Howell Heflin

Mr. HEFLIN

Mr. HEFLIN. Madam President, I was interested in what the distinguished Senator from Michigan had to say, particularly with regard to the reversal of where he made the elderly individual the defendant. Most elderly persons in our country over the years, at least, I think the biggest majority of them, believed in having a home and buying a home and paying for their home by the time they reach retirement age. Most of them have what the insurance industry calls a homeowner's policy. Now, how does that affect the illustration that he gave of the elderly defendant? Practically every homeowner's policy has a provision known as the comprehensive liability provision. And those comprehensive liability provisions which insurance companies have sold over the years are indeed very comprehensive. I commend the insurance industry for the way they have sold these policies and their breadth. They cover pretty well any type of action that might be brought, unless it is specifically excluded. The elderly individual probably in almost every case will have insurance to protect them from any liability that they might incur. Certainly, if they are driving an automobile, they carry insurance. So I think the opportunity of saying the reversal--if you leave out the element of insurance--most of them are insured relative to this matter. I just wanted to point that out in regard to this. I have talked a lot about the Snowe amendment and severability and provisions on punitive damages in the underlying bill. Since Senator Snowe is in the chair, it might be of interest to her, and I will recite it again. Under the provisions of the underlying bill, if a person brings a suit and demands punitive damages, there is a provision that says if you demand it, either party can demand a separate hearing for punitive damages. I think that increases transaction costs, but that is not the point I want to bring here. In that separate hearing, there is other language in the underlying bill which says that a party cannot introduce evidence of the conduct which would be admissible under a punitive damage trial, but in the suit for compensatory damages. So, therefore, a person who might be really, under several liability involved in this, 85 percent at fault but could not present the evidence of conduct which would constitute conduct recoverable under punitive damages in the trial in chief, you might have a situation where that person is 85 percent at fault really but because of this protection ends up with only about 5 percent in the noneconomic damage aspect of it. So when you attempt to double that, you have a problem. That language pertaining to the fact that you cannot introduce in the compensatory damages part of a trial, the conduct of a defendant who is willful or conscious and flagrantly indifferent, but who could come under the punitive damage portion of a trial, prohibits such evidence from being introduced in the trial in chief. Therefore, the severability aspect of this comes into play, and it can well be that the defendant who is the severability as it would apply to the noneconomic damages, would be, in effect, able to escape relative to these matters. So it is something she might want to look into as this bill goes forward. I feel like there is a major problem that might be there. I just mention that again. I think I will yield the floor at this time. Mr. ABRAHAM addressed the Chair.

Mr. HEFLIN. In other words, we have an expansion to all civil actions on any theory as to changes in the area of punitive damages and the elimination of joint and several liability. And the amendment does not limit its application to interstate commerce. We as a deliberate body, the U.S. Senate, are going to attach our stamp of approval to language that has such a far-reaching, encompassing aspect without having a single witness or law professor or defense lawyer, or anybody to advise us as to its potential effect. I do not know where and how it affects Americans under the Disabilities Act or a State law that has a disability act. I do not know how it affects--and from this one cannot tell--what it does pertaining to all of the various State laws dealing with the environment. There are some States that have had Superfund-type cleanup laws. What happens where there are numerous parties which might have contaminated the environment? It certainly seems to me that these things ought to be subject to some hearings and some investigations rather than coming here without having really any great knowledge as to its ultimate impact. Now, it seems to me that this matter of rendering a separate judgment against each defendant as to the amount to be determined, pursuant to the preceding sentence, which is that they be in direct proportion to the percentage of responsibility of the defendant. Now, in a trial of a case where you might have 10, 15, or more defendants, there are really no standards, no real directions that are given as to how you, in effect, will determine the placing of damages, no real instructions or standards, or various criteria to be used. There are just so many unanswered questions, it seems to me that the Senate ought to give certainly a lot of careful thought to this amendment before we move forward. The overall concept in the past has been that the wrongdoers, if a judgment is obtained, do the apportionment of the damages amongst themselves. Some States have what they call contribution among joint tort feasors. This has not been a real problem that I have heard of any great consequence--and I practiced law for 25 years--where there were those who really suffered as a result of joint tort feasor action. There may be some illustrations and there may be some instances to be pointed out, but I think they would be rare, indeed. Of course, if a person does not have any money, and the person who is injured only has a judgment against somebody that does not have any money, he cannot collect. The injured party is left holding the bag. He is the one who is really suffering. In other words, what you are doing with this amendment is benefiting the wrongdoer. Now, under the underlying bill, you also have this matter of determining the percentage of fault. You have the situation of the employer's responsibility, co-employee's responsibility, and in the underlying bill, which is designed and it seems to be for such an advantage, that the harm can be placed against a nonparty. He does not have to be a defendant. You come up with somebody. And there are a lot of people you cannot sue. They are in bankruptcy, and so therefore, if they are in bankruptcy they have no money. Everybody wants to put all the fault off on him, on the person that might be in bankruptcy. Sometimes you cannot get service on someone in order to file a suit. So there are all sorts of considerations that should given to the impact of this far reaching amendment. This underlying bill, seemingly, in determining the fault of the employer and the co-employee, is designed to give a particular emphasis to that. And it has language in the bill which says the last issue that shall be presented to the jury is the issue of the amount of fault that falls on the co-employee or the employer. So you, therefore, try to have that fresh in the minds of the jury rather than somebody being able to present the case in a manner which they consider to be the proper way to do it. It ends up that you are required to try to emphasize and put the emphasis on the employer's fault, the coemployee's fault. And in most States you cannot sue the coemployee, who cannot be a party to the lawsuit because the employer is protected by workmen's compensation and the coemployee is protected by workmen's compensation. So, all of these things are involved in this amendment which to me raises many questions. It just seems to me that it is already faulted with the fact that we have got that in the underlying theory is grossly, in my judgment, unfair. I yield the floor. Mr. ABRAHAM addressed the Chair.

Mr. HEFLIN. I still refer to the Senator as my chairman, but I realize that all of a sudden we have had change. So no hearings have been held in regards to the sweep of this. I would like to also ask the ranking member, have any hearings been held as to the broad sweep and the encompassing aspects of all civil actions pertaining to punitive damages outside of the field of product liability?

Mr. HEFLIN

Mr. HEFLIN. I yield the floor. Mr. THOMPSON addressed the Chair.

Mr. HEFLIN. I thank the Senator. I appreciate the distinguished Senator from Tennessee responding to my questions relative to these matters. I have a better understanding relative to what his amendment attempts to do. I might just ask him, too, in this regard, I believe if we look at the Federal law and the Federal Rules of Civil Procedure that apply, the distinction between equity and civil cases is now combined into civil cases. So in the Federal law that we have today under the Federal Rules of Civil Procedure, cases that we used to make a distinction between--we used to have really three types of cases. You would have criminal cases, you would have civil cases, and equity cases. But the Federal Rules of Procedure, of course, which are not affected by Erie versus Tompkins, are now combined and you have equity and civil cases in it. So, basically, under the present Dole amendment, basically what we are looking at are really two types of cases--criminal cases and civil cases. Under this, in regard to the Dole amendment as to punitive damages, in other words, the only thing it really excludes is criminal cases. Would the Senator agree with that?

Mr. HEFLIN. All right. Now, I am not sure that I understand this provision, the last one, which is No. 8. It reads: In section 102(c), add the following new paragraph: (8) create a cause of action or provide for jurisdiction by a Federal Court under section 1331 or 1337 of title 28, United States Code, that otherwise would not exist under applicable Federal or State law. Now, that provision in there, I believe, is in the bill that was introduced. That is to prevent saying: ``Create a Federal cause of action,'' and therefore leaves it strictly to the preemption that is in this bill as amended and does not create a separate cause of action at the Federal courts; is that correct?

Mr. HEFLIN. I was just saying that, looking at punitive damages, we look upon that as being in big figures. But if the suit is only for $50,000, then the amount that you sue for includes if you seek punitive damages and it puts a cap on it. You cannot recover more than you can sue for and if you do not sue for more than $50,000, then you stay in the State courts and it is not removable to the Federal court.

Mr. HEFLIN. Now, if you are seeking punitive damages, you are limited in the amount that you claim with regard to the removal. So, chances are, you are not going to have many punitive damage cases that are affected, since there is a limit in the amount of money that you sue for, in the removal of those small type cases. Does the Senator agree with that?

Mr. HEFLIN. Mr. President, the Senator keeps using the word ``interstate.'' As I read the language that we have now adopted, it is applied in regard to punitive damages in any civil action whose subject matter affects commerce, not interstate commerce, but commerce. Actually, it seems to me that commerce is affected almost by every conceivable type of action if there is a transaction. That, to me, under this language that is now in here, makes it so broad. It affects commerce and affects that aspect of it. Now, under the Senator's amendment, he would allow for actions that are transferred, removed from the State courts to the Federal courts. And that is what is known as a removal action. It is my understanding today that I think we passed in the Senate some bills that would enlarge the jurisdiction. But the present jurisdiction is that if the suit is for $50,000 or less, you cannot remove it from the State court to the Federal court. So, therefore, those types of cases of a frivolous nature seeking small damages relative to this matter would stay in the State court if they are $50,000 or less. Does the Senator interpret it that way?

Mr. HEFLIN. Basically, I have a reservation on the philosophical viewpoint. I think, No. 1, as the bill presently stands, as it is amended, the Senator's amendment is an improvement. I do have reservations as to whether or not from a philosophical viewpoint we ought to be legislating in an area that has been left to the States for many years. And so it is a question of federalism. I am in somewhat of a conflict as to whether or not I would support the Senator's amendment, and that is something I am going to think about and give a little more thought to.

Mr. HEFLIN. The Senator is correct in regard to substantive law. So if this particular bill, as amended, is silent relative to a State law and is not preempted, then a Federal court would continue to apply State substantive law in a case brought in the Federal courts? Is that correct?

Mr. HEFLIN. All right. The distinguished Senator from Tennessee, I am sure, knows of the doctrine which came out of a case in the Supreme Court called Erie versus Tompkins. Now, Erie versus Tompkins basically says that State law prevails in diversity cases and prevails in Federal cases in the event that the Federal law is not written to approach it. In other words, if there is a void in Federal law, then the concept is that State law will be followed under the doctrine of Erie versus Tompkins in the Federal courts.

Mr. HEFLIN. All right. So, now, if I understand it from the Senator's speech and also Senator Simon's speech, the Senator's idea is that this would be an experiment, in effect a pilot program for a period of time in which you would determine how it would work, and from it, State courts could use the experience. State could learn from that experience? And, of course, Congress could look at the same thing and learn from the experiences that might be contained therein; is that correct?

Mr. HEFLIN. You have the biomaterials provision and all of that in the product liability bill. Are those provisions limited strictly to cases that are tried in Federal district courts?

Mr. HEFLIN. In other words, the Senator's amendment, in effect, says that the provisions of the underlying bill--you have provisions dealing with punitive damages; you have provisions dealing with misuse and alteration; you have standards that are created relative to punitive damages; you have provisions dealing with intoxication and defenses on that----

Mr. HEFLIN. As I understand it, the Senator's amendment does not create a new cause of action or a Federal cause of action. Is that correct?

Mr. HEFLIN. All right. Now, the provision dealing with the interpretation of the court of appeals, which is in the underlying bill, the court of appeals that might interpret a district court and the Federal courts, that decision that is made relative to the underlying bill, as amended, would not affect proceedings in a State court?

Mr. HEFLIN. It does not impose any of those provisions that are in the underlying bill, as amended, upon the State of Tennessee, the State of Mississippi, the State of Alabama, the State of New York, or any other State--it does not impose those provisions on them; is that correct?

Mr. HEFLIN. In order to clarify, I think if there are amendments people have, if there is no objection, I think it may be extended until 3 o'clock or something like that, if people have them. I do not know of any more I am going to file myself.

Mr. HEFLIN. All right.

Mr. HEFLIN. Mr. President, as I understand it, he is filing it with the idea of meeting the post-cloture requirement. In the event of that, all he has to do is file it at the desk and we can do it. Is that not all he has to do is file it at the desk?

Mr. HEFLIN. I do not think so at this time. I think we want to ask some questions and do some things and have a clearer understanding of what the Thompson amendment does. I want to engage in a colloquy at least and so forth relative to the matter. So I would think at this time we ought to know.

Mr. HEFLIN. Will the Senator yield?

Mr. HEFLIN. I reserve the remainder of my time.

Mr. HEFLIN. Madam President, again, let me address some of the things that I think have escaped the attention of people--the interrelationship with the Dole amendment and the underlying bill, the underlying Gorton substitute--which deal with the issue pertaining to the calculation on each defendant of the noneconomic damages, and then its relationship to the Snowe amendment which basically sets the cap on punitive damages at twice the noneconomic damages, and the economic damages. The underlying bill and the Dole amendment provide for a bifurcated trial--that is, two--where punitive damages are sought. If punitive damages are sought, then any--and I read from the Dole amendment, which is the exact language as in the bill -- . . . evidence relative only to punitive damages as determined by applicable State law shall be inadmissible in any proceedings to determine whether compensatory damages are to be awarded. Compensatory damages include noneconomic damages so therefore you cannot prove gross negligence; you cannot prove recklessness; you cannot prove wantonness; you cannot prove intentional conduct pertaining to the compensatory damage trial. The Dole amendment includes all civil actions, including automobile accidents that I talked about. It would also include this matter of the issue pertaining to rental cars. Take, for example, a company decides there is need of a recall of certain cars, and therefore in the recall of those cars there is an immediate danger. But they continue to lease those cars. Then, in effect, you could not prove it where you sought also punitive damages. Now, the noneconomic damages as it relates to section 109, which is several liability for noneconomic damages, provides, and I read: Each defendant shall be liable only for the amount of noneconomic loss allocated to defendant in direct proportion to the percentage of responsibility. For the harm, in other words, the percentage of fault. Therefore, if you seek punitive damages, then under the underlying bill and the Dole bill, you cannot prove in the compensatory damage lawsuit in the trial in chief those elements of fault which constitute elements that would go to the proof of punitive damages. You are precluded. It is inadmissible. So how can you prove the percentage of fault that may rest on defendants that have been guilty of punitive damage conduct, wantonness, conscious, flagrant indifference? How can you prove that and how can there be any logical sense way of determining what the noneconomic loss is? And in its relationship here, it makes it an impossibility. Therefore, when it comes to the case, as I pointed out, of a motor vehicle, where the company knew that the man had been convicted of four drunk driving charges, two reckless driving charges, and they continued to allow him to operate and drive trucks, you could not prove any of that in the case in chief. Therefore, you could not go toward the establishment of the percentage of harm of noneconomic damages towards that defendant. And then in the punitive damages, it can only be twice the amount that might be allocated to him in the overall situation. So it seems to me that the relationship of this and the punitive damages, particularly with the Snowe amendment really, have so many consequences. I have just thought of a few. There are a multitude of consequences that occur relative to this matter. So I wish to point out that this is a situation which ought to be carefully considered, and I just do not believe even the authors of the bill and the authors of the Snowe amendment recognize the dangers that they are getting into relative to these matters. How much time remains?