Henry Hyde

Mr. HYDE

Mr. HYDE. I thank the gentleman.

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

Mr. HYDE. Mr. Chairman, I thank the chairman for yielding me this time. The amendment offered by the gentleman from North Carolina would strike section 201 of the bill, the clear and convincing evidence standard in punitive damages cases. This is an intermediate burden of proof that is higher than preponderance of the evidence, the general rule in civil cases, and a lower standard than proof beyond cases. Because punitive damages are not designed to compensate injured parties, but rather to punish or to deter egregious conduct, a higher threshold than that required for establishing a right to compensation seems entirely appropriate. It is inconsistent with our concept of fairness to impose punishment in the form of punitive damages merely on the basis of showing a probability, perhaps a 51-percent likelihood. The discussion of this subject in the American Law Institute Reporters' Study on Enterprise Responsibility for Personal Injury in 1991 has this to say: In the case of punitive damages, the immediate victim's interests are not as important as society's need for optimal care, which includes avoiding overdeterrence and undue risk aversion by defendants to the detriment of people who need their goods and services. While the full-blown retributive rationale for punitive damages might suggest imposition of the criminal law standard of proof ``beyond a reasonable doubt,'' what is at issue here is a civil monetary penalty against an organization, not the criminal condemnation and deprivation of liberty (or even life) of an individual. Consequently, we endorse the emerging consensus among legal scholars, practitioners, and state legislators in favor of an intermediate ``clear and convincing evidence'' burden of proof. That is exactly what we have in this bill. The report of the Special Committee on Punitive Damages of the American Bar Association, its section on litigation, reached the same result. What they said in their report: Because one of the purposes of punitive damages is punishment, the committee feels that it is important that persons who are not guilty of conduct warranting an award of punitive damages should not be punished. The value in ensuring that innocent defendants are not held liable for punitive damages overrides the effects of a small number of instances where guilty defendants might not be held liable. The committee concludes, therefore, that the ``clear and convincing'' burden of proof is appropriate for an award of punitive damages. That is what we have in this legislation. If we allow punitive damage awards based on too loose an evidentiary standard, we risk punishing defendants unfairly, and exacerbate pressures to offer settlements in cases of tenuous liability. Consumers of goods and services often end up paying the cost of inappropriate awards of punitive damages. For these reasons, I believe the standard of clear and convincing evidence is fair and reasonable. It is not a mere preponderance; it is not beyond a reasonable doubt; it is right in the middle, clear, and convincing evidence. The American Bar Association, recommends it; the American Law Institute recommends it; and I recommend it. Mr. Chairman, the amendment offered by the gentleman from North Carolina would strike from section 201 of the bill the ``clear and convincing evidence'' standard in punitive damages cases. This is an intermediate burden of proof that is a higher standard than ``preponderance of the evidence,'' the general rule in civil cases, and a lower standard than ``proof beyond a reasonable doubt,'' the burden in criminal cases. Because punitive damages are not designed to compensate injured parties but rather punish or deter egregious conduct, a higher threshold than that required for establishing a right to compensation seems entirely appropriate. It is inconsistent with our concept of fairness to impose punishment, in the form punitive damages, merely on the basis of showing a probability--perhaps a 51-percent likelihood. The discussion of this subject in the American Law Institute Reporters' Study on Enterprise Responsibility for Personal Injury [1991] is particularly pertinent: [I]n the case of punitive damages, the immediate victim's interests are not as important as society's need for optimal care, which includes avoiding overdeterrence and undue risk aversion by defendants to the detriment of people who need their goods and services. While the full-blown retributive rationale for punitive damages might suggest imposition of the criminal law standard of proof ``beyond a reasonable doubt,'' what is at issue here is a civil monetary penalty against an organization, not the criminal condemnation and deprivation of liberty (or even life) of an individual. Consequently, we endorse the emerging consensus among legal scholars, practitioners, and state legislators in favor of an intermediate ``clear and convincing evidence'' burden of proof. The Report of the Special Committee on Punitive Damages of the American Bar Association Section of Litigation [1986] reached the same result. That report concludes: Because one of the purposes of punitive damages in punishment, the committee feels that it is important that persons who are not guilty of conduct warranting an award of punitive damages should not be punished. The value in insuring that innocent defendants are not held liable for punitive damages overrides the effects of a small number of instances where guilty defendants might not be held liable. The committee concludes, therefore, that the ``clear and convincing'' burden of proof is appropriate for an award of punitive damages. If we allow punitive damages awards based on too loose an evidentiary standard, we not only risk punishing defendants unfairly but also exacerbate pressures to offer settlements in cases of tenuous liability. Consumers of goods and services often end up paying the costs of inappropriate awards of punitive damages. For all these reasons, I believe the standard of ``clear and convincing evidence'' is fair and reasonable. I urge the defeat of the pending amendment.

Mr. HYDE. Mr. Chairman, I rise in opposition to the amendment.

Mr. HYDE. Mr. Chairman, this amendment is unfair, it violates due process by allowing suits against corporations that ``should have known'' their products would be sold in the United States. It violates the fundamental principles of fairness, and it subjects corporations to suits that might never have intended to do business over here. I know the distinguished gentleman from Illinois [Mr. Durbin] who just spoke is familiar with the Hague Convention on the taking of evidence abroad. He would not intentionally want to violate those rules of discovery of foreign corporations which already exist. The amendment is unnecessary. It casts too large a net. We are subject to retaliation. There is no definition of a foreign manufacturer. There are just so many things wrong with this that I urge a ``no'' vote.

Mr. HYDE. Mr. Chairman, I demand a recorded vote.

Mr. HYDE. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I oppose the amendment offered by the gentleman from Michigan because it raises significant constitutional and international law questions, represents a serious potential irritant in our bilateral relations with other countries, and raises the specter of foreign retaliation against American firms. For the United States to take unilateral action that is likely to be perceived as overbearing in character and constituting an affront to other nations is shortsighted and counterproductive. The due process clause of the fifth amendment and principles of international law are implicated when we purport to confer jurisdiction on a U.S. court over a foreign manufacturer based merely on the fact that the manufacturer knew or reasonably should have known that the product would be imported into the United States. The criteria for U.S. jurisdiction in the amendment would even embrace situations where a manufacturer might not want its product imported into this country but knew or reasonably should have known that that eventuality would materialize in spite of its wishes. The extent to which American statutes apply to foreign nationals already is a point of contention in our relations with other countries. Prudence dictates that we proceed cautiously in this arena rather than act precipitously without adequate consideration. Although the author of this amendment offered another amendment in the Committee on the Judiciary markup relating to service of process on a foreign manufacturer, our committee did not have the opportunity to give any consideration to the proposal now presented to this body. There are internationally recognized procedures for Americans, litigating matters in the United States, to obtain relevant information or material from foreign countries. These procedures involve going initially to an American court--with the discovery request eventually being presented to the appropriate foreign court. Many countries react negatively to U.S. discovery procedures--and efforts to give extraterritorial effect to discovery orders of U.S. courts, by deeming failure to comply as an admission, fail to show appropriate deference to the sensibilities and prerogatives of other countries. Our own discovery practices have been subject to severe criticism even within the United States--and efforts to export them in circumvention of the courts of a foreign country are unjustified. The extent to which failure to furnish material is deemed an admission under proposed section 110(b) is overbroad, in any event, because the admission embraces any fact with respect to which the discovery order relates even though the testimony, document, or other thing that is sought may turn out to be irrelevant. The potential for foreign retaliation cannot be overlooked when we contemplate the possibility of foreign countries taking the position that American firms must respond in foreign courts--under foreign law-- when the particular product is sold or used there. The new proposed section also raises significant interpretive problems when we try to give content to the term ``foreign manufacturer.'' U.S. manufacturers, for example, often have affiliates in other countries that manufacture component parts. The ambiguity of the reference to foreign manufacturer in proposed section 110 undoubtedly would precipitate much litigation. It makes much more sense, in my judgment, to place primary emphasis in resolving this type of issue on international conventions and bilateral agreements. This body is not in a position today to contribute in a helpful way to addressing this subject. I urge the defeat of the amendment.

Mr. HYDE. I do, Mr. Chairman.

Mr. HYDE. I certainly would expect our counsel or the plaintiff's counsel to urge the trial judge to disclose that if it was----

Mr. HYDE. I thank the gentleman for yielding. I would simply like to state the rule 26(c) of the Federal Rules of Civil Procedure has to do with protective orders and it provides the trial judge with authority in an appropriate case to seal documents or not to seal them. I prefer to leave it to the trial judge who is on the firing line and has the case before him or her and can make these decisions based on the type of case, the type of information, the demands of privacy, the embarrassment, the humiliation, the revelation of proprietary information or not. These are tough decisions, they are difficult decisions, and why should we make it for the judge and require the disclosure of these things? I personally would like to know the formula for making Coca-Cola. I would suggest that has some monetary value. I would suggest the Coca- Cola people want to keep it quiet. In a lawsuit, why require its disclosure, if it is not essential to the litigation? I yield to my friend, the gentlewoman from Chicago, IL.

Mr. HYDE. Mr. Chairman, I yield such time as he may consume to the distinguished gentleman from Ohio [Mr. Oxley], and I ask that the gentleman yield to me briefly.

Mr. HYDE. I thank the gentleman for yielding.

Mr. HYDE. Mr. Chairman, I am pleased to yield 3 minutes to the gentleman from Wisconsin [Mr. Sensenbrenner], a member of the committee.

Mr. HYDE. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I think this is a very dangerous amendment. It is one that should be defeated. It would impair litigants' rights to maintain their privacy, protect valuable property interests, and interfere with settling legal disputes. Massive amounts of private information are produced through the modern discovery process. The amendment requires the court to weigh the value of confidentiality versus the public interest in disclosure. To conduct such a weighing process on every document that is private would indeed weigh the courts down in endless disputes. Disputes over discovery issues would skyrocket, and further clog our courts. The amendment would restrict judicial discretion in protecting confidential information, and would create lawsuit abuse, not eliminate it. The courts would have to conduct extensive and complex factual inquiries, which could include extensive hearings on and in camera review of thousands of documents. Such in camera review could result in an unfair and prejudicial prejudgment of the case. This amendment would make it much more difficult to settle cases. It would prevent the mutual agreement between parties on issues of confidentiality, and would result in more contentious trials, consuming more time and attention than ever before. There is no need for this amendment. The proponents of this amendment may trot out some tragic anecdotes allegedly supporting forced disclosure, but in each case the proponents of this amendment should be asked whether or not such information relating specifically to the alleged defect was not available to the public prior to the protective order, and in many cases, long before the lawsuits were even filed. There is proprietary information, private information, information that does not belong in the public domain, and the judge now has ample authority to rule on whether this information shall be sealed or whether it should be made public. It is something that is best handled by court rules, not legislation. Mr. Chairman, I do not know what else to call this but the Ralph Nader amendment, because it would permit any citizen at any time to intervene to get information that it wants, and that may or may not be helpful, but as a rule of law, it is the sort of thing that would obstruct the settlement of cases. It would make people very reluctant to disclose information on a nonconfidential basis. I would sincerely hope that this gutting amendment would be defeated. Mr. Chairman, this amendment represents a mischievous effort to compromise confidential information with potential adverse consequences for both businesses and injured parties. The amendment raises a new subject we did not consider in the Committee on the Judiciary. The amendment can be interpreted as including a flat prohibition on sealing a court order or opinion in a product liability case. This prohibition--in contrast to the prohibition relating to a court record--apparently admits of no exception and may result in compromising trade secrets of American firms if the court order or opinion refers to such secrets. By providing for public access to material obtained through discovery, we place in the public domain information that may have no relevance to pending litigation. The evidentiary standards for obtaining information through discovery are much broader than those applicable in a trial--a fact that renders inappropriate treating the discovery process like a public proceeding. The need to obtain a court order to restrict public access to records obtained through discovery can be expected to add immeasurably to the transaction costs of litigation--as parties go to court to safeguard the confidentiality of the discovery process. Alternatively, parties to litigation can be expected to resist discovery in order to keep irrelevant material from reaching the public domain. Efforts to avoid discovery or limit its scope may also add greatly to the transaction costs of litigation. Providing that orders protecting confidentiality do not remain in effect after final disposition unless separate particularized findings are made by the court also complicates and prolongs the litigation process. Courts will be bogged down in considering such matters, and attorneys will invest considerable time and effort at additional costs to the litigants. Consumers will end up paying higher prices because of increased legal fees. The amendment also discourages settlements by barring agreements between parties that purport to restrict disclosure of information to Government agencies. Finally, this amendment adds to the costs of litigation--and exacerbates problems of delay--by allowing any person to intervene in a product liability action to participate in proceedings considering limitation of access to records. Although facilitating opportunities for some third parties to intervene in limited circumstances may be justifiable, the unlimited intervention mechanism this amendment establishes needlessly encumbers the litigation process. Although I am committed to facilitating public access to relevant safety-related information, this shotgun approach to a complex subject is not the answer. Issues of confidentiality implicate not only the public's right to know but also the rights of victims to lead private lives and the rights of American corporations to protect proprietary information from foreign competitors; American jobs may depend on it. Next week, the Judicial Conference of the United States will be considering proposed changes in rule 26(c) of the Federal Rules of Civil Procedure relating to protective orders. We should not precipitously preempt that process today. I urge my colleagues to vote against this amendment. Mr. Chairman, I reserve the balance of my time.

Mr. HYDE. Mr. Chairman, I yield such time as me may consume to the gentleman from Wisconsin [Mr. Sensenbrenner], a member of the committee, to close debate.

Mr. HYDE. Mr. Chairman, I yield 30 seconds to the gentleman from Ohio [Mr. Oxley].

Mr. HYDE. The Chair is correct. I certainly should not have yielded, but she looked at me and I could not say no.

Mr. HYDE. Mr. Chairman, I yield myself 1 minute. The gentleman objected last night to mentioning the American Trial Lawyers. You thought that was an invidious comparison. I did not yield to the gentleman. I did not yield to you. The gentleman has no problem attacking us and linking us with rich friends and that sort of thing. The gentleman ought to do and practice what he preaches. Mr. Chairman, I yield 2 minutes to the gentleman from California [Mr. Moorhead].

Mr. HYDE. Mr. Chairman, I yield myself 30 seconds. I am equally surprised that the gentleman is opposing this amendment. The language I seek to strike was not in the bill in our committee. It was put in by the Committee on Commerce, and I think upon mature reflection it undoes the purpose of the statute of repose. It would leave it open-ended, almost impossible to predict or fulfill, and, therefore, if you are for a statute of repose, I should think you would be for having it a definite, time-certain.

Mr. HYDE. That is correct.

Mr. HYDE. Mr. Chairman, if the gentleman will yield, this amendment does not change that.

Mr. HYDE. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, every State has statutes of limitation that prescribe the period of time within which a law must be brought. Similar but not identical is a statute of repose. Statutes of repose specify the period of time after which a manufacturer may not be sued for an alleged injury caused by its product. Consequently, a statute of limitations specifies when an existing right to bring a suit expires, while statutes of repose specify the period of time after which no right to sue will be recognized at all. Seventeen States have enacted statutes of repose, but they vary in length and in their applicability to various products. A uniform statute of repose is needed in order to provide certainty and finality in commercial transactions. Section 108 of H.R. 956 would establish a 15-year Federal statute of repose in product liability cases. Thus, a product liability action against a manufacturer would be barred 15 years after the date of first delivery of the product. To be fair to plaintiffs, the provision would not apply in instances involving a latent illness--a physical illness the evidence of which does not ordinarily appear less than 15 years after the first exposure to the product. In addition, the statute of repose does not bar a product liability action against a defendant who made an express warranty in writing as to the safety of the specific product involved where the express warranty given was longer than 15 years. This legislation is similar to legislation that passed the Congress last year known as the General Aviation Revitalization Act of 1994 (Public Law 103-298). That Federal statute created an 18-year statute of repose for general aviation aircraft. Section 108 is intended to reflect the view that, after a reasonable length of time, manufacturers should be free from the burden of disruptive litigation and potential liability. It recognizes that difficulty that exists in locating reliable evidence and defending claims many years after a product has been manufactured. It also prevents the unfairness that occurs when manufacturers are held liable for goods that have been beyond their control and subject to misuse or alteration, perhaps for decades. A statute of repose also helps to avoid the possibility of juries unfairly imposing current legal and technological standards on products manufactured many years prior to suit. Even though manufacturers of older products frequently are successful in defense of these lawsuits they nevertheless must invest time and money into legal and transactional costs. These costs are wasted costs that could be better applied to create jobs and assist American companies in competing globally. My amendment is aimed in ensuring that this statute of repose section does what it is intended to do. As part of the effort to combine the Judiciary Committee's legal standards bill with a product liability measure reported by the Commerce Committee, new language was inserted into the statute of repose section. It says ``(T)his subsection shall apply only if the court determines that the claimant has received or would be eligible to receive full compensation from any source for medical losses.'' Though unintended, this new language could effectively render the statute of repose provision useless. My amendment is directed at deleting this one sentence because it would create a giant loophole for trial lawyers and would reverse the work of both committees in seeking a fair and effective statute of repose. Under the language I would strike, all a trial lawyer would have to show--to avoid the statute of repose--is that his client did not receive or was ineligible to receive full compensation for medical expenses. So, if there was any insurance copayment provision, if there was any insurance deductible, if reimbursed medical expenses are limited in any way, such as ordinarily and customary expense limitations--the statute of repose might not apply. Once the statute of repose is successfully evaded, a litigant could then seek additional economic damages, noneconomic damages and punitive damages. This is certainly not the result that the Judiciary Committee intended. Unless this sentence is stricken, it will prompt further lawsuit abuse. Under this exception language, a manufacturer seeking to invoke the statute of repose would first have to litigate the issue of whether or not a claimant has received full compensation from medical losses. That is, has every medical test, prescription, bandage or Band-Aid been fully covered by insurance? This loophole would encourage a plaintiff to continue to claim medical expenses for as long as possible and to the maximum degree possible, so as to prevent full payment from triggering the statute of repose and its protections. It is important to point out that the European Economic Community has a 10-year statute of repose with no such language contained within its provisions. Japan has a 10-year statute of repose with no such language. Again 17 States currently have statutes of repose, none has language like this in it. No such language was contained in the General Aviation Revitalization Act. This language is an unwise, unfair and unworkable addition to an otherwise good strong and effective statute repose section. It must be removed if this House is to have the opportunity to vote for a statute of repose that really helps American manufacturers and encourages American productivity. I strongly urge the adoption of my amendment. It will ensure that section 108 will be effective and provide manufacturers with the kind of certainty and finality that they deserve.

Mr. HYDE. Mr. Chairman, I offer an amendment.

Mr. HYDE

Mr. HYDE. Reclaiming my time, Mr. Speaker, I respectfully disagree with the gentlewoman from Colorado [Mrs. Schroeder]. Mr. Chairman, I yield back the balance of my time.

Mr. HYDE. I am one of each.