield to the gentleman from Indiana.

Mr. GOODLATTE. Mr. Chairman, I have a parliamentary inquiry.

Mr. GOODLATTE. I yield to the gentleman for the purpose of debate. I apologize to the gentleman that he will not be allowed to offer an amendment under these circumstances.

Mr. GOODLATTE. Mr. Chairman, do I have the ability to yield to the gentleman from Michigan [Mr. Smith] for the purpose of offering an amendment?

Mr. GOODLATTE. Mr. Chairman, the fact of the matter is that legal costs in this country are rising at a rate of 12 percent a year, far in excess, far in excess of what is happening even in the cost of medical care, but certainly three or four times the rate of inflation in this country. And this amendment will reduce drastically the ability to use this provision to say, when you file a lawsuit, you take a risk. You have made the risk way too small, I would say to the gentleman from Indiana.