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Carol Aarhus Alpha Files
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Originally Processed With FOIA(s):
FOIA Number:
S
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin: Speechwriting, White House Office of
Series:
Aarhus, Carol, Files
Subseries:
Alpha File, 1990-1992
OA/ID Number:
13861
Folder ID Number:
13861-001
Folder Title:
Civil Justice Reform
Stack:
Row:
Section:
Shelf:
Position:
G
19
2
5
2
OFFICE OF THE VICE PRESIDENT
WASHINGTON
March 10, 1992
Civil Justice Reform Roundtable.
DATE:
March 12, 1992
LOCATION:
Holiday Inn Conference Center
Lansing, Michigan
TIME:
3:20 p.m.
JH
FROM:
John L. Howard
I. PURPOSE
To discuss the Administration's Civil Justice Reform
initiative and to seek support for reforms at the federal and
state levels.
This also is an opportunity to assist Governor John Engler
advance medical liability reform measures currently pending.
II. BACKGROUND
This Civil Justice Roundtable is hosted by Governor Engler.
The event has been designed to focus primarily on how unnecessary
litigation impacts the availability of health care.
In addition to reducing the costs and delay inherent in our
litigation process, the Administration's Civil Justice Reform
initiative can be helpful in containing medical costs. The high
costs of defending against frivolous lawsuits or unfounded
demands for punitive damages are a direct, and major, component
in increasing physician's liability insurance. Equally important
are the indirect costs incurred when physician's are forced to
order vast batteries of costly, and often unnecessary, tests in
order to protect themselves from the possibility of lawsuits.
The impact of medical liability litigation on the
availability, costs, and quality of health care is a matter of
longstanding concern of the Administration. In addition to the
Civil Justice Reform proposal, the Administration has introduced
the Health Care Liability Reform and Quality of Care Improvement
Act of 1991 to reform the substantive tort laws underlying most
malpractice actions. Among the substantive changes proposed for
containing health care costs are: 1) eliminating joint and
several liability for non-economic damages, 2) capping non-
economic damages, and 3) promoting ADR. Together, the two
Administration initiatives would improve the quality of care and
lower legal*costs.
Last November, the Michigan Senate approved SB 248, which
establishes an alternative dispute resolution mechanism for
medical liability claims; and SB 249, which provides tighter
expert witness requirements, a shortened statute of limitations.
for actions by minors, and a sliding scale for attorney
contingency fees.
Both of these bills are now pending in the Michigan House of
Representatives. The bills are supported by the Michigan
Medical Liability Reform Coalition which, in addition to health
care providers, includes the Michigan State Chamber of Commerce,
the National Federation of Independent Businesses, and the
Michigan Insurance Federation.
Governor Engler strongly supports these medical liability
reform measures.
III. PARTICIPANTS
The Vice President
Governor John Engler
IV. EVENT OUTLINE
3:25 p.m. The VICE PRESIDENT arrives in Imperial Room A and
participates in Photo Opportunity.
3:35 p.m. The VICE PRESIDENT concludes Photo Opportunity and
participates in Civil Justice Reform Roundtable.
4:00 p.m. The VICE PRESIDENT concludes Roundtable and
proceeds to Holding Room.
4:05 p.m. The VICE PRESIDENT departs Holding Room and
proceeds to Imperial Room B for Press Roundtable.
4:30 p.m. The VICE PRESIDENT concludes Press Roundtable and
proceeds to Holding Room.
V.
PRESS PLAN
Press Pool Coverage (beginning only)
VI. ATTACHMENTS
List of Participants
Fact Sheet on the President's Health Reform Program
Talking Points
Biography of Governor Engler
VII. FOLLOW-UP ACTION REQUIRED
Thank You Notes
Mail Photographs
Jacque Sammet
Medical Liability Insurance Executive
Richard Kitch
Defense Attorney, Michigan Hospital
Association, Michigan Association of
Osteopathic Physicians and Surgeons
Richard Whitmer
President & CEO, Blue Cross Blue Shield of
Michigan
Spencer Johnson
President, Michigan Hospital Association
Dennis Paradis
VP, Michigan Hospital Association
Jack Ryan, M.D.
Hospital CEO & Insurance Board member
Mike Schwartz
CEO, Sisters of Mercy
Young Suh
CEO, St. Joseph, Flint
John McVeety
CEO, Alpena Hospital
Thomas E. Brennan
Former Michigan Supreme Court Justice,
President, Cooley Law School
Larry Burns
President, Michigan Society Hospital
Attorneys
Pat O'Leary
Attorney, Plunkett, Cooney
Ed McRee
CEO, Ingham Medical Center
Robert Yellan
VP, Detroit Medical Center
Dave Benfer
VP, Henry Ford Health System
Nancy McKeague
Michigan State Chamber of Commerce
Vernice D. Anthony
Director of Public Health
Dr. Charles Vincent
Physician, Hutzel Hospital
Eugene Sikorski, D.O.
Chair of Council of Public Education
and Health, Michigan Association of
Osteopathic Physicians and Surgeons
Eugene Oliveri, D.O.
Michigan Association of Osteopathic
Physicians and Surgeons Board President
Tom Payne
President Elect - Michigan State Medical
Society; Ingham Medical Center-
Radiologist
Bob Burton
Current President- Michigan State Medical
Society; Ear, Nose and Throat - Grand
Rapids
Peter McCabe
Vice Chair . Michigan State Medical
Society Board; Plastic Surgeon . Wayne City
Jack Barry
Chair - Michigan State Medical Society
Board; Family Physician
Bob McDonough
VP, Upjohn; Certificate of Need Board
John Wortman
President, Amerisure
Jack Wintemute
President, Citizens Insurance
Dr. Susan Adelman
Immediate Past President, MSMS
Senator Dan DeGrow
R-Port Huron
Senator Joe Schwarz, M.D. R-Battle Crock
Representative Rick Banstra R-Grand Rapids
Representative Joe Young, Sr.
D-Detroit
Representative Tom Hickner
D-Bay City
Representative David Gubow
D-Huntington Woods
"A Prescription for a Healthy Michigan"
Governor John Engler's Special Message on Health Care
"Our goal must be a healthy Michigan, with
affordable, accessible, quality health care for all."
In his Special Message on Health Care, Governor Engler outlined a
comprehensive set of reforms designed to increase access, reduce costs, and improve
the quality of health care services available to Michigan's citizens.
The Governor's "Prescription for a Healthy Michigan" stressed prevention as
the key to increasing our long term health status and highlighted a number of
innovations that will control skyrocketing costs and improve the quality of care
available to all citizens.
The most vital part of Governor Engler's overall cost containment strategy is
reform of Michigan's medical malpractice liability laws to more efficiently resolve
disputes, cut the cost of liability, and encourage more doctors to participate in
programs that serve the poor and uninsured. The Governor emphasized that
liability reform is closely linked with improvements he supports in Michigan's
licensing and health professional discipline system and that both initiatives must
become law.
"In striving to achieve our goal, we cannot diminish the rights, the choices or
the freedom of patients to receive quality care. But we must seek to limit the ability
of a few to unfairly profit at the expense of the health of Michigan's citizens."
EXPANDING PREVENTION
"Increased prevention efforts are the cornerstone of my long term strategy
to improve the health status of the people of our state."
Five major initiatives to prevent smoking, especially among young people,
are featured in the Governor's prevention plan:
Banning smoking in state buildings, prohibiting tobacco sales on state
property, and ending the production of cigarettes by state prison industries.
Establishing the right of K-12 students to smoke-free schools, the right of
patients to smoke-free health care facilities, and the right of college
students to smoke-free student housing.
Banning sales of cigarettes through vending machines and prohibiting
distribution of free samples and the sale of individual cigarettes.
-1-
Requiring cigarettes sold by the pack to be placed behind the counter
and putting stiff fines on the retailer and the seller of cigarettes to minors,
as well as the minors who purchase them.
Supporting amendments to Michigan's Clean Indoor Air Act to increase
the percentage of non-smoking restaurant seating to 50 percent.
In addition, Michigan's Department of Public Health has received a $9
million grant through the ASSIST program (Americans Stop Smoking Intervention
Study) to further promote our anti-smoking agenda.
Governor Engler highlighted the fact that Michigan will receive more than
$15 million from the federal government to offer breast and cervical cancer
screening to 15,000 uninsured women.
In addition, the WIC program has been expanded to help prevent low birth-
weight babies and to reach more recipients than ever before. By the end of this year,
more than 180,000 needy women, infants, and children will benefit.
Further efforts to improve awareness of vital pre-natal care is provided by an
expanded "Baby Your Baby" campaign. Calls to the program hotline have increased
a thousand times over. The Governor also created the Task Force on Drug Exposed
Infants to offer recommendations on how to prevent drug abuse among pregnant
women and how to treat the smallest victims of America's drug epidemic.
Governor Engler and HHS Secretary Louis Sullivan recently launched the
Detroit Immunization Initiative to help immunize 15,000 additional pre-schoolers,
raising immunization rates to a target of 90%.
The Governor also announced that he will reinvigorate the Governor's
Council on Physical Fitness to encourage Michigan's citizens to adopt healthy
lifestyles through awareness and public recognitions of achievement.
The success of prevention programs is displayed in MDPH's Upper Peninsula
Diabetes Outreach Network. This initiative has reduced both diabetes deaths and
hospitalization for that disease by about one-third.
Statewide implementation of Governor Engler's prevention plan is linked to
his commitment to "50-50" state/local cost sharing for required basic health care
services by 1994.
CONTROLLING COSTS
"For our job providers, the high cost of health care means higher product
costs and prices -- killing our ability to compete in world markets A competitive
Michigan is a healthy Michigan. And to be competitive and healthy, we must cut
costs The most important action the state can take to control costs and increase
access is to reduce the cost of medical liability."
-2-
UFF DUE OF GOVERNOR JOHN ENGLER
004
the Michigan Senate:
Governor Engler endorsed the following liability reforms already passed by
A no-exceptions cap on non-economic damages
A limit on attorney fees
Improved expert witness qualifications
And a realistic statute of limitations
Governor Engler also announced that he would support legislation to create a
Health Care Fraud Strike Team that will combine elements of Michigan's licensing
boards, the Insurance Bureau, and the Attorney General's Office. This anti-fraud
unit will be responsible for cracking down on practitioners who improperly bill
Medicaid and other insurance carriers in various illegal activies that account for as
much as 10% of our total health care bill. The Strike Team will be empowered to
offer rewards of as much as 10% of the restitution paid by convicted offenders.
Another highlight of the Governor's cost containment agenda is getting the
most and the best care from taxpayer dollars spent in the Medicaid program. To
accomplish this goal, all of Michigan's one million Medicaid recipients will be
enrolled in managed care programs by the end of the 1993 fiscal year. Managed care
provides every patient with a doctor, providing better, more personalized care that
costs 10% less than typical fee-for-service medicine.
Governor Engler offers help in controlling costs to Michigan's job providers
by calling for a moratorium on new state mandated health care benefits. This
action will help businesses maintain coverage they already provide and keep their
products competitive in world markets.
The Governor also endorsed legislative action to create a more efficient
Certificate of Need system that focuses on high cost capital expenditures rather than
excessive regulatory burdens that tend to push up costs.
In order to cope with the increasing costs associated with expansion of the
"scope of practice" of licensed professionals, Governor Engler plans to increase
scrutiny and demand justification of any expansion that adds to insurance liability.
INCREASING ACCESS
"The real question is this: Are we making the best use of our health care
dollar? Hutzel Hospital recently paid $10 million to settle a lawsuit. That $10
million could have paid for pre-natal care for the 10,000 mothers who gave birth at
Hutzel last year My goal is fairness and an efficient system to resolve disputes
that adequately compensates the injured without penalizing those who make a
good faith effort to provide care."
-3-
In his efforts to increase access to medical care, the Governor highlighted
RBRVS -- the Resource Based Relative Value Scale New Reimbursement system.
Michigan is the first state in the nation to implement this initiative to increase
payments for primary care by 21% as well as those for ob-gyn services by 29%.
By emphasizing these high value, relatively low cost services that poor families
need most, more providers will be encouraged to participate in Medicaid and more
patients will be helped with the care they need.
At the same time, the shift to managed care through the Physician Sponsor
Plan gives Medicaid recipients direct access to a personal doctor who will be in
charge of managing all their health care interests.
By reducing the cost of liability, doctors who are currently being forced to
leave the state may choose to remain in Michigan, especially obstetrician/
gynecologists who are so desperately needed.
In addition, Good Samaritan Immunity for Emergency Room providers and
for those who volunteer to serve the poor and uninsured will dramatically increase
the number of practitioners willing to help.
The Governor's plan also proposes allowing small job providers who
purchase employee health coverage for the first time be freed from the burden of
mandated benefits. Experts estimate this action will benefit 10 to 20 percent of
Michigan's uninsured workers -- as many as 200,000 people.
To increase access to care for uninsured children, the Governor continues to
support expansion of the Caring Program for Children. During this year, the
number of participants helped by the WIC nutrition program will climb to more
than 180,000 -- more than ever before.
Governor Engler's commitment to make state and local governments equal
partners in providing required health services will ultimately result in more
individuals gaining access to those services, regardless of their ability to pay.
By investigating the best possible "small market" reforms, the Governor
hopes to increase access by finding ways to end the practices of health redlining,
exclusions for pre-existing conditions, and "churning" - among other risk-avoiding
underwriting strategies that currently deny many people insurance coverage.
Finally, with the 1993 budget, Governor Engler has recommended spending
$18 million to restore the Medicaid Dental Program that provides dentures and
preventive dental care.
-4-
CHOLCR
Udo
IMPROVING QUALITY
"In conjunction with my support for liability reform, I am pleased to
announce my support for legislative proposals to improve licensing and
strengthen enforcement mechanisms to better discipline poor practitioners. In
any profession and any walk of life, there are those who fail to meet their responsi-
bilities to the people they are entrusted to serve. It is in the interest of both the
public and the medical profession that incompetent or negligent doctors are
disciplined and have the chance to get needed help."
The centerpiece of the Governor's strategy to improve quality is his
endorsement of a legislative package of health professional licensing reforms.
These initiatives include:
Dedication of licensing fees to support the investigative and disciplinary
process.
Improved "whistleblower" protections, and mandated confidential peer
reporting of licensing violations.
Improved public participation in the licensing and disciplinary process.
A new, enlightened, and non-punitive way for licensing boards to help
impaired professionals.
And new, definitive deadlines for completion of the investigation,
determination, and discipline process.
Governor Engler stressed that these licensing reforms must be passed in
conjunction with liability reform legislation and should not be separated.
The Governor also announced that he will appoint 8 new members to the
Board of Medicine. In his letter of appointment, he will instruct them to live up to
their statutory obligation and get tough on bad practitioners.
Another part of Governor Engler's strategy to improve the quality of care
includes getting a waiver from the federal government to provide home and
community based care for senior citizens and disabled individuals. Further
improvement in care for senior citizens will result from implementation of a plan
to provide acuity-based reimbursement for nursing home care paid by Medicaid.
This plan will improve quality and access to care for older Michiganians by paying
nursing homes in accordance with care needs of individual patients, not a flat rate.
In addition, by guaranteeing that every Medicaid client has a personal doctor,
patients will develop doctor/patient relationships that will improve the overall
quality of care.
-5-
10:02
OFFICE OF GOVERNOR JUHN ENGLER
007
THE IMPORTANCE OF NATIONAL HEALTH CARE REFORM
"The reforms I have talked about today are important, but they cannot be
considered a complete solution to the problem. They are realistic and achievable
steps state government can take to reduce costs, increase access, and improve
quality. A complete solution must be national in scope While significant reform
is needed, we simply cannot throw out our system of health care and just start
anew Our responsibility is to build upon what works and reform what doesn't."
Governor Engler emphasized that the most intractable of our health care
problems - like providing coverage for the working uninsured - must be addressed
by a national plan. He offered his endorsement of President Bush's initiatives to:
Help the uninsured afford health insurance through tax credits.
Help middle income families pay for coverage with tax deductions.
Improve the efficiency of the health care system by developing health
insurance networks.
Put a lid on medical malpractice lawsuits.
Get federal programs under control and encourage state innovations.
The Governor also indicated that under his leadership, Michigan is at the
national bargaining table, helping to shape the national strategy in forums like:
The SEIU Labor/Management Joint Committee on Health Care Reform
The Engler/Poling Health Care Group
The National Governor's Association Health Care Task Force
He made it clear that a completely government-run system is not the right
answer because such a bureaucracy would limit choice, create shortages and delays,
and stifle the development of life-saving innovations.
A PRESCRIPTION FOR A HEALTHY MICHIGAN
"Concrete action to cut costs, expand prevention programs, and increase
access to care are the best things one state can do to move ahead on this vital
issue. We won't see results overnight, but this is a long term strategy for the long
term health of Michigan's people. I urge the Legislature to act promptly and
adopt this Prescription for a Healthy Michigan."
-30-
П-А
association
MICHIGAN
STATE
H
33
MEDICAL
SOCIETY
we care
MEDICAL LIABILITY REFORM
I. Why liability reform is needed in Michigan
Medical liability reform is needed in Michigan because
affordable, available health care is threatened by unfair
medical liability laws.
A. Access problems
The medical liability environment in Michigan has
resulted in many access problems including the following:
93% of Michigan's smaller and rural hospitals are
having difficulty recruiting health care
professionals, especially obstetricians, primarily
because of liability costs. (Source: 1991 MHA survey
of smaller hospital executives)
Only five of the sixteen Upper Peninsula hospitals
have a physician who specializes in obstetrics.
During the past five years, 92% of the hospitals in
the Detroit area have experienced difficulties
retaining or recruiting physicians in high risk
specialties, including orthopedic surgery, and
neurosurgery, due to medical liability costs. (Source:
SEMHC)
Nearly 87% of the medical residents trained in
Michigan who originally planned to practice in the
Michigan Hospital Association 6215 West St. Joseph Highway Lansing, Michigan 48917 phone (517) 323-3443
Michigan Association of Osteopathic Physicians & Surgeons, Inc. 33100 Freedom Road Farmington, Michigan phone (313) 476-2800
Michigan State Medical Society 120 West Saginaw Street P.O. Box 950 East Lansing, Michigan. 48826-0950 phone (517) 337-1351/fax (517) 337-2490
state, but changed their minds during their residency
training, cited liability as a major factor in their
decision to leave Michigan. (Source: MSMS 1991 study)
In recent years, one in ten Michigan hospitals has
closed its obstetrical unit, in part because of the
medical liability climate and the resultant difficulty
in recruiting obstetricians. (Source: State of
Michigan commissioned study)
Feedler 3443.
Approximately 20% of Michigan's obstetricians do not
deliver babies anymore and another 20% do not perform
Nancy Mich.Hosp Mich. 003 Hosp. Asso.
high risk deliveries. (Source: Michigan section of
the American College of Obstetricians and
Gynecologists, 1991)
Ninmi upto bith
Because of the negative liability climate, many
can 15 yrs. suedyor
physicians, including neurosurgeons and orthopedic
surgeons, are not performing high risk procedures.
B. Cost Problems
In 1989, physician charges were 17% higher because of
the cost of liability insurance and the cost of
"defensive medicine" procedures to protect against
lawsuits. (Source: USA Today, 1991)
Ever escalating medical liability costs for health
care providers mean higher costs for consumers and
businesses. Approximately $300 of the average
hospital bill goes to cover liability costs.
Nearly one-half billion dollars is spent annually by
hospitals ($239 million) and physicians ($251 million)
2
on medical liability premiums. (Source: Lewin Study,
1990, commissioned by State of Michigan)
Michigan's medical liability costs for physicians and
hospitals are among the highest in the nation and are
projected to double in seven years, topping $1
billion, if reforms are not enacted. (Source:
Tillinghast Company, nationally recognized insurance
actuarial firm, 1991)
The average hospital per bed medical liability cost in
Michigan is more than three times higher than the
national average. Michigan -- $4,600, national
average --$1,400.
A dollar saved cutting medical liability costs is a
dollar that could go toward improving the access and
quality of our health care.
Small Michigan hospitals pay higher per bed rates than
large hospitals in major U.S. cities. Example: Rural
Michigan -- $2,800 per bed; Chicago -- $2,753;
Cleveland -- $2,351; San Francisco -- $2,797. (Source:
St. Paul Insurance Co. study)
Detroit area hospitals pay the highest liability rates
in the nation. Detroit -- $6,900 per bed; national
average -- $1,400 per bed. (Source: St. Paul Insurance
Co.)
The cost of $1 million/$3 million coverage for Detroit
area obstetricians is $134,000 annually. The same
coverage in Chicago would cost $59,000; $80,000 in New
3
York City; and $51,000 in Ohio. (Source: MHA survey,
1991)
The cost annually of $100,000/$300,000 coverage for
Detroit area obstetricians is $63,000. The same
coverage is $23,000 in Chicago, and $25,000 in Ohio.
The size of awards for liability suits continues to
rise for Michigan hospitals and doctors. The average
payout per paid claim by the Michigan Hospital
Association Insurance Company (MHAIC) went from
$51,000 in 1986, to $139,000 in 1990, a 173 percent
increase in the past four years. The average payout
by the Michigan Physicians Mutual Liability Company
(MPMLC) increased from $61,000 in 1985 to $85,000 in
1990. The average payout by the Physicians Insurance
Company of Michigan (PICOM) went from $39,000 in 1985
to $73,000 in 1990. (Source: MHAIC, MPMLC and PICOM,
1991)
C. Miscellaneous
Only 37 cents of each medical liability dollar goes to
the injured party. Most of the rest of the medical
liability dollar goes for court costs and attorney
fees. (Tillinghast)
The average medical liability case in Michigan takes
three to five years to resolve. One-third of the
cases take from five to ten years to resolve. (Source:
Michigan Commissioner of Insurance)
4
The number of medical liability claims fell after the
glut of suits filed to beat the effective date of the
1986 tort reforms. However, since 1989, an increase
in the number of medical liability claims has
occurred. The medical liability insurance companies
expect this trend to continue. (Source: PICOM, MPMLC,
MHAIC)
Medical liability reform would redirect millions of
dollars now spent on insurance premiums and legal
costs to necessary medical care for patients.
II. Widespread recognition of medical liability problem
The negative medical liability climate in Michigan is
widely recognized. Debbie Dingell, a General Motors Company
executive and chairwoman of the "Baby Your Baby" initiative,
believes there is a serious medical liability problem in
Michigan. In a Detroit Free Press column earlier this year,
Ms. Dingell stated:
"There are numerous factors contributing to the
rate of infant deaths, but one very important
factor that requires immediate attention is the
acute shortage of doctors willing to practice
obstetrics because of concerns over medical
malpractice and high insurance premiums. All
Michigan women are affected by this shortage,
but low-income women in particular are being
denied access to important prenatal
care
Clearly, the unresolved malpractice
liability problem is a growing threat to the
availability and accessibility of prenatal
care."
In addition, Robben Fleming, former Governor Blanchard's
medical liability factfinder wrote in his report that "there
5
is very widespread dissatisfaction with the present system"
of resolving medical liability cases. He also stated that
"Health care costs in all their ramifications
are now a major factor in state and federal
budgets. It is naive to suppose that as the
pressure to control these costs increases, the
problem of medical malpractice can escape
attention and reform.' "
Several newspapers throughout the state including the
Flint Journal, the Bad Axe Huron Daily Tribune, the Jackson
Citizen Patriot, and the Oakland Press have endorsed medical
liability reform during 1991. Moreover, many non-health
groups, including the Michigan State Chamber of Commerce and
the Michigan Association for Local Public Health, have joined
the Medical Liability Reform Coalition.
III. Tort reform legislation
The medical liability reform legislation (SBs 248-249)
supported by MSMS is based on California's highly successful
Medical Injury Compensation Reform Act (MICRA) of 1975.
MICRA has resulted in California physicians paying only a
fraction of the medical liability premiums paid by Michigan
physicians. (See attached sheet) The law also has resulted
in higher policy limits and fewer physicians going without
insurance coverage.
The key elements of the California law, which are
included in SB 249, are a strict limit on non-economic
damages, a sliding scale contingency fee, a requirement that
notice be provided to a physician before a medical liability
6
suit can be filed, and a reduction in the statute of
limitations for minors.
Michigan law currently limits non-economic damages to
$225,000 but provides seven exceptions to the limit. These
exceptions have served to render the existing cap meaning-
less, because virtually every case can come under one of the
exceptions. SB 249 proposes to establish a limit of $250,000
and to eliminate all of the exceptions and thereby establish
a strict cap on non-economic damages, similar to the
California law.
The establishment of a sliding scale contingency fee is
preferable to the current system under which plaintiff
attorneys can recover up to one-third of a plaintiff's award.
Under the sliding scale system, the percentage of the
recovery that goes to the plaintiff's attorney decreases as
the amount recovered by the plaintiff increases. This
provision should help ensure that injured parties receive a
higher percentage of the medical liability dollar.
The provision in SB 249 that would require a plaintiff to
give 180 days notice to a physician before a medical
liability suit can filed would result in many liability
claims being resolved before a lawsuit is actually filed.
The experience under a similar provision in California has
shown that many claims are either settled or dropped during
the notice period. The result is considerable savings in
defense attorney fees and court costs.
7
The requirement in SB 249 that lawsuits on behalf of
children eight years of age or less must be filed by the
childs's tenth birthday is reasonable. In fact, many states
including California, have a more restrictive statute.
California law provides that children who have not reached
their sixth birthday have either three years from the date of
the alleged wrongful act or until their eighth birthday,
whichever period is longer, to sue.
8
COMPARISON OF LIABILITY RATES
FOR MATURE CLAIMS MADE POLICIES
$1 MILLION - - $3 MILLION
Family Physician (Minor Surgery)
Northern California
$ 8,400
Wayne, Oakland, Macomb Counties
$ 34,700*
Rest of Michigan
$ 20,000
Obstetrics/Gynecology
Northern California
$ 38,000
Wayne, Oakland, Macomb Counties
$133,900**
Rest of Michigan
$ 77,000
* $100,000 - $300,000 coverage - $16,000
** $100,000 - $300,000 coverage - $63,000
9
MICHIGAN'S MEDICAL
LIABILITY CRISIS
A Continuing Threat to Accessible,
Affordable Health Care
Our medical liability crisis continues despite the tort
reform efforts of 1986. The crisis continues to reduce patient
access to care and adds to everyone's health care cost.
Michigan's medical liability system is among the most
expensive and inefficient systems in the country.
Every year our physicians and hospitals pay nearly $500
million dollars for medical liability coverage. Michigan's per-bed
hospital rate is more than three times the national average. These
costs increase everyone's health care bill.
In Michigan, claims can take many years to be resolved.
Michigan's Insurance Bureau reported a third of the cases filed
between 1983 and 1988 remained unresolved five years later.
association
Michigan hospitals continue to have tremendous difficulty
recruiting physicians in high-risk specialties including obstetrics,
orthopedic surgery, neurosurgery and emergency medicine. This
MEDICAL MICHIGAN 18 SOCIETY 66 STATE
forces patients to travel long distances from home for services that
were once available at their local hospital.
It's time to change Michigan's medical liability system.
The current system reduces access to health care by driving away
our young physicians, causing older physicians to retire early and
forcing those remaining to reduce services to high risk patients.
Michigan
Association
of
A medical liability system that works better and more
steopathic
equitably is possible. The Legislature must be decisive and enact
Physicians
&
reform legislation to provide better access to care while
Surgeons,
Inc
moderating health care costs.
Public L. Accept Alternanves to Our Current System
Michigan voters overwhelmingly support changes in Michigan's medical liability laws including limits
on attorney fees, limits on awards and an alternative to the tort system.
A Michigan Hospital Association poll of 600 voters conducted in January found:
77 percent think the system of allowing a trial lawyer to take one-third of the patient's award needs
to be changed to make it more equitable.
69 percent support a maximum of $225,000 for non-economic losses.
A Michigan State Medical Society poll of 500 voters conducted in 1989 found similar results including:
75 percent support a new, more equitable system for settling medical liability claims as long as it
is quick, uniform and available to all regardless of income.
Medical Liability Premium Survey
Increase in New Claims Filed
Reveals the Problem
Expected to Continue
Michigan physicians continue to pay among
The number of new claims against the two
the highest premiums in the country, from three to
major physician insurers, Michigan Physicians
seven times as high as physicians in surrounding
Mutual Liability Company (MPMLC) and Physi-
Great Lakes states. Though rates held steady in
cians Insurance Company of Michigan (PICOM),
1990, they are more than 400 percent above what
is increasing again. The dip following the glut of
they were in 1977. This adds to office "overhead"
suits filed to beat the deadline before the 1986 tort
and the cost of doing business which ends up
reform went into effect is over. The insurance
costing everyone more for health care. The rates
companies expect this upward trend to continue.
below are annual premiums based on 1990 data.
The Michigan data is from MPMLC.
MPMLC
PICOM
Ob/Gyn
Internal
Limits
1977
51
195 (Brown-McNeely)
Med.
in $1,000's
1978
179
314 (Brown-McNeely)
Florida
116,436
13,862
2,500/7,500
1979
210
356 (Brown-McNeely)
New York
84,026
15,759
200/600
1980
500
421
Michigan
79,808
12,913
200/600
1981
670
377
Colorado
46,444
6,700
500/1,500
1982
1026
526
California
43,868
5,924
500/1,500
1983
1217
549
Wisconsin
42,722
8,505
400/1,000
1984
1256
706
Texas
38,400
8,665
200/600
1985
1220
839
Ohio
28,470
9,668
200/600
1986
1330
984
Pennsylvania
28,009
6,286
200/600
1987
1007
820
Illinois
27,964
5,832
2,500/7,500
1988
849
778
Indiana
24,615
2,896
100/300
1989
811
670
Minnesota
11,431
2,386
2,500/7,500
1990
950
750
Average Payouts Per Paid Claim
MPMLC
PICOM
Rise Rapidly
Average Payout
Average Payout
1985
$61,100
$39,000
Average payouts per paid claim have risen
rapidly-a41 percent increase in the last five years
1986
$78,700
$52,000
for MPMLC and 87 percent for PICOM. Huge jury
1987
$58,500
$51,000
awards coupled with the increased number of suits
1988
$80,800
$57,000
drive up the cost of health care by increasing the
1989
$84,300
$64,000
cost of liability insurance premiums.
1990
$85,800
$73,000
Recommendations to Help Solve the Medical Liability Crisis
The Michigan Alternative - Senate Bills 248-249
Legislation including tort reforms and an alternative to the traditional court system for settling
medical liability claims has been proposed by Senator Dan DeGrow, R-Port Huron, and Senator John J.H.
Schwarz, MD, R-Battle Creek. This legislation is supported by the coalition of the Michigan State Medical
Society, the Michigan Hospital Association and the Michigan Association of Osteopathic Physicians and
Surgeons.
Under this proposed legislation, patients may bring suit either through the traditional, costly, time-
consuming court system or they may choose a streamlined system to resolve the dispute quicker with more
of the settlement money going to the patient. Specifically, the proposed legislation includes:
an alternative dispute resolution system
sliding scale for attorney fees
a limit of $225,000 on non-economic dam-
stricter statute of limitations
ages, such as pain and suffering
stricter criteria for qualification as an expert
elimination of death, injury to the repro-
witness
ductive system and loss of vital bodily
180 day notice before a medical liability suit
function as exceptions to the limit on non-
can be filed
economic damages
interest to be paid only on plaintiff's portion
a limit of $1.5 million for economic dam-
of award
ages, such as medical costs and lost
elimination of the lost chance doctrine
income
Sliding Scale Contingency Fee
The Coalition is asking hundreds of businesses, senior groups, professional associations, local
governments and others throughout the state to join in a petition to the Michigan Supreme Court asking it
to adopt a sliding scale contingency fee under which the percentage that an attorney is allowed to charge
would decline as the amount recovered increases. Currently, the huge percentage carved out for the
plaintiff's attorney unreasonably reduces compensation to the injured patient and increases costs to
defendants.
The Coalition is Examining Several Other Issues Including:
Physician Licensure and Discipline
A bi-partisan effort to strengthen Michigan's physician licensure and discipline system, strongly
supported by the profession for more than half a decade, is now underway in the Legislature. Major elements
include a nine-month limit on actions and additional funding for more investigative staff.
Immunity for Emergency Care in Hospitals
Senate Bill 268 would offer immunity to health care personnel providing emergency care when no
previous physician-patient relationship existed.
Countersuit Legislation
Legislation is needed that would allow a defendant in a liability suit to file a countersuit against the
plaintiff and the plaintiff's trial lawyer for damages incurred by the defendant if certain conditions exist.
Hospital-Physician Risk Management Programs
Incentives are being offered by insurers to physicians and hospitals implementing risk management
programs and participating in risk management educational seminars. Further programs are under
development by MSMS and MHA.
In addition, MSMS is studying the potential benefits of a State Legal Expense Fund that would provide
governmental liability coverage to physicians treating obstetrical, prenatal and pediatric needs of
Medicaid-eligible women and children.
State Liability Factfinder Finds Real Problems in Our System
Detroit News, November 5, 1990
In his 1990 report to the Governor,
state medical liability factfinder Robben
Fleming found that Michigan is one of the
State near top costs in
nation's most expensive states for physi-
cian and hospital liability insurance costs.
His research showed that the two groups
malpractice Paying price: Study backs claims that riskiest.' suits,
pay $490 million each year for liability
coverage. Since rates are established
sulting firm based in Washington.
It was paid for by the Michigan
based on the number of lawsuits filed
Hospital Association, the Michigan
huge awards make Michigan 'one of
Medical Society. the Michigan of
and the cost of claims, it's obvious Michi-
State State Bar. Blue Cross-Blue Shield and
Hutzel Hospital from a birth in 1981.
Michigan, two physician insurers
gan is out of the norm when compared
With interest, the award could ex-
one hospital malpractice insurer.
to other states.
By Dwight E.M. Angell
ceed $30 million.
The study found:
The study, obtained by The De-
Michigan doctors paid an esti- last
THE DETROIT NEWS
troit News. was commissioned by J.
mated $251 million in premiums state's
This added cost of doing business
Michigan hospitals and doctors
Robben Fleming, Gov. James
or $13,489 for each of the
shell out nearly $500 million a year
Blanchard's appointed fact-finder on
year 18,600 doctors who treat patients.
ends up hurting the people of Michi-
in medical malpractice premiums,
medical malpractice.
Michigan hospitals paid $238.7
of the highest statewide outlays
It will be included among recom-
million in medical malpractice That pre-
gan in many ways:
one in the country, according to a yet-to-
mendations Fleming is to send to
in fiscal year 1988.
be-released study.
Blanchard by Nov. 30 on the liability
miums amount ranked third overall, behind
The study documents for the first
issue. The study compares Michigan
California and New York, states with
higher medical costs
time the state's total cost for mal-
with other large industrialized states
more hospitals than Michigan.
practice premiums, and bolsters ar- of-
such as New York and New Jersey.
Michigan hospitals also ranked
guments by medical and hospital
As in other forms of insurance,
high in other categories for malprac-
higher deductibles and co-pays
ficials that numerous lawsuits, sym-
medical malpractice premiums re-
tice premiums: second in premiums in
pathetic juries and uncontrolled
flect such factors as past and future the
hospital bed ($6,902); second and
reduced access to health care
awards inflate malpractice premiums. hos-
claims, inflation and return on
per premiums per capita ($19.83) total
Last month, the medical and
insurer's own investments.
first in premiums as a percent of
pital $19-million Wayne County
community was stunned Circuit by a
The study was done by Lewin/
hospital expenses (2.84 percent).
ICF. an international health care con-
Court jury verdict against Detroit's
In his report, liability factfinder Robben Fleming wrote:
Widespread Dissatisfaction with Present System
"Whether or not there is at any given moment a 'crisis' in medical malpractice is a largely irrelevant
consideration. There is very widespread dissatisfaction with the present system."
Medical Liability Costs Add to Overall Health Care Costs
"Health care costs in all their ramifications are now a major cost factor in state and federal budgets.
It is naive to suppose that as the pressure to control these costs increases, the problem of medical malpractice
can escape attention and reform."
Tort Theory is Seriously Flawed
"Our system of adjudicating malpractice claims on a tort theory is seriously flawed. A tort is a civil
wrong, usually classified as either intentional or negligent. Since an intentional act which damages a patient
is rare, this leaves only negligence as the principal cause of action. But medical science is imperfect and
many maloccurrences take place which are not attributable to negligence."
Current System is Unfair and Inequitable
"The fairly obvious conclusion from all this is that if we want all patients who suffer from a bad result
to be compensated, an entirely laudable objective, we need a new system of insurance in which all of us
participate in the rewards and the costs. So far we have, as a people, been unwilling to enact the appropriate
legislation. Meanwhile, it is patently unfair and inequitable to burden doctors and hospitals with damages
where there is no legitimate claim of negligence."
Consumers Pay for Liability Costs
"We need doctors to care for Michigan's mothers and
children. The state must take immediate action to reduce
the impact of liability on access to prenatal care."
- Debbie Dingell
Detroit Free Press, January 14, 1991
Medical Liability Premiums per Hospital Bed
Selected States - 1988
A medical liability crisis
$8,000
$7,000
puts Medicaid babies at risk
$6,000
By Debbie Dingell
$5,000
Last month, the Michigan Depart-
T
his crisis must
$4,000
ment of Public Health released
be addressed.
$3,000
Michigan's 1989 infant mortality sta-
tistics. Contrary to the national trend,
$2,000
Michigan's rate increased; there were
the widely held perception that the
1,645 infant deaths in 1989, 103 more
poor, particularly those on Medicaid,
$1,000
than in 1988.
tend to sue more often than people in
$0
This rate is unacceptably high and
other economic groups has not been
we must do something as a state to
substantiated.
MI
IL
OH
IN
WI
improve the chances of the newborn
According to the American Col-
Source: Lewin/ICF, 1990
child to live.
lege of Obstetricians and Gynecolo-
There are numerous factors con-
gists, the average cost of liability
tributing to the rate of infant deaths,
insurance for obstetricians in 1987
but one very important factor that
was three times higher than in 1982.
Premiums as a Percent of Total Hospital Expenses
requires immediate attention is the
During this same time, 12 percent of
Selected States - 1988
acute shortage of doctors willing to
ob-gyns terminated their obstetrical
practice obstetrics because of con-
practices, and many others limited
Percent
cerns over medical malpractice and
the high-risk portion of their prac-
high insurance premiums. All Michi-
tice.
3.0
gan women are affected by this short-
In response to the growing threat
2.5
age, but low-income women in par-
to the availability and accessibility of
2.0
ticular are being denied access to
prenatal care, states are examining
important prenatal care.
four potential solutions:
1.5
The problem has been exacerbated
Supplementing liability insurance
in recent weeks by the astounding
premiums for providers of obstetri-
1.0
$19-million jury award against Hutzel
cal care for medically underserved
0.5
Hospital in a medical malpractice
areas and medically indigent patients.
case.
Assuming the financial risk of large
0.0
At the time of that judgment, there
malpractice judgments against pro-
MI
IL
IN
were only four private doctors in
viders who treat Medicaid and indi-
OH
WI
Wayne County who agreed to treat
gent patients.
Source: Lewin/ICF, 1990
pregnant Medicaid patients. Now it
Exempting from liability health
appears we will lose all of them.
services that are provided without
That means that low-income
compensation or on an emergency
Cost of "Defensive" Medicine
basis.
women may only be able to get pre-
AMA estimates $14 Billion is spent each year
natal care in public health clinics.
Reforming the tort liability system
nationwide on "defensive" medicine
Those clinics, already overflowing
by creating a no-fault approach.
with patients, simply cannot make up
Michigan legislators must recog-
This cost creates higher co-pays and deductibles
for the loss of private physicians.
nize the significant impact the short-
in consumer health care policies
Clearly, the unresolved malprac-
age of prenatal care is having on the
tice liability problem is a growing
health of children. This crisis must be
threat to the availability and accessi-
addressed.
bility of prenatal care.
Women who are poor and preg-
Access Problems
According to the National Com-
nant face barriers to receiving the
mission to Prevent Infant Mortality,
prenatal care that can improve sig-
Physicians reducing services or leaving the state
obstetrical providers nationwide (in-
nificantly the health of their babies.
cluding family physicians, obstetri-
We need doctors to care for
Limited treatment for Medicaid and uninsured
cians and certified nurse midwives)
Michigan's mothers and children. The
patients
have been affected by increases in
state must take immediate action to
liability insurance rates. Physicians
reduce the impact of liability on ac-
Emergency Room staffing problems
are increasingly unwilling to provide
cess to prenatal care.
maternity services to low-income and
Rural recruitment problems
Debbie Dingell, a General Mo-
Medicaid patients because they fear
tors Co. executive, is chairwoman of
12.5% of Obstetrician/Gynecologist in the U.S.
lawsuits and because of low reim-
Baby Your Baby, a public-private
bursement rates. Although low-in-
no longer deliver babies
initiative designed to reduce infant
come women have higher health risks,
mortality rates.
What Michigan Newspapers are Saying About Medical Liability
"There is a clear need to establish limits for malpractice claims for all but those cases in
which damages are severe and/or the negligence is great. The Legislature definitely should
confront this thorny issue A legislative solution to these problems is greatly needed. The alterna-
tive proposed by Sen. DeGrow may well provide a vehicle for a compromise retaining the advan-
tages of the present system while also offering a speedier, less costly method of settling medical
malpractice claims."
- The Flint Journal
February 13, 1991
"The malpractice problem in Michigan has resulted in liability insurance rates fives times as
high as the rest of the nation. It has made recruitment of doctors to this state nearly impossible
why would physicians come to an area where they have to pay more for malpractice insurance and
may end up being sued despite having provided a patient the best care possible?
The malpractice problem also has resulted in skyrocketing health care costs, as doctors and
hospitals practice defensive medicine so patients cannot sue because of a lack of testing How-
ever, state lawmakers first must vigorously revive the malpractice reform debate in Lansing. Then
they must work to provide legislation that brings the malpractice lawsuit epidemic under control."
- The Huron Tribune, Bad Axe
February 27, 1991
"So, what's the truth? Is the malpractice crisis so much smoke and mirrors, as the lawyers
say? Or is it for real, as the doctors and hospitals say? We are inclined to side with the medical
community.
Our reason is the genuine crisis we have observed in Jackson. This community has lost many
of its obstetricians. The situation grew so serious that as many as 500 Jackson County women
annually have been going out of county for prenatal and maternity care. Many doctors have cited
the high liability insurance as their reason for either leaving the community or a specialty.
So yes, the crisis is real and further reforms are needed. The review board is a good idea."
-The Jackson Citizen Patriot
February 19, 1991
"A rational person would conclude, that the Legislature needs to look at changes in the
malpractice-related laws. It did make some modifications a few years ago but they seem to have
been ineffectual.
The problem is that the lawyers who profit from Michigan's overly frequent and generous
malpractice awards are dead set against significant change. And, reading the handwriting on the
wall, they are already mounting a lobbying campaign to retain the status quo
It's big business. Hospitals and doctors in Michigan spend $500 million a year on malprac-
tice premiums, a hefty percentage of which eventually finds its way into the lawyer's pockets."
-The Oakland Press
March 15, 1991
Call or Write Your State Representative and State Senator Today.
Ask them to support the Michigan Alternative.
The Honorable
The Honorable
Michigan Senate
Michigan House of Representatives
P.O. Box 30036
P.O. Box 30014
Lansing, MI 48909
Lansing, MI 48909
To obtain your legislators' telephone numbers, call the State Capitol at 517-337-1837.
Michigan Hospital Association, 6215 West St. Joseph Highway, Lansing, MI 48917 Ph. (517)323-3443
Michigan Association of Osteopathic Physicians & Surgeons, Inc., 33100 Freedom Road, Farmington, MI Ph. (313) 476-2800
Michigan State Medical Society, 120 West Saginaw Street, P.O. Box 950, East Lansing, MI 48826-0950 Ph. (517) 337-1351
9.4
ACCESS TO JUSTICE ACT OF 1992
A BILL
To provide greater access to civil justice by reducing costs
and delay and for other purposes.
1
Be it enacted by the Senate and House of Representatives of
2 the United States of America in Congress assembled, That this Act
3 may be cited as the "Access to Justice Act of 1992".
4
5 SEC. 101. FEDERAL DIVERSITY JURISDICTION; SUM IN
6
CONTROVERSY
7
Section 1332 of Title 28, United States Code, is amended by
8 redesignating subsection (d) as subsection (g) and inserting
9 after subsection (c) the following new subsections:
10
w (d) In determining whether a matter in controversy exceeds
11
the sum or value of $50,000, the amount of damages for pain
12
and suffering or mental anguish, punitive or exemplary
13
damages, and attorney's fees or costs shall not be included.
14
(e) On February 1 of each year, the monetary amounts
15
referred to in subsections (a), (b) and (d) shall each be
16
adjusted to the nearest thousand dollars to reflect the
17
change in the Consumer Price Index for All Urban Consumers
18
(CPI-U), U.S. City Average, All Items, under its current
19
official reference base as designated by the Bureau of Labor
20
Statistics, U.S. Department of Labor. The adjusted amounts
21
shall be attained by multiplying the relevant monetary
22
amount by the annual average CPI-U for the most recent
23
calendar year, and then dividing that SUR by the annual
24
average CPI-U for 1992."
2
1 SEC. 102. DIVERSITY OF CITIZENSHIP JURISDICTION; AWARD OF
2
ATTORNEY'S FEES TO PREVAILING PARTY.
3
Section 1332 of Title 28, United States Code, is amended by
4
adding after subsection (e) the following new subsection:
5
(f) For the purposes of this section:
6
(1) The prevailing party shall be entitled to
7
attorney's fees only to the extent that such party prevails
8
on any position or claim advanced during the litigation.
9
The sum of entitled attorney's fees shall be paid by the
10
non-prevailing party but shall not exceed the attorney's
11
fees of the non-prevailing party with regard to such
12
position or claim. If the non-prevailing party receives
13
services under a contingent fee agreement, the SUR of the
14
entitled attorney's fee shall not exceed the reasonable
15
value of those services.
16
(2) Counsel of record in actions under this section
17
shall maintain accurate, complete records of hours worked on
18
the matter regardless of the fee arrangement with his
19
client.
20
# (3) The term 'prevailing party' means a party to an
21
action who obtains a favorable final judgment (other than by
22
settlement), exclusive of interest, on all or a portion of
23
the claims asserted during the litigation.
24
(4) The court may, in its discretion, limit the fees
25
recovered under paragraph (1) of this section if the court
26
finds special circumstances that make payment of such fees
27
unjust.
3
1
(5) This subsection shall not apply to any action
2
removed from a state court pursuant to Section 1441 of Title
3
28, United States code, or to the United States or any
4
state, agency of the United States or any state, or any
5
official, officer or employee of a federal or state
6
agency
7 SEC. 103. AMENDMENT TO EQUAL ACCESS TO JUSTICE ACT.
8
(a) Subsection (d) (2) (A) (ii) of section 2412 of Title 28,
9 United States Code, is amended by striking out "or a special
10 factor, such as the limited availability of qualified attorneys
11 for the proceedings involved," and inserting in lieu thereof "as
12 reflected by the change in the Consumer Price Index for All Urban
13 Consumers (CPI-U), U.S. City Average, All Items, under its
14 current official reference base as designated by the Bureau of
15 Labor Statistics, U.S. Department of Labor.".
16
(b) Subsection (d) of section 2412 of Title 28, United
17 States Code, is amended by adding the following new paragraph
18 after paragraph (d) (5) :
19
(6) (A) If a court determines that the cost of living
20
adjustment permitted by paragraph (d) (2) (A) (ii) should be
21
made in a particular case, it shall calculate the adjustment
22
in accordance with this paragraph. When compensable
23
services are rendered in more than one calendar year, an
24
adjustment shall be made for each year in which compensable
25
services are rendered.
26
4
1
(i) When compensable services are rendered in the
2
present calendar year, the hourly rate shall be calculated
3
by multiplying $75 times the CPI-U for the month in which
4
the last compensable services were rendered, and then
5
dividing that sum by the CPI-U for October, 1981.
6
(ii) When compensable services are rendered in more
7
than one calendar year, the adjustment for services rendered
8
in the present calendar year shall be calculated using the
9
formula set forth in (i) above. The hourly rate for
10
services rendered in each previous calendar year shall be
11
calculated by multiplying $75 times the annual average CPI-U
12
for the year in which the services were rendered, and then
13
dividing that sum by the CPI-U for October, 1981.
14 SEC. 104. PRIOR NOTICE AS A PREREQUISITE TO BRINGING
15 SUIT IN THE UNITED STATES DISTRICT COURT.
16 Title 28 of the United States Code is amended by adding a new
17 section 483 as follows:
18
"Prior Notice To Suit. (a) At least 30 days before filing
19
suit, a claimant shall transmit written notice to the
20
intended defendant or defendants of the specific claims
21
involved, including the amount of actual damages and
22
expenses incurred and to be incurred. The claimant shall
23
transmit such notice to the intended defendant or defendants
24
at an address reasonably calculated to provide actual notice
25
to each such party. For purposes of this section,
26
'transmit' shall mean to mail by first class-mail, postage
27
prepaid, or contract for delivery by any company which
5
1
physically delivers correspondence as a commercial service
2
to the public in its regular course of business. A
3
certificate of service evidencing compliance with this
4
subsection shall be filed with the court at the commencement
5
of the action.
6
(b) In the event the applicable statute of limitations for
7
that action would expire during the period of notice, the
8
statute of limitations shall expire on the thirtieth day
9
from the date written notice was transmitted to the intended
10
defendant or defendants. The parties may by written
11
agreement extend the tolling period not to exceed 90 days.
12
(c) The requirements of this section shall not apply --
13
(1) in any action to seize or forfeit assets subject
14
to forfeiture or in any bankruptcy, insolvency,
15
receivership, conservatorship, or liquidation proceeding;
16
(2) where the assets that are the subject of the
17
action or that would satisfy the judgment are subject to
18
flight, dissipation or destruction, or where the defendant
21
19
is subject to flight;
show
05
20
"(3) where a written notice prior to filing suit is
21
otherwise required by law, or where the claimant has made a
22
prior attempt in writing to settle the claim with the
23
defendant;
24
(4) in proceedings to enforce a civil investigative
25
demand or an administrative summons;
26
(5) in actions to foreclose liens; or
6
1
(6) in actions pertaining to temporary restraining
2
orders, preliminary injunctive relief, fraudulent conveyance
3
of property, or in other types of actions which by their
4
nature compel immediate resort to the courts.
5
"(d) In the event the district court. finds that the
6
requirements of subsection (a) of this section have not been
7
fulfilled by the claimant, and such defect is asserted by
8
the defendant within 60 days of service of the summons or
9
complaint upon such defendant, the claim shall be dismissed
10
without prejudice and the costs of such action, including
11
attorney's fees, shall be imposed upon the claimant.
12
Whenever an action is dismissed under this section, the
13
claimant may refile such claim within 60 days after
14
dismissal regardless of any statutory limitations period if:
15
(1) during the 60 days after dismissal, notice is effected
16
under subsection (a) of this section and, (2) the original
17
action was timely filed in accordance with subsection (b) .".
18 SEC. 105 AWARD OF ATTORNEY'S FEES IN DISPUTES INVOLVING THE
19 UNITED STATES.
20 Title 28 of the United States Code is amended by adding a new
21 section 2412a following 28 U.S.C. §2412 as follows:
22
"Award of Attorney's Fees in Disputes Involving The United
23
States. (a) Except as otherwise specifically provided by
24
statute, the United States is authorized to enter into an
25
agreement which provides that attorney's fees may be awarded
26
against the United States or any other party to the
27
litigation --
7
1
(1) where the United States commenced the suit or
2
(2) in civil litigation involving disputes pursuant to
3
the Contract Disputes Act of 1978, 41 U.S.C. " 601-613,
4
including litigation before boards of contract appeals
5
pursuant to 41 U.S.C. §§ 606 and 607; or
6
(3) where the United States and another party have
7
agreed to the use of outcome-determinative mediation, the
8
mediation has resulted in a determination, and the United
9
States or the other party has given notice pursuant to 28
10
U.S.C. $ 484(b) (8), pertaining to outcome-determinative
11
mediation, that either party accepts the determination. In
12
this event, 28 U.S.C. 5 484 (b) (8) (A) - (8) (c), pertaining to
13
award of costs and attorney's fees, shall apply to the award
14
of attorney's fees.
15
(b) The following standards shall apply to the award of any
16
attorney's fees pursuant to subsection (a) (1) or (2) :
17
(1) Attorney's fees may be awarded only to a
18
prevailing party in the litigation, subject to paragraphs
19
(b) (2) and (3) The prevailing party shall be entitled to
20
attorney's fees from the non-prevailing party with respect
21
to and only to the extent that such party prevails on any
22
claim advanced during the litigation, except that the sum of
23
entitled attorney's fees shall not exceed the attorney's
24
fees of the non-prevailing party with regard to such claim.
25
w (2) In determining the amount of attorney's fees for a
26
private party, the court or board shall take into account
27
1
the degree of success obtained by that party relative to its
2
original claim or claims, the prevailing market rates in the
3
area for the kind and quality of the legal services
4
furnished, and any other factors relevant to whether an
5
award of attorney's fees would be reasonable and, if so,
6
what a reasonable amount of attorney's fees would be.
7
(3) In determining the amount of attorney's fees of
8
the United States, the court or board shall determine the
9
number of hours spent by the attorneys employed by the
10
United States on the litigation multiplied by the salaries
11
and benefits paid those attorneys, and an amount for
12
overhead, computed as an hourly rate.
13
"(c) A party who files an application for an award of
14
attorney's fees and expenses against the United States under
15
any other provision of law may not pursue an award of
16
attorney's fees under this section. A party who files an
17
application for an award of attorney's fees under this
18
section may not pursue an award of attorney's fees and
19
expenses under any other provision of law. A party who
20
agrees to mediation under 28 U.S.C. 5 484 may seek an award
21
of attorney's fees only under this section and 28 U.S.C. §
22
484.
23
"(d) A party seeking an award of attorney's fees under this
24
section shall file an application for fees within thirty
25
days of final judgment in the action. The application shall
26
show that the party is eligible to receive an award under
27
9
1
this section and the amount sought, including an itemized
2
statement from any attorney appearing on behalf of the party
3
which sets forth the actual time expended and the rate at
4
which fees are computed. Within thirty days after service
5
of the fee application upon the party against whom the fees
6
are sought to be awarded, that party may file a response
7
setting forth its reasons why an award of fees would not be
8
reasonable or why the amount of fees should be reduced.
9
Where an award of attorney's fees is sought against any
10
party, the attorney for that party shall submit a statement
11
of the total amount of attorney's fees incurred in the
12
litigation in order that the court or board may determine
13
that the fees sought in the application do not exceed the
14
amount of fees incurred by that party.
15
"(e) As provided in appropriations acts, agreements may be
16
entered into as authorized by this section. Awards of
17
attorney's fees received by an agency on behalf of the
18
United States pursuant to this section shall be credited to 8
19
an appropriate account of that agency. To the extent
20
provided in advance in appropriation acts, such amounts
21
shall be available only to pay awards of attorney's fees
22
against that agency on behalf of the United States made
23
pursuant to this section. Each such agency is authorized to
24
pay any shortfall caused if amounts credited to such account
25
are insufficient to pay amounts awarded against such agency
26
10
1
on behalf of the United States from funds currently
2
available in such account
3
w (f) For the purposes of this section:
4
" (1) United States' includes any agency and any
5
official of the United States acting in his or her official
6
capacity;
7
N
(2) final judgment' means a judgment that is final
8
and not appealable; and
9
#
(3) prevailing party' means a party to an action who
10
obtains a favorable final judgment other than by settlement,
11
exclusive of interest, on all or a portion of the claims
12
asserted during the litigation."
13 SEC. 106. AVOIDANCE OF LITIGATION THROUGH MULTI-DOOR
14 COURTHOUSES.
15
Title 28 of the United States Code is amended by adding a
16 new section 484 as follows:
17
"Multi-Door Courthouses. (a) The chief judge of each
18
federal judicial circuit shall designate one district within
19
the jurisdiction of the Circuit to be a pilot Multi-Door
20
Courthouse district; provided, however, that the United
21
States Court of Appeals for the District of Columbia Circuit
22
shall not be included. The United States Court of Appeals
23
for the Federal Circuit shall designate the United States
24
Claims Court to be a pilot Multi-Door Courthouse. Such
25
designation, and the program established by this section,
26
shall terminate at the expiration of a three-year period
11
1
following such designation unless renewed by an Act of
2
Congress,
3
(b) (1) Every court which has been designated as a Multi-
4
Door Courthouse, as set forth in subsection (a), shall, not
5
later than 6 months after the effective date of this Act,
6
establish an alternative dispute resolution plan.
7
"(2) The alternative dispute resolution plan
8 shall include, but not be limited to--
9
(A) procedures for limited discovery;
10 "(B) confidentiality of proceedings as to possible subsequent
11 pretrial and trial actions; and
12
(c) the selection, use, and payment of non-
13
judicial personnel (also referred to in this section as
14
neutrals, mediators, or arbitrators) who may be selected to
15
conduct alternative dispute resolution procedures.
16
(3) The plan shall also establish standards for
17
determining which cases are appropriate for alternative
18
dispute resolution, considering such factors as whether
19
factual issues predominate over legal issues, whether the
20
case involves complex or novel legal issues requiring
21
judicial action, and any other factors the court considers
22
relevant.
23
(4) Each plan shall provide that each federal judge
24
or, in a case assigned to a magistrate judge, magistrate
25
judge in a Multi-Door Courthouse established under
26
subsection (a) shall conduct a conference with counsel
27
12
1
within 120 days after a complaint is filed to review non-
2
binding, voluntary alternative dispute resolution procedures
3
that may be used in lieu of litigation to resolve the claims
4
in controversy.
5
(5) Outcome-determinative mediation under this
6
section means a procedure in which either a single mediator
7
or a panel of three mediators selected by or under the
8
direction of a federal district court provides the parties
9
with a dollar amount determination that would be awarded if
10
the case is tried.
11
(6) Each plan shall authorize the parties, if they
12
agree, to utilize non-binding alternative dispute resolution
13
procedures that may be used in lieu of litigation to resolve
14
the claims in controversy. These non-binding alternative
15
dispute resolution procedures shall include, but are not
16
limited to, early neutral evaluation, traditional mediation,
17
outcome-determinative mediation, minitrials, summary jury
18
trials, and arbitration
19
(7) Each plan shall provide that
20
(A) the parties may agree as to the use of any
21
alternative dispute resolution procedure listed in the
22
alternative dispute resolution plan to effectuate prompt
23
resolution of the claims involved; and
24
w (B) the parties may choose to utilize the
25
alternative dispute resolution procedures and neutrals made
26
available by their court or may, if all parties and the
27
13
1
court agree, utilize the services of other neutrals not
2
designated in accordance with the court's alternative
3
dispute resolution plan.
4
48) Each plan shall also provide that if the parties
5
choose outcome-determinative mediation and in the event a 8
6
determination is reached--
7
(A) either or any party may give notice that it
8
intends to accept that determination, while the other party
9
or parties remain free to reject the determination and
10
continue with the litigation. If all parties reject that
11
determination, no costs or attorney's fees shall be assessed
12
against any party;
13
(B) a plaintiff, including the United States or
14
an officer or agency thereof, who rejects the determination
15
and fails to obtain a final judgment that is at least ten
16
percent greater than the determination shall pay the
17
defendant's costs, as set forth in 2B U.S.C. $1920, and
18
reasonable attorney's fees, as set forth in 28 U.S.C.ens
19
$2412a, incurred after the rejection of the determination;
20
and
ORSITE
21
(c) a defendant, including the United States and
22
officers and agencies thereof, who rejects the determination
23
and fails to obtain a final judgment that is at least ten
24
percent less than the determination shall pay the
25
plaintiff's costs, as set forth in 28 U.S.C. §1920, and
26
14
1
attorney's fees, as established in 26 U.S.C. §2412a,
2
incurred after rejection of the determination.
3
"(9) In carrying out their plans, the district courts
4
are authorized to utilize the volunteer services of non-
5
judicial personnel (also known as neutrals, mediators, and
6
arbitrators) to conduct alternative dispute resolution
7
procedures. The courts are also authorized to establish and
8
pay, subject to amounts provided in advance in
9
appropriations acts and to limits set by the Judicial
10
Conference of the United States, the amount of compensation,
11
if any, that each neutral shall receivedfor services
12
rendered in each case."
13 SEC. 107. FLEXIBLE ASSIGNMENT OF DISTRICT COURT JUDGES.
14
(a) Section 292(d) of Title 28, United States Code, is
15 amended by striking out "upon presentation of a certificate of
16 necessity by the chief judge or circuit justice of the circuit
17 wherein the need arises. and inserting in lieu thereof "whenever
18 the business of that court so requires."
19
(b) Section 604(a) of Title 28, United States Code, is
20 amended --
21
(1) by striking out ":- and" in paragraph (23) and
22 inserting in lieu thereof "i";
23
(2) by redesignating the two paragraphs currently both
24 designated as paragraph (24) as paragraph (25) and paragraph
25 (26), respectively;
26
15
1
(3) by striking the period at the end of new paragraph
2 (25) inserting in lieu thereof and" and
3
(4) by adding the following new paragraph immediately
4 after paragraph (23) :
5
(24) Secure information as to the courts' need for
6
temporary judicial resources to ease overcrowded dockets
7
(including information on delays being encountered in the
8
maintenance of civil suits) and prepare and transmit
9
annually to the Chief Justice, the chief judges of the
10
circuits, the Congress and the Attorney General, statistical
11
data, reports and recommendations summarizing the results of
12
this inquiry;".
13 SEC. 108. IMMUNITY OF STATE JUDICIAL OFFICERS.
14
(a) Section 1988 of Title 42, United States Code, is amended
15 by inserting before the period at the end of the second sentence
16 the following: ", except that notwithstanding any other provision
17 of law, no state judicial officer shall be held liable for any
18 costs, including attorney's fees, in any proceeding brought
19 against such judicial officer for an act or omission taken in an
20 official capacity".
21
(b) Section 1983 of Title 42, United States Code, is
22 amended by adding before the period at the end of the first
23 sentence: ", except that in any action brought against a
24 judicial officer for an act or omission committed in such
25 officer's official capacity, injunctive relief shall not be
26
16
1 granted unless a declaratory decree was violated or declaratory
2 relief was unavailable"
3 SEC. 109. AMENDMENT TO THE CIVIL RIGHTS OF INSTITUTIONALIZED
4 PERSONS ACT.
5
(a) Section 1997e of Title 42, United States Code, is
6 amended by --
7
(1) amending (a) (1) to read as follows:
8
"In any action brought pursuant to section 1983 of Title 42,
9
United States Code, by any adult convicted of a crime con-
10
fined in any jail, prison, or other correctional facility,
11
the court shall continue such case for a period not to ex-
12
ceed 180 days in order to require exhaustion of such plain,
13
speedy, and effective administrative remedies as are
14
available.";
15
(2) redesignating paragraphs (b) (1) and (2) as
16
paragraphs (b) (2) and (3), respectively; and
17
(3) adding a new paragraph (b) (1) immediately after
18 paragraph (a) (2) to read as follows:
19
(b) (1) Upon the request of a State or local corrections
20
agency, the Attorney General of the United States shall
21
provide the agency with technical advice and assistance in
22
establishing plain, speedy, and effective administrative
23
remedies for inmate grievances.".
24
(b) Subsection (d) of section 1915 of Title 28, United
25 States Code, is amended to read as follows:
26
'(d) The court may request an attorney to represent any
27
such person unable to employ counsel and may dismiss the
17
1
case if the allegation of poverty is untrue, or if satisfied
2
that the action fails to state a claim upon which relief can
3
be granted or is frivolous or malicious.
4 SEC. 110. IMPROVEMENTS IN CASE MANAGEMENT
5
Subsection (a) of Section 623 of Title 28, United States
6 Code, is amended --
7
(a) by redesignating paragraphs (5), (6), and (7) as
8 paragraphs (6), (7) and (8), respectively; and
9
(b) by adding the following new paragraph immediately after
10 paragraph (4) :
11
"(5) study and determine ways in which case and docket
12
management techniques (including alternative dispute
13
resolution techniques) may be applied to improve the cost-
14
effectiveness of litigation and to eliminate unjustified
15
expense and delay, and include in the annual report required
16
by paragraph (3) of this subsection details of the results
17
of the studies and determinations made pursuant to this
10
18
paragraph;"
19 SEC. 111. ASSIGNMENT OF JUDGES; PANELS; HEARING; QUORUM.
20
(a) Subsection (c) of section 46 of Title 28, United States
21 Code, is amended to read as follows:
22
'(c) Cases and controversies shall be heard and determined
23
by a court or panel of not more than three judges (except
24
the United States Court of Appeals for the Federal Circuit
25
may sit in panels of more than three judges if its rules so
26
provide), unless a hearing or rehearing before the court in
27
18
1
banc is ordered by a majority of the circuit judges of the
2
circuit who are in regular active service. A court in banc
3
shall consist of all circuit judges in regular active
4
service, except that any senior judge of the circuit shall
5
be eligible to participate, at his election, and upon
6
designation and assignment pursuant to section 294 (c)nof
7
this title and the rules of the circuit, as a member of an
8
in banc court reviewing a decision of a panel of which such
9
judge was a member.
10
(b) Section 6 of Public Law 95-486, 92 Stat. 1633, is
11 amended to read as follows:
12
"Sec. 6. Any court of appeals having more than 15 active
13
judges may constitute itself into administrative units
14
complete with such facilities and staff as may be prescribed
15
by the Administrative Office of the United States Courts.
16 SEC. 112. SEVERABILITY.
17
If any provision of this Act or the amendments made by this
18 Act or the application of any provision or amendment to any
19 person or circumstance is held invalid, the remainder of this Act
20 and such amendments and the application of such provision and
21 amendment to any other person or circumstance shall not be
22 affected by that invalidation.
23 SEC. 113. EFFECTIVE DATE.
24
Except as expressly otherwise provided, this Act shall
25 become effective 90 days after the date of enactment. This Act
26 shall not apply to litigation commenced prior to the effective
19
1 date except that sections 108 and 109 shall apply to civil
2 actions pending in any court on the date of enactment.
NO
SISATANY
ACCESS TO JUSTICE ACT OF 1992
ACCESS TO JUSTICE ACT OF 1992
SECTION-BY-SECTICE ANALYSIS
This bill, the "Access to Justice Act of 1992" (the "Act")
provides for greater access to civil justice by reducing costs,
delays, and excessive, needless litigation. The analysis below
summarizes and explains various key provisions of the Act.
Section 101 provides that the amount in controversy required
to invoke Federal court jurisdiction does not include the amount
of damages sought for pain and suffering or mental anguish,
punitive or exemplary damages, and attorney's fees or costs.
Section 102 adopts a "Fairness Rule" in cases brought under
Federal courts' diversity jurisdiction. The rule will not apply
where (1) the action is removed under 28 U.S.C. 51441; or (2) the
United States or any State, agency of the United States or any
State, or any official, officer or employee of a Federal or State
agency is a party to the action. Under this system, the
prevailing party is entitled to attorney's fees that it expended
in order to prevail, limited to the amount of attorney's fees the
non-prevailing party incurred. Awarded fees are also subject to
limits imposed by judicial discretion in circumstances where
requiring payment of all or a portion of the fees would be
unjust. If the losing party received services under a contingent
fee agreement, the reasonable value of those services is the
award limit. The term "prevailing party" is defined for purposes
2
of this section and section 105 to mean a party to an action who
obtains a favorable judgment, other than by settlement, exclusive
of interest, on all or a portion of the claims asserted during
the litigation.
Section 103 amends the Equal Access to Justice Act.
Subsection (a) establishes a uniform methodology for calculating
awardable fees based upon the Bureau of Labor Statistics'
Consumer Price Index. Subsection (b) provides clear standards
for calculating a cost of living adjustment for compensable
services. No other adjustment to the uniform methodology is to
be made.
Section 104 adds a new section to title 28 of the United
States Code to require that a claimant give written notice of the
specific claims and the amount of actual damages prior to filing
suit in the United States District Court. A certificate of
service showing compliance must be filed when an action is
commenced. New subsection (b) tolls an applicable statute of
limitations that would expire during the period of notice for
thirty (30) days from the date the written notice is transmitted.
New subsection (c) sets out exceptions to the prior notice
prerequisite, which include circumstances that compel immediate
resort to the courts.
3
New subsection (d) provides that upon a finding that the
claimant has not complied with the provisions of new subsection
(a) and upon the assertion of such a defect by the defendant
within 60 days of service of the summons or complaint, the claim
will be dismissed without prejudice, and the costs of such
action, including attorney's fees, may be imposed upon the
claimant. The claimant may refile such claim within 60 days
regardless of any statutory limitations if notice pursuant to new
subsection (a) is effected and the original action was timely
filed.
Section 105 provides for an award of attorney's fees in
disputes involving the United States in specified types of cases
and is only to be implemented when the parties have expressly
agreed to shift fees in accordance with the provisions of this
section. The specified cases are (1) civil litigation initiated
by the United States; (2) disputes pursuant to the Contracts
Disputes Act of 1978, including litigation before boards of
contract appeals, or (3) cases where the United States and
another party have agreed to use outcome-determinative mediation
which has resulted in a determination that either party has given
notice to accept. In those cases, an award of attorney's fees
may be awarded to a prevailing party in the litigation only to
the extent that such party prevails on any claim advanced during
the litigation. The amount cannot not exceed the attorney's fees
of the party who did not prevail on such claim.
In determining the amount of attorney's fees awardable to a
private party, factors including the degree of success obtained
by that party relative to its original claim or claims and the
prevailing market rates in the area for the kind and quality of
the legal services furnished should be considered in determining
whether an award of attorney's fees would be reasonable, and, if
so, in what amount. The number of hours spent by the attorneys
employed by the United States on the litigation multiplied by the
salaries and benefits paid to those attorneys, and an amount for
overhead, computed at an hourly rate, is determinative of the
amount of attorney's fees awardable to the United States.
An application for an award of attorney's fees under this
Act bars pursuit of an award of attorney's fees and expenses
under the Equal Access to Justice Act. Likewise, an application
under the Equal Access to Justice Act precludes an application
for an award of attorney's fees under this Act. Thus, a party
may not initiate proceedings under either Act without waiving all
rights under the other Act.
This section sets forth the procedures by which to apply for
and obtain an award of attorney's fees in certain disputes
5
involving the United States. It also states that fee-shifting
agreements may be entered into, fees received by the United
States may be credited to an agency account, and payments may be
made from that account to pay fee awards against the United
States.
"United States" is defined for purposes of this section to
mean any agency and any official of the United States acting in
his or her official capacity. "Final judgment" is defined to
mean a judgment that is final and not appealable.
Section 106 adds a new section to title 28 of the United
States Code which creates a multi-door courthouse program to be
used in selected Federal district courts for a three-year period
(unless renewed by Congress). This program will foster use of
alternative dispute resolution ("ADR") procedures. The
designated districts will adopt plans permitting the parties to
choose among specific methods for resolving their disputes,
without litigation.
New subsection (a) provides that the Chief Judge of each of
the Federal Circuits, except the District of Columbia, will
designate one of its districts to be a pilot multi-door
courthouse.
6
New subsection (b) provides that each multi-door courthouse
district will, within six months of the effective date of this
Act, establish an ADR plan. The plan will include (1) procedures
for limited discovery; (2) confidentiality of proceedings
regarding possible pretrial and trial actions; (3) selection, use
and payment of non-judicial personnel to conduct ADR; and (4)
standards for determining which cases should go to ADR. The
parties will be authorized, upon agreement, to utilize non
binding ADR in lieu of litigation. Approved forms of ADR include
early neutral evaluation, traditional mediation, outcome
determinative mediation (one mediator or a panel of three
mediators selected by or under the direction of a Federal
district court to provide a dollar amount determination of the
outcome of the case if tried), minitrials, summary jury trials,
and arbitration. In addition, the ADR plan will provide for a
conference with counsel conducted by the district judge or
magistrate judge to whom a case is assigned within 120 days after
a complaint is filed to review the use of non-binding, voluntary
ADR procedures.
New subsection (b) further provides that the parties may
agree to use any ADR procedure listed in the ADR plan. The
parties may choose to use the ADR procedures and neutrals made
available by their district court. In addition, if all parties
and the court agree, the parties may use other neutrals, not
7
designated through their court's ADR plan. In the event that
outcome-determinative mediation is selected and a determination
is reached, new subsection (b) provides that any party may
independently decide to accept or reject the determination and
continue with the litigation, giving notice of such an intention.
If all parties reject the determination, then no attorney's fees
and costs will be assessed against any party. If any party
rejects a determination and fails to obtain an outcome at least
10% more favorable than the ADR determination, that party will
have to pay its opponent's reasonable expenses and attorney's
fees incurred after rejection of the determination. This
provision applies to the United States or any of its officers or
agencies.
The district courts are authorized to use non-judicial
personnel on a volunteer basis to conduct the procedures in
carrying out the ADR plans. These volunteers, neutrals,
mediators, and arbitrators may be compensated for services
rendered by the district courts, subject to amounts provided in
advance in appropriations acts and to limits set by the Judicial
Conference of the United States.
Section 107 encourages more efficient use of judicial
resources by requiring that information be obtained as to the
courts' need for temporary judicial resources and that the
results of such inquiry be provided annually to the Chief
Justice, the chief judges of the circuits, the Congress, and the
Attorney General. Collection of this information will complement
the efforts of other groups interested in the efficiency and
structure of the Federal court system.
Section 108 applies to the immunity of State judicial
officers. Subsection (a) restores judicial immunity to State
court judges for the fees and costs they incur in defending their
official actions. Subsection (b) provides that injunctive relief
will not be granted in any action against judicial officers for
their official actions unless declaratory relief was unavailable
or such a decree was violated.
Section 109 amends section 7 of the Civil Rights of
Institutionalized Persons Act (42 U.S.C. $1997e) to remove
unnecessary. barriers to effective grievance procedures. The
courts will be required to continue any action brought by an
inmate pursuant to 42 U.S.C. $1979 for a period up to 180 days to
require the exhaustion of any available administrative remedies.
The Attorney General will provide States or local correction
agencies with technical advice and assistance in establishing
administrative remedies for inmate grievances, if requested.
Subsection (b) provides that the court may dismiss a case if an
attorney is appointed upon an allegation of poverty which is
9
untrue, or if the court is satisfied that the action fails to
state a claim, or is frivolous or malicious.
Section 110 provides for the study and determination of
methods of case and docket management techniques to improve the
cost effectiveness of litigation and to eliminate unjustified
expense and delay.
Section 111 changes current laws by eliminating "mini" in
banc panels.
Section 112 is a severability clause which would preserve
the balance of the Act if any portion of it is held to be
invalid.
Section 113 specifies the Act's effective date.
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
October 23, 1991
#
FACT SHEET
EXECUTIVE ORDER ON CIVIL JUSTICE REFORM
The President today signed an Executive order to
apply immediately the reforms proposed in the Council on
Competitiveness report "Agenda for Civil Justice Reform in= =
America" to civil litigation involving the United States
Government. The Executive order requires agencies to implement
discovery and expert witness reforms and to adopt the Fairness
Rule (also known as the English Rule), whenever feasible.
The Executive order also requires agencies to attempt to settle
disputes prior to litigation, and to employ settlement and
Alternative Dispute Resolution (ADR) techniques in order to avoid
prolonged litigation.
In August 1991, the President's Council on Competitiveness
recommended 50 specific changes to our current civil litigation
system. These recommendations were aimed at achieving swifter
justice and reducing the costs of litigation. The proposals
facilitate more timely and efficient handling of civil cases.
This Executive Order on Civil Justice Reform seeks to
produce a more fair American legal system by making Federal
litigators a model for parties in the private sector involved in
dispute resolution. Although the Executive order requires the
Federal Government to implement many of these legal reforms
unilaterally, the Administration expects this Executive order to
be a catalyst for civil justice reform in the Congress, State
legislatores, and the courts.
Backgrou
The tremendous growth of civil litigation in the past
30 years, including litigation involving the United States
Government, has overburdened the American court system.
Excessive litigation imposes high costs on American individuals,
small businesses, industry, professionals, and government at all
levels. With 70 percent of the world's lawyers, it is not
surprising that the number of lawsuits filed in the Federal
courts each year has more than tripled in the last 30 years --
from approximately 80,000 in 1960 to more than 250,000 in 1988.
- more -
2
ssive litigation puts America at a competitive
disadvantage internationally and results in higher prices for
American consumers for everything from household goods to medical
treatment. Every year our legal system costs Americans, directly
and indirectly, an estimated $300 billion -- including wasted
legal fees, court costs, and individual time and effort devoted
to litigation.
Several current litigation practices add to these burdens
and costs by prolonging the resolution of disputes, thus delaying
just compensation and encouraging wasteful litigation. Although
procedural changes alone cannot solve all of these problems, the
excessive costs and long delays that have plagued our legal
system may be reduced by encouraging voluntary dispute
resolution, limiting unnecessary discovery, promoting judicious
use of expert testimony and prudent use of sanctions, and where
appropriate, modifying current fee arrangements.
Promoting Just and Efficient Civil Litigation
In order to promote more efficient litigation in actions
involving the United States Government, the Executive order
directs all Federal agencies with litigation authority to
implement the following reforms:
The Fairness Rule. Subject to appropriate legal
authority, offer to adopt the Fairness Rule in contract
disputes with the United States Government and in
actions initiated by the United States, whereby the
loser of the lawsuit pays an appropriate portion of the
costs and fees incurred by the winner.
Discovery Reform. Streamline and expedite discovery by
offering to exchange core information with opposing
parties, by eliminating needless discovery, and by
discussing all discovery disputes with opposing counsel
before seeking resolution in the courts.
Expert Evidence Reform. Use expert testimony only if
it is based on "widely accepted theories" and refrain
from using contingency fees to compensate expert
witnesses.
Notice of Complaint. Where appropriate, notify parties
whom the United States intends to sue, informing them
of the nature of the dispute, before filing suit.
Settlement Discussions. Attempt to resolve disputes by
initiating settlement discussions.
Alternative Dispute Resolution. Employ ADR techniques
whenever appropriate.
- more -
3
Proposing gislation and Regulations that DO Not Unduly Burden
the Court
The Executive order also contains provisions designed to
reduce litigation caused by poorly drafted Federal legislation
and regulations. Specifically:
All legislation and regulations proposed by the
Administration will be reviewed to eliminate drafting
errors and to use clear and specific standards instead
of more ambiguous general standards whenever
practicable.
All legislation and regulations will be reviewed
against a "litigation checklist" of 15 specific issues
(such as statutes of limitation, preemptive effect, - = -
retroactivity, etc.) that historically have led to
needless litigation.
Agencies proposing legislation and regulations must
certify compliance with this checklist in their
legislative submissions to the Office of Management and
Budget.
Promoting Just and Efficient Administrative Adjudication
The Executive order also requires that, whenever reasonable
and practicable, all agencies that adjudicate administrative
claims employ more efficient case management procedures in
administrative law proceedings.
Scope and Effective Date
This Executive order applies to civil matters only and is
not intended to affect criminal matters. It shall become
effective 90 days from the date of the President's signature, and
will not apply to litigation commenced prior to the effective
date.
#
#
#
FOR IMMEDIATE RELEASE
February 19, 1992
THE PRESIDENT'S COUNCIL ON COMPETITIVENESS
"AGENDA FOR CIVIL JUSTICE REFORM IN AMERICA"
FACT SHEET
FEDERAL RULES CHANGES
The Administration today announced proposed rules of procedure
and evidence designed to reduce the costs and delay in civil
litigation. The proposed rules changes were developed by the
President's Council on Competitiveness, chaired by Vice President
Dan Quayle, to help reduce the costs of overuse and abuse of the
civil justice system. The Council's 50-point initiative to help
reduce overburdened court dockets and control the rapidly
escalating cost of litigation is contained in its report, "Agenda
for Civil Justice Reform in America."
In submitting its suggested amendments to the Federal Rules of
Civil Procedure and Evidence to the Supreme Court's Advisory
Committee on Civil Rules, the Administration focussed on
restructuring the civil justice process toward more cooperation
by litigants. The proposed rule changes add incentives to the
litigation process that will promote settlement and quicker, less
costly, civil trials. The proposals will also make the system
more rational and efficient by encouraging careful evaluation of
disputes, timely handling of cases, and speedier judicial
intervention.
Among the amendments presented by the Department of Justice on
behalf of the Administration are:
Reform of the Discovery Process
The current discovery process allows lawyers to ask
virtually limitless questions to force their opposition
to spend enormous amounts of time and money in
responding. The proposed amendments would place
reasonable limitations on discovery -- in particular by
requiring the parties to disclose core or basic
information up front, having the parties negotiate a
discovery plan, and setting limits on the extent of
discovery after which the side requesting the extra
information would have to pay the cost of obtaining it.
Elimination of Junk Science
Many of our courtrooms are burdened by testimony of
alleged "experts" whose views are not supported by a
significant number of the members of their scientific
community. The Administration has suggested amendments
to the rules which will require that an expert's
testimony must be "widely accepted" in the relevant
field. In addition, experts would be barred from
receiving payment based on the results of their
testimony.
Settlement Alternatives
With the ever-growing number of cases in the civil
system, there is an enormous need to reduce litigation.
Therefore, the Administration proposed amendments to
the rules which would require that a court direct
litigants to appear before it to discuss settlement and
use of alternative dispute resolution procedures. In
addition, the rules would be amended to provide
incentives for the giving and acceptance of settlement
offers by plaintiffs and defendants.
Rule 11
The Administration suggests rules amendments requiring
litigants and lawyers to correct statements later
learned to be untrue and to provide additional
information as they learn of it. Under the proposed
amendments those who do not follow this rule would be
subject to sanctions.
These recommendations were prepared by the Council's Working
Group on Civil Justice Reform, chaired by Solicitor General
Kenneth W. Starr. The Working Group was composed of experts from
the Department of Justice, the White House Counsel's Office, the
Office of the Vice President, and the Departments of Commerce,
Treasury, Energy, and Health and Human Services, the Office of
Management and Budget, and the Council of Economic Advisers.
The Administration's commitment to the fair, efficient and early
resolution of disputes is demonstrated by efforts to implement
reform at all levels. As a catalyst for civil justice reform,
the Administration has already implemented many of the Council's
recommendations in the Federal government through Executive Order
12778 (October 23, 1991). On February 4, 1992, President Bush
transmitted the "Access to Justice Act of 1992" and called upon
Congress to enact reforms requiring Federal legislation. And,
since most reforms are equally applicable to the states, the
Administration has published the Civil Justice Reform Model State
Amendments and the Model State Punitive Damages Act.
FOR IMMEDIATE RELEASE
February 13, 1992
THE PRESIDENT'S COUNCIL ON COMPETITIVENESS
"AGENDA FOR CIVIL JUSTICE REFORM IN AMERICA"
FACT SHEET
CIVIL JUSTICE REFORM MODEL STATE AMENDMENTS
As part of the Administration's efforts to reform the civil
justice system, Vice President Dan Quayle today presented the
Civil Justice Reform Model State Amendments. The Amendments,
which include both model legislation and model rules of procedure
and evidence, would implement the recommendations proposed by the
President's Council on Competitiveness Report, "Agenda for Civil
Justice Reform in America."
Over the past 30 years, our legal system has become burdened
with excessive costs and long delays. Many features of the -
current legal system no longer serve to expedite justice or to
ensure fair results. Instead, overuse and abuse of the legal
system impose tremendous costs upon American society. Higher
costs mean higher prices for American consumers for everything
from household goods to medical treatment. Higher costs also
reduce America's ability to compete in the global marketplace.
To address these problems, the Council established a working
group, chaired by Solicitor General Kenneth W. Starr. The
resulting recommendations provide concrete steps that can be
taken to restore our civil justice system as an institution that
is fair to all and serves the ends of justice. The
Administration's proposals seek to restore fairness to our
judicial system and to eliminate the economic burden placed on
American society by excessive litigation. None of the reforms
impairs any substantive legal rights. Instead, they will help
ensure that deserving victims actually receive their compensation
earlier and with less expense.
The Problem: An Overburdened System
States reported the filing of 17,321,125 civil cases in
1989. Excessive and expensive civil litigation has overburdened
our court system and imposed higher costs on small businesses,
professionals, industry, and Government at all levels in the form
of excessive legal fees, court costs, and wasted individual time
and effort. Every year, our legal system costs Americans,
directly and indirectly, an estimated $300 billion.
While every State has its unique legal system, each can
benefit by applying the principles of fair, efficient, and early
resolution of disputes.
In order to reduce litigation costs, promote swifter
justice, protect individual rights, and restore the integrity of
our legal system, among the provisions of the "Access to Justice
Act of 1992" are the following reforms:
Multi-Door Courthouse - To give consumers the opportunity to
elect an effective alternative to court adjudication, courts
would be required to foster alternative dispute resolution
(ADR) procedures rather than trials to settle disputes. The
parties would be free to select from different ADR
procedures such as early neutral evaluation, traditional
mediation, outcome determinative mediation, mini-trials,
summary jury trials, and arbitration.
Core Disclosure and Discovery - Discovery consumes 80
percent of the time and money in litigation; it should be
reformed to enable the parties to proceed to the central
issues without extraneous, costly, and unproductive
practices. The Model proposals will require automatic
disclosure of basic or "core information" and mandate that
the parties confer at discovery planning conferences.
Discovery would also be partially governed by market
incentives.
Expert Evidence Reform - Unlike ordinary witnesses who may
offer only factual testimony, expert witnesses are allowed
to testify as to their opinions. Therefore, it is necessary
that the expert's opinion testimony be based on "widely
accepted" theories instead of "junk science." The Model
proposals will require courts to determine that proposed
witnesses are legitimate experts in their field. The Model
also bans contingency fees for experts.
The Fairness Rule - The United States is one of the few
countries which does not allow the winning party to recover
the costs of litigation. Instead, winners and losers alike
pay their own legal fees. The "loser pays" rule would help
those who have legitimate claims, particularly those who
effectively barred from the courts because the costs of
pursuing the claim would have exceeded the expected
recovery. The legislation would limit the amount the loser
must pay and specifies that courts should not require the
loser to pay if circumstances make payment "unjust."
The Civil Justice Reform Model State Amendments also include
other provisions to encourage settlement and reduce costs. This
package of state legislation and rules changes, in conjunction
with the Administration's proposed "Access to Justice Act of
1992" will greatly reduce the burdens of excessive, needless
litigation while protecting and enhancing every American's
ability to vindicate legal rights through our legal system.
FOR IMMEDIATE RELEASE
February 13, 1992
THE PRESIDENT'S COUNCIL ON COMPETITIVENESS
"AGENDA FOR CIVIL JUSTICE REFORM IN AMERICA"
FACT SHEET
MODEL STATE PUNITIVE DAMAGES ACT
Punitive damages are punishments in the nature of fines
awarded in civil cases after the injured party has been fully
compensated. While the award of noncompensatory, punitive
damages can serve a useful purpose in deterring and punishing
extreme or egregious misconduct, the current methods for awarding
punitive damages often impose punishment in a random and
capricious manner. Unfortunately, the specter of unlimited
punitive damages encourages parties to try cases needlessly and-
frustrates early settlement, thereby delaying justice and
impeding the swift award of compensatory damages to injured
victims.
This type of inordinate cost and delay in the civil justice
system was one subject of an extensive study by the President's
Council on Competitiveness, chaired by Vice President Dan Quayle.
As a result, the Council developed 50 recommendations for
improving the civil justice system. Reported in the "Agenda for
Civil Justice Reform in America," the recommendations will make
the justice system more fair and accessible for all citizens.
Among the Council's recommendations is the reform of unlimited
punitive damages.
The current common law approach of unlimited punitive
damages leads to indiscriminate awards. If punitive damages are
to be an effective deterrent, they must be imposed in a rational
and predictable manner. The Council's recommendations for
punitive damages reform are now embodied in a Model State
Punitive Damages Act. The Model Act establishes reasonable and
fair standards that will promote predictability while insuring
that punitive damages remain an effective deterrent.
The Model Act presents a six-part proposal for state
legislative action for punitive damages reform. Each component
has been proven effective in one or more states, but no state has
enacted a comprehensive reform package containing all suggested
measures. The Model State Punitive Damages Act is a rational and
consistent approach to punitive damages that includes:
Pre-Litigation Notice of Claims - In order to provide
parties with the opportunity to settle their disputes at the
earliest stages, the Model Act requires pre-complaint notice
when punitive damages may be requested.
Pleading Punitive Damages - To prevent inclusion of punitive
damages merely for publicity and to ensure that punitive
damages remain as an issue at trial only if there is
sufficient evidence, the Model Act eliminates from the
complaint requests for specific dollar amounts.
Standard of Proof - Before an award of punitive damages, the
plaintiff must establish, by clear and convincing evidence,
that the defendant acted with malice - specific intent to
cause serious injury or a flagrant indifference to the
potential harm.
Bifurcated Trials - The jury would award punitive damages in
a separate proceeding after liability has been determined.
This insures that punitive damages are measured decisions,
not the product of passion.
Judicial Determination of Amount - After the jury finds that
punitive damages are appropriate, the judge draws upon his
or her experience with such cases and determines the amount
of punitive damages to be awarded.
Ceiling for Punitive Damages - No award of punitive damages
would exceed the amount of total compensatory damages award
to the plaintiff. Capping the amount of punitive damages at
one times the actual damages serves as a deterrent while
insuring that the injured party is fully compensated for his
or her injuries.
The Administration is committed to the fair, efficient and early
resolution of disputes. In addition to the Model State Punitive
Damages Act, the Administration has made available Civil Justice
Reform Model State Amendments for additional reform at the state
level. On the Federal level, the Administration has applied the
civil justice reform recommendations through Executive Order
12778 and has transmitted to Congress the "Access to Justice Act
of 1992. The Administration is also proposing amendments to the
Federal Rules of Procedure and Evidence through the Supreme
Court's rulemaking process.
FOR IMMEDIATE RELEASE
FEBRUARY 4, 1992
20
THE PRESIDENT COUNCIL ON COMPETITIVENESS
"AGENDA FOR CIVIL JUSTICE REFORM IN AMERICA"
IMPLEMENTATION FACT SHEET
Excessive cost and delay in our civil justice system harm
the American people and impair their ability to compete in
the global marketplace.
Vice President Dan Quayle
Many features of our civil justice system no longer expedite
justice or insure fair results. Instead overuse and abuse of the
legal system impose tremendous costs on American society
To address these problems, the President's Council on
Competitiveness, chaired by Vice President Dan Quayle, developed
50 recommendations for improving the civil justice system.
Reported in the "Agenda for Civil Justice Reform in America,'
these recommendations help reduce the inordinate cost and delay
found in the system. As most of the proposals have been tested
in federal or state courts and have proven effective, the Agenda
presents a comprehensive approach to effect meaningful change in
our overburdened civil justice system.
TO
The Administration is committed to the fair efficient and
early resolution of disputes This commitment is demonstrated by
efforts to implement reform at all levels: Executive branch
action, Federal legislation, Federal rules changes, and model
state packages.
Executive Action
As a catalyst for civil justice reform, the Administration
has already implemented many of the Agenda reforms in the Federal
government. To promote more efficient litigation in actions
involving the United States Government, on October 23, 1991,
President Bush signed Executive Order 12778. To help make the
Government's litigators a model for the private sector, the
President directed all Federal agencies to encourage voluntary
dispute resolution, limit unnecessary discovery, avoid "junk
science," and, where appropriate, use the "Fairness" or "loser
pays" rule for attorneys' fees. The directive also provides a
"litigation checklist" designed to reduce legislative drafting
errors that cause uncertainty and unnecessary litigation.
Federal Legislation
On February 4, 1992, President Bush transmitted the "Access
to Justice Act of 1992" calling upon Congress to enact reforms
requiring federal legislation. Among the Act' provisions are:
Multi-Door Courthouse - Establishes alternative dispute
resolution (ADR) programs to provide effective alternatives
to trials. Parties would gain the opportunity to choose
between several methods of resolving their disputes.
Pre-Complaint Notification Encourages resolution at the
earliest stages, in most cases the right to sue is
conditioned upon giving notice to the intended parties of
the nature of the dispute.
Fairness Rule - Adopts a "loser pays" rule in cases
involving state law brought under the federal courts'
diversity jurisdiction. This rule is grounded in the
equitable principle that prevailing parties should be made
"whole." The loser would pay the winner's legal expenses
subject to limits, including when payment would be "unjust."
Federal Rules of Civil Procedure and Evidence
Through the Supreme Court' rulemaking process, the
Administration is proposing amendments to the Federal Rules of
Civil Procedure and Evidence to help make the system more
rational and efficient:
Discovery Reform - Discovery consumes 80 percent of the time
and money in litigation. Our proposal will require
automatic disclosure of basic or "core information" and
mandate discovery planning conferences. After presumptive
numerical limits are met additional discovery would be
governed by market incentives.
Expert Evidence Reform - Experts, who unlike other
witnesses, are allowed to present their opinions should be
required to base their testimony on "widely accepted"
theories instead of "junk science." Our proposal requires
courts to determine that proposed witnesses are legitimate
experts in their field and bans contingency fees paid to
expert witnesses in return for a successful outcome.
State Legislation and Rule Changes
Most reforms proposed for the Federal system are equally
applicable to the states. As a result, the Administration has
published the Civil Justice Reform Model State Amendments and the
Model State Punitive Damages Act to assist with reforms in the
state systems. Reform at the state level could have a dramatic
effect since that is where most litigation occurs.
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
February 4, 1992
FACT SHEET
ACCESS TO JUSTICE ACT OF 1992
As promised in the President State of the Union Address,
the Administration today transmitted to Congress the "Access to
Justice Act of 1992" to enact major reforms in the nation's civil
justice system. The Act embodies the fifty recommendations
contained in the report "Agenda for Civil Justice Reform in
America,' written by the President's Council on Competitiveness
under the chairmanship of Vice President Dan Quayle. These
proposals seek to restore fairness to our judicial system and to
eliminate the economic burden placed on American society by
-
excessive litigation.
The "Access to Justice Act of 1992" provides an opportunity
to elect an alternative to litigation, seeks to make the
prevailing party whole by providing compensation for legal fees,
permits the opportunity for pre-trial settlement, and allows
legal fees to be recovered in suits initiated by the United
States. None of the reforms impairs any substantive legal
rights. Instead, they will help ensure that deserving victims
actually receive their compensation earlier and with less
expense.
The Problem: An Overburdened System
With 70% of the world's lawyers it is not surprising that
America has experienced a litigation explosion. The number of
civil lawsuits filed in the federal courts each year has more
than tripled in the last thirty years
This tremendous growth of civil litigation has overburdened
our court system and imposed higher costs on small businesses,
professionals, industry, and Government at all levels in the form
of excessive legal fees, court costs and wasted individual time
and effort. Every year, our legal system costs Americans,
directly and indirectly, an estimated $300 billion.
Higher costs mean higher prices for American consumers for
everything from household goods to medical treatment. Higher
costs also reduce America's ability to compete in the global
marketplace.
"Access to Justice Act of 1992"
SHT
In order to reduce litigation costs, promote swifter
justice, protect individual rights, and restore the integrity of
our legal system, among the provisions of the "Access to Justice
Act of 1992" are the following reforms:
Multi-Door Courthouse - To give consumers the opportunity to
elect an effective alternative to court adjudication,
federal courts would be required to establish multi-door
courthouses for a three year period. Multi-door courthouses
foster alternative dispute resolution (ADR) procedures
rather than trials to settle disputes. The parties would be
free to select from different ADR procedures such as early
neutral evaluation, traditional mediation, outcome
determinative mediation, mini-trials, summary jury trials,
and arbitration.
Pre-Litigation Notice of Claims - In order to provide
parties with the opportunity to settle their disputes at the
earliest stages, the Act requires pre-complaint notice.
Where appropriate, the right to sue in federal court is
conditioned upon giving notice to intended parties of the
nature of the dispute This procedure will allow parties to
reach an agreement and fashion appropriate remedies at lower
costs without court involvement.
The Fairness Rule :- The United States is one of the few
countries which does not allow the winning party to recover
the costs of litigation. Instead, winners and losers alike
pay their own legal fees. The "loser pays" provision would
help fund meritorious claims not currently initiated because
the costs of pursuing the claim would have exceeded the
expected recovery.
The Act proposes an experiment with the "Fairness Rule" for
private parties in bringing state law claims under the
Federal court's "diversity" jurisdiction. Litigants who
desire the traditional arrangement, where each side pays its
own attorney, may file the same cases in state courts. The
Act also limits the amount the doser must pay to the SUB it
expended in litigating the suit and specifies that courts
should not require the loser to pay if circumstances make
payment "unjust." Finally, the Act allows parties the
option to elect the Fairness Rule in suits initiated by the
United States and disputes pursuant to the Contract Disputes
Act of 1978.
Cost of Living Adjustments - The Act establishes a clear,
uniform methodology for calculating federal court
jurisdictional amounts and fees under the Equal Access to
Justice Act.
Reform of the Judicial System - The Act re-establishes the
immunity of state judicial officers. To facilitate swifter
case handling, the Act encourages better case management,
permits flexible assignment of federal district court
judges, and clarifies appellate in banc procedures.
Similarly, the Act amends the Civil Rights Act of
Institutionalized Persons Act (CRIPA) to permit
administrative resolution of inmate claims.
The "Access to Justice Act of 1992" will greatly reduce the
burdens of excessive, needless litigation while protecting and
enhancing every American's ability to vindicate legal rights
through our legal system.
The "Access to Justice Act of 1992" results from the
recommendations prepared by the Council on Competitiveness
Working Group on Civil Justice Reform, chaired by Solicitor
General Ken Starr. In August, 1991, the Council's chairman, Vice
President Dan Quayle transmitted the recommendations to the
President in the report "Agenda for Civil Justice Reform in
America." Many of the proposals were implemented for litigation
brought by the U.S. Government on October 23, 1991, when
President Bush signed Executive Order 12778 on Civil Justice
Reform. In addition to the Executive Order and the "Access to
Justice Act of 1992," the Administration will continue to work to
implement the Civil Justice Reform initiative at the federal and
state level.
CIVII JUSTICE REFORM
E PROPOSED AMEN OMEN
FEDERAL
OF @ Rah
PREFACE TO PROPOSED CIVIL JUSTICE
REFORM AMENDMENTS TO THE
FEDERAL RULES OF CIVIL PROCEDURE
This pamphlet contains the Administration's proposed revisions to
the Federal Rules of Civil Procedure, Federal Rules of Evidence
and Federal Rules of Appellate Procedure. These revisions were
submitted to the Civil Rules Advisory Committee on February 7,
1992 to implement many of the Civil Justice Reform ("CJR")
recommendations made by the President's Competitiveness Council.
The Amendments were submitted in conjunction with comments on
pending rules amendments proposed by the Advisory Committee.
Consideration of proposed amendments to the Federal Rules of
Civil Procedure by the Advisory Committee precedes further
consideration by the Standing Rules Committee, the Judicial
Conference of the United States, the Supreme Court, and Congress.
Accompanying the proposed rule changes is a commentary explaining
the suggested revisions. The commentary is located at the back
of this pamphlet.
AMENDMENTS TO THE FEDERAL RULES OF CIVIL
PROCEDURE TO IMPLEMENT THE AGENDA
FOR CIVIL JUSTICE REFORM III AMERICA
Rule 11 CJR Recommendations 37 - 39
Introduction
Proposed additions to Rule 11 of the Federal Rules of Civil Procedure to Implement
Recommendations 37 . 39 of the Agenda for Civil Justice Reform in America are underlined below
and deletions to the present rules are bracketed.
Rule 11. Signing of Pleadings, Notions, and Other Papers; Sanctions
(a) Incorrect or False Court Filings. Every pleading, motion, and other paper of
0 party represented by an attorney shall be signed by at least one attorney of
record in the attorney's individual name, whose address shall be stated. A party
who is not represented by an attorney shall sign the party's pleading, motion, or
other paper and state the party's address. Except when otherwise specifically
provided by rule or statute, pleadings need not be verified or accompanied by
affidavit. The rule in equity that the averments of an answer under eath must be
overcome by the testimony of two witnesses or of one witness sustained by
corroborating circumstances is abolished. The signature of an attorney or party
constitutes a certificate by the signer that the signer has read the pleading,
motion or other paper; that to the best of the signer's knowledge, information,
and belief formed after reasonable inquiry it is well grounded in fact and is
warranted by existing law or a good faith argument for the extension,
modification, or reversal of existing law, and that it is not interposed for any
improper purpose, such as to harass or to cause unnecessary delay or needless
increase in the cost of litigation. If a pleading, motion or other paper is not
signed, it shall be stricken unless it is signed promptly after the omission is
called to the attention of the pleader or movant. If a pleading, motion, or other
paper is signed in violation of this rule, the court, upon motion or upon its own
initiative, shall impose upon the person who signed it, 8 represented party, or
both, or any other attorney who is not a signatory but who is responsible for the
veracity of the content of the pleading, motion. or other paper. an appropriate
sanction, which may include an order to pay to the other party or parties the
amount of the reasonable expenses incurred because of the filing of the pleading,
motion, or other paper, including a reasonable attorney's fee.
(b) Correction of Subsequently Detected False Or Incorrect Statements. If after
the filing of a document the attorney or party who signed pleadings, motions or
other papers discovers or obtains knowledge. information. or belief that the
document signed contains an error or falsehood, the party is obligated to provide
corrected information within a reasonable period of time of learning of the error
or falsehood.
- 1 -
AMENDMENTS TO THE FEDERAL RULES OF CIVIL
PROCEDURE TO IMPLEMENT THE AGENDA
FOR CIVIL JUSTICE REFORM IN AMERICA
Rule 16 CJR Recommendation 5
Introduction
Proposed additions to Rule 16 of the Federal Rules of civil Precedure to Implement
Recommendation 5 of the Agenda for civil Justice Reform In America are underlined below and
deletions to the present rules are bracketed.
Rule 16.
Pretrial Conferences; Scheduling; Management
(a) Pretrial Conferences; Objectives. In any action. as soon as practicable, but
in no event more than 120 days after the filing of the complaint. the court shall
direct the attorneys for the parties and any unrepresented parties to appear
before the court, or 9 neutral third party appointed by the court. for conferences
to discuss settlement and possible resort to alternative dispute resolution
procedures. in addition. [In any action,] the court may tin its discretion direct
the attorneys for the parties and any unrepresented parties to appear before it
for a conference or conferences before trial for such other purposes as
(1) expediting the disposition of the action;
(2) establishing early and continuing control $0 that the case
will not be protracted because of lack of management;
(3) discouraging wasteful pretrial activities; and
(4) improving the quality of the trial through more thorough
preparation, 1, and;)
((5) facilitating the settlement of the case.]
(b) Scheduling and Planning. Except in categories of actions exempted by district
court rule as insppropriate, the judge, or a magistrate when authorized by
district court rule, shall, after consulting with the attorneys for the parties
and any unrepresented parties, by a scheduling conference, telephone, mil, or
other suitable means, enter a scheduling order that limits the time
(1) to join other parties and to amend the pleadings;
(2) to file and hear motions; and
(3) to complete discovery.
The scheduling order also may include
(4) the date or dates for conferences before trial, a final
pretrial conference, and trial; and
(5) any other matters appropriate in the circumstances of the
case.
The order shall issue as soon as practicable but in no event more than 120
days after filing of the complaint. A schedule shall not be modified except by
leave of the judge or a magistrate when authorized by district court rule upon a
showing of good cause.
(c) Subjects to be Discussed at Pretrial Conferences. In addition to discussing
settlement and resort to alternative dispute resolution procedures as provided by
section (a). [T] the participants at any conference under this rule may consider
and take action with respect to
- 2 -
(1) the formulation and simplification of the issues, including the
elimination of frivolous claims or defenses;
(2) the necessity or desirability of assendments to the pleadings;
(3) the possibility of obtaining admissions of fact and of documents which
will avoid unnecessary proof, stipulations regarding the authenticity of
documents, and advance rulings from the court on the admissibility of
evidence;
(4) the avoidance of unnecessary proof and of cumulative evidence;
(5) the identification of witnesses and documents, the need and schedule
for filing and exchanging pretrial briefs, and the date or dates for
further conferences and for trial;
(6) the advisability of referring matters to a magistrate or mester;
((7) the possibility of settlement or the use of extrajudicial procedures
to resolve the dispute;]
(7) ((8)] the form and substance of the pretrial order;
(8) [(9)] the disposition of pending motions;
(9) [(10)] the need for adopting special procedures for managing
potentially difficult or protracted actions that may involve complex
issues, multiple parties, difficult legal questions, or unusual proof
problems; and
(10) [(11)] such other matters as may aid in the disposition of the action.
At least one of the attorneys for each party participating in any conference
before trial shall have authority to enter into stipulations and to make admissions
regarding all matters that the participants may reasonably anticipate may be discussed.
(d) Final Pretrial Conference. Any final pretrial conference shall be held as
close to the time of trial as reasonable under the circumstances. The
participants at any such conference shall formulate a plan for trial, including a
program for facilitating the admission of evidence. The conference shall be
attended by at least one of the attorneys who will conduct the trial for each of
the parties and by any unrepresented parties.
(e) Pretrial Orders. After any conference held pursuant to this rule, an order
shall be entered reciting the action taken. This order shall control the
subsequent course of the action unless modified by a subsequent order. The order
following a final pretrial conference shall be modified only to prevent manifest
injustice
(f) Sanctions. If [a] an unrepresented party or 1 party's attorney fails to obey
(a scheduling or pretrial order, or if no appearance is made on behalf of 8 party
at 8 scheduling or pretrial conference, or if a] an order of the court directing
participation in a settlement conference, if an unrepresented party or [a] party's
attorney is substantially unprepared to participate in the conference, or If [a]
an unrepresented party or [a] party's attorney falls to participate in good faith,
the judge, upon motion of either party or upon the judge's own initiative, may
make such orders with regard thereto as are just[,] [and among others any of the
orders provided in Rule 37(b)(2)(B), (C), (D).] and appropriate. Refusal to agree
to any proposal made by any party, standing alone, shall not constitute failure to
participate in good faith. In lieu of or in addition to any other senction, the
judge shall require the party or the attorney representing the party or both to
pay the reasonable expenses incurred because of any noncompliance with this rule,
including attorney's fees, unless the judge finds that the noncompliance was
substantially justified or that other circumstances make an award of expenses
unjust.
- 3 -
AMENDMENTS TO THE FEDERAL RULES OF CIVIL
PROCEDURE TO IMPLEMENT TRE AGENDA
FOR CIVIL JUSTICE REFORM III AMERICA
Rule 26 CJR Recommendations 6-13; 21-22
Introduction
Proposed additions to Rule 26 of the Federal Rules of Civil Precedure to Implement
Recommendations 6 - 13 and 21 . 22 of the Agenda for Civil Justice Referm in America are
underlined below and deletions to the present rules are bracketed.
Rule 26. General Provisions Governing Discovery and Disclosure
(a) Mendatory disclosure. Unless the court otherwise directs or the
parties otherwise stipulate with the court's approval. . disclosure
statement shall be filed (1) by a plaintiff within 15 days after service of
an answer to its complaint: and (ii) by a defendant within 30 days after
serving its answer to the complaint. Except in actions exempted by Local
rule or order. the disclosure statement shall include:
(1) the names (and, if known. the addresses and
telephone numbers) of sell persons then known to have
personal knowledge of any material fact directive
relevent to the particularized allegations of the
pleadings, including any claim or defense. briefly
indicating (if not obvious from an identification of
the person) the subjects to which such personal
knowledge pertains: and
(2) a general description of the location of all
documents. data compilations. and tangible things in
the possession. custody. or control of the perty
that are then known to be directly relevant to any
claim or defense:
This requirement shall apply in all cases involving adverse parties, Including
multiple party suits. third party claims and counter and cross actions. Information
subject to a claim of privilege need not be disclosed. However, notice must be given to
the opposing party that a privilege is asserted. If the court determines that a party has
in bad faith failed to make adequate disclosure pursuant to this rule. the court shall bar
a party from engaging in discovery absent a showing of good cause, The disclosure
statement shall be accompanied by a certification by counsel that reasonable inquiry has
been made and that the disclosures set forth in the disclosure statement will be
supplemented promptly if additional information otherwise required to be disclosed becomes
known to counsel.
[(a)] (b) Discovery Methods. Parties may obtain discovery by one or more of the
following methods: depositions upon oral examination or written questions; written
interrogatories; production of documents or things or permission to enter upon
land or other property, for inspection and other purposes; physical and mental
examinations; and requests for admission. Discovery at . place within B country
having a treaty with the United States applicable to such discovery shall be
conducted by methods authorized by the treaty unless the court determines that
those methods are inadequate or inequitable and authorizes other discovery methods
not prohibited by the treaty.
[(b)] (c) Discovery Scope and Limits. Unless otherwise limited by order of the
court in accordance with these rules, the scope of discovery is as follows:
(1) In General. Parties may obtain discovery regarding any matter, not
privileged, which is relevant to the subject matter involved in the pending
action, whether it relates to the claim or defense of the party seeking
discovery or to the claim or defense of any other party, including the
existence, description, nature, custody, condition and location of any
books, documents, or other tangible things and the identity and location of
- 4 -
persons having knowledge of any discoverable matter. It is not ground for
objection that the information sought will be inedmissible at the triel If
the information sought appears reasonably calculated to lead to the
discovery of admissible evidence.
The frequency or extent of use of the discovery methods set forth in
subdivision [(a)] (b) shall be limited by the court If it determines that:
(1) the discovery sought is unreasonably cumulative or duplicative, or is
obtainable from some other source that is more convenient, less burdensome,
or less expensive; (11) the party seeking discovery has had smple
opportunity by discovery in the action to obtain the information sought; or
(iii) the discovery is unduty burdensome or expensive, taking into account
the needs of the case, the amount in controversy, limitations on the
parties' resources, and the importance of the fssues at stake in the
litigation. The court may act upon its own initiative after reasonable
notice or pursuant to a motion under subdivision ((c)] (d).
(2) Insurance Agreements. A party may obtain discovery of the existence
and contents of any Insurance agreement under which any person carrying on
an insurance business may be liable to satisfy part or all of B judgment
which may be entered in the action or to indemnify or reimburse for
payments made to satisfy the judgment. Information concerning the
insurance agreement is not by reason of disclosure admissible in evidence
at trial. For purposes of this paragraph, an application for Insurance
shall not be treated as part of an insurance agreement.
(3) Trial Preparation: Materials. Subject to the provisions of
subdivision [(b)] (c)(3) of this rule, a party may obtain discovery of
documents and tangible things otherwise discoverable under subdivision
[(b)] (c)(1) of this rule and prepared in anticipation of litigation or for
trial by or for another party or by or for that other party's
representative (including the other party's atterney, consultant, surety,
indemnitor, insurer, or agent) only upon a showing that the party seeking
discovery has substantial need of the materials in the preparation of the
party's case and that the party is unable without undue hardship to obtain
the substantial equivalent of the materials by other means. In ordering
discovery of such materials when the required showing has been made, the
court shall protect against disclosure of the mental impressions,
conclusions, opinions, or tegal theories of any attorney or other
representative of a party concerning the litigation.
A party may obtain without the required showing 8 statement
concerning the action or its subject matter previously made by that party.
Upon request, a person not a party may obtain without the required showing
B statement concerning the action or its subject metter previously made by
that person. If the request is refused, the person may move for a court
order. The provisions of Rule 37(a)(4) apply to the award of expenses
incurred in relation to the motion. For purposes of this paragraph, a
statement previously made is (A) a written statement signed or otherwise
adopted or approved by the person making it, or-(B) a stenographic,
mechanical, electrical, or other recording, or a transcription thereof,
which is a substantially verbatim recital of an oral statement by the
person making it and contemporaneously recorded.
(4) Trial Preparation: Experts. Discovery of facts known and opinions
held by experts, otherwise discoverable under the provisions of subdivision
(b)(1) of this rule and acquired or developed in anticipation of litigation
or for trial, may be obtained only as follows:
(A) Interrogatories. A party asy through interrogatories
require any other party to identify each person whom the
other party expects to call as an expert witness at trial,
to state the subject matter on which the expert is expected
to testify, to state the substance of the facts and opinions
to which the expert is expected to testify and 8 summary of
the grounds for each opinion, to list the expert's formal
training and the expert's publications and the cases in
which the expert has testified or given a deposition, and to
state the compensation fee for the expert.
- 5 -
(B) Deposition. A party ENY. without the necessity of
court order, depose each person the other perty has given
notice it may call as on expert witness at trial. at
reasonable time prior to trial as Lens 00 the party
requesting the deposition paysitke expert a reasonable fee
for the time spent in the deposition. unless by motion:
court determines the payment of such fees would result in
manifest injustice. or the certies agree otherwise.
(C) Document Requests, A certy without the necessity
of 1 court order. request all documents upon which the
expert witness relies or has reviewed in preparation for his
testimony.
(D) Additional Discovery. Upen metion, the court may order
further discovery by other means, subject to such
restrictions as to scope and such provisions, [pursuant to
subdivision (b)(4)(c) of this rule, concerning) including
fees and expenses_ as the court may deem appropriate.
(E)[B] A party may discover facts known or opinions held by
an expert who has been retained or specially employed by
another party in anticipation of litigation or preparation
for trial and who is not expected to be called as a witness
at trial, only as provided in Rule 35(b) or upon a showing
of exceptional circumstances under which it is impracticable
for the party seeking discovery to obtain facts or opinions
on the same subject by other means.
[Current F. R. Civ. P. Rules 26(b)(4)(A)(1) and (C) are to be deleted.)
(5) Limits on Discovery. Unless otherwise permitted by the court
for good cause shown. or by agreement of counset. no party shall
serve upon any other party, at any one time or cumulatively. more
than fifteen (15) written interrogatories. including all parts and
sub-parts. Unless otherwise permitted by the court for good cause
shown, or by agreement of counsel. no party shall take more than
ten (10) depositions. whether upon oral examination pursuant to
Rule 30, upon written questions pursuant to- File 31. or pursuant to
any other provision of these rules.
(6) After a party has admitted a fact, by response to a request for
admissions, by stipulation or in any other manner of record. discovery by
the party that obtained the admission as to matters relevant to
establishment of that fact is barred absent an order of the court for good
cause shown.
[(c)] (d) Protective Orders. Upon motion by a party or by the person from
whom discovery is sought, and for good cause shown, the court in which the
action is pending or alternatively, on matters relating to a deposition,
the court in the district where the deposition is to be taken may make any
order which justice requires to protect party or person from annoyance,
embarrassment, oppression, or undue burden or expense, including one or
more of the following: (1) that the discovery not be had; (2) that the
discovery may be had only on specified terms and conditions, including a
designation of the time or place; (3) that the discovery may be had only by
a method of discovery other than that selected by the party seeking
discovery; (4) that certain matters not be inquired into, or that the scope
of the discovery be limited to certain matters; (5) that discovery be
conducted with no one present except persons designated by the court; (6)
that a deposition after being sealed be opened only by order of the court;
(7) that a trade secret or other confidential research, development, or
commercial information not be disclosed or be disclosed only in a
designated way; (8) that the parties simultaneously file specified
documents or information enclosed in sealed envelopes to be opened as
directed by the court.
If the motion for a protective order is denied in whole or in part,
the court may, on such terms and conditions as are just, order that any
- 6 -
party or person provide or permit discovery. The previsions of Rule
37(a)(4) apply to the award of expenses incurred In relation to the motion.
[(d)] (a) Sequence (end) Timing and Centents of Discovery. (1)
Sequence and Timins. Unless the court upon motion, for the
convenience of parties and witnesses and In the interests of
justice, orders otherwise, methods of discovery may be used in any
sequence and the fact that a party is conducting discovery, whether
by deposition or otherwise, shall not operate to delay any other
party's discovery.
(2) Contents of discovery requests. Each separate discovery
request shall designate the specific portion ef the complaint.
answer or other pleading to which the discovery request is directed
and shall constitute a certification that the discovery request is
reasonsbly calculated to be relevant to the subject matter of the
designated pleading.
[(e)] (f) Supplementation of Responses. A party who has responded to a request
for discovery with a response that was complete when made is under no duty to
supplement the response to include information thereafter acquired, except as
follows:
(1) A party is under a duty seasonably to supplement the response with
respect to any question directly addressed to (A) the Identity and location
of persons having knowledge of discoverable matters, and (8) the Identity
of each person expected to be called as an expert witness at trial, the
subject matter on which the person is expected to testify, and the
substance of the person's testimony.
(2) A party is under a duty seasonably to amend a prior response If the
party obtains information upon the basis of which (A) the party knows that
the response was incorrect when made, or (B) the party knows that the
response though correct when made is no Longer true and the circumstances
are such that a failure to amend the response is in substance a knowing
concealment.
(3) A duty to supplement responses may be imposed by order of the court,
agreement of the parties, or at any time prier to trial through new
requests for supplementation of prior responses.
[(f)] (g) Discovery Conference. At any time after commencement of an action the
court may direct the attorneys for the parties to appear before it for a
conference on the subject of discovery. The court shall do so upon motion by the
attorney for any party if the motion includes:
(1) A statement of the issues as they then appear;
(2) A proposed plan and schedule of discovery;
(3) Any limitations proposed to be placed on discovery;
(4) Any other proposed orders with respect to discovery; and
(5) A statement showing that the attorney making the metion has made a
reasonable effort to reach agreement with opposing attorneys on the matters
set forth in the motion. Each party and each party's attorney are under a
duty to participate in good faith in the framing of a discovery plan If a
plan is proposed by the attorney for any party. Notice of the motion shall
be served on all parties. Objections or additions to matters set forth in
the motion shall be served not later than 10 days after service of the
motion.
Following the discovery conference, the court shall enter an order
tentatively identifying the issues for discovery purposes, establishing a plan and
schedule for discovery, subject to the provisions of subdivision (c)(5) setting
additional limitations on discovery, if any; and determining such other matters,
including the allocation of expenses, as are necessary for the proper management
- 7 -
of discovery in the action. An order may be altered or amended whenever justice
60 requires.
Subject to the right of a party who properly moves for a discovery
conference to prompt convening of the conference, the court may combine the
discovery conference with a pretrial conference authorized by Rule 16.
((g)] (h) signing of Discovery Requests, Responses, and Objections. Every
request for discovery or response or objection thereto made by a party represented
by an attorney shall be signed by at least one attorney of record in the
attorney's individual name, whose address shall be stated. A party who is not
represented by an attorney shall sign the request, response, or objection and
state the party's address. The signature of the attorney or party constitutes a
certification that the signer has read the request, response, or objection, and
that to the best of the signer's knowledge, information, and belief formed after a
reasonable inquiry it is: (1) consistent with these rules and warranted by
existing law or a good faith argument for the extension, modification, or reversal
of existing law; (2) not interposed for any improper purpose, such as to harass or
to cause unnecessary delay or needless increase in the cost of litigation; and (3)
not unressonable or unduly burdensome or expensive, given the needs of the case,
the discovery already had in the case, the amount in controversy, and the
importance of the issues at stake in the litigation. If a request, response, or
objection is not signed, it shall be stricken unless it is signed promptly after
the omission is called to the attention of the party making the request, response,
or objection, and a party shall not be obligated to take any action with respect
to it until it is signed.
If a certification is made in violation of the rule, the court, upon motion or
upon its own initiative, shall impose upon the person who made the certification,
the party on whose behalf the request, response, or objection is made, or both, an
appropriate sanction, which may include an order to pay the amount of the
reasonable expenses incurred because of the violation, including a reasonable
attorney's fee.
(i) Discovery plans. After service of the disclosure statements
pursuant to subdivision (a), the parties shall meet to formulate a
discovery plan. The discovery plan shall be consistent with the
provisions of subdivision (c)(5), absent agreement by the parties.
or an order of the court for good cause shown. The parties shall
submit their proposed discovery plan to the court for approval.
Absent agreement. the parties shall jointly move the court for
a
discovery conference and shall file each party's proposed discovery
plan with the motion.
Discovery beyond that authorized under the plan approved by
the court may be taken by a party only if that party agrees to pay
the reasonable costs and reasonable attorney's fees of the person
or party to whom the discovery is directed. An unconditional
commitment to pay these reasonable costs and reasonable attorney's
fees, signed by counsel and by an authorized representative of the
party, shall be forwarded with any such discovery request. The
court may waive the requirement for payment for good cause shown.
The provisions of Rule 37(b) shall apply to any order
entered under this subdivision.
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AMENDMENTS TO THE FEDERAL RULES OF CIVIL
PROCEDURE TO IMPLEMENT THE MERDA
FOR CIVIL JUSTICE REFORM III AMERICA
Rule 37 CM Recommendations 6 . 13
Introduction
Proposed additions to Rule 37 of the Federal Rules of Civil Precedure to Implement
Recommendations 6 - 13 of the Agenda for Civil Justice Reform in America are underlined below and
deletions to the present rules are bracketed.
Rule 37. Failure to Make or Cooperate in
Discovery: Sanctions
(a) Notion for Order Compelling Discovery. Upon compliance with subdivision (e).
(A) party, upon reasonable notice to other parties and all persons affected
thereby may apply for an order compelling discovery as follows:
(1) Appropriate Court. An application for an order to a party may be made
to the court in which the action is pending, or, on matters relating to a
deposition, to the court in the district where the deposition is being
taken. An application for an order to a deponent who is not a party shall
be made to the court in the district where the deposition is being taken.
(2) Motion. If a deponent fails to answer a question propounded or
submitted under Rules 30 or 31, or a corporation or other entity fails to
make a designation under Rule 30(b)(6) or 31(e), or a party fails to answer
an interrogatory submitted under Rule 33, or if 8 party, in response to a
request for inspection submitted under Rule 34, fails to respond that
inspection will be permitted as requested or fails to permit inspection as
requested, the discovering party may move for an order compelling an
answer, or a designation, or an order compelling inspection in accordance
with the request. When taking a deposition on oral examination, the
proponent of the question may complete or adjourn the examination before
applying for an order.
If the court denies the motion in whole or in part, it may make such
protective order as it would have been empowered to make on a motion made
pursuant to rule 26[(c)3(d).
(3) Evasive or Incomplete Answer. For purposes of this subdivision an
evasive or incomplete enswer is to be treated as à failure to answer.
(4) Award of Expenses of Motion. If the motion is granted, the court
shall, after opportunity for hearing, require the party or deponent whose
conduct necessitated the motion or the party or attorney advising such
conduct or both of them to pay to the moving party the reasonable expenses
incurred in obtaining the order, including atterney's fees, unless the
court finds that [the opposition to the motion was substantially Justified
or that other] special circumstances make an award of expenses unjust.
If the motion is denied, the court shall, after opportunity for hearing,
require the moving party or the attorney advising the motion or both of
them to pay to the party or deponent who opposed the motion the reasonable
expenses incurred in opposing the motion, including attorney's fees,
[unless the court finds that the making of the motion was substantially
justified or that other] unless the court finds that special circumstances
make an award of expenses unjust.
If the motion is granted in part and denied in part, the court [may] shall
apportion the reasonable expenses incurred in relation to the motion among
the parties and persons in a just manner.
- 9 -
(b) Failure to Comply with Order.
(1) Senctions by Court in District there Deposition is Taken. If a
deponent fails to be sworn or to answer a question after being directed to
do so by the court in the district in which the deposition is being taken,
the failure may be considered a contempt of that court.
(2) Sanctions by Court in Which Action is Pending. If a party or an
officer, director, or managing agent of a party or a person designated
under Rule 30(b)(6) or 31(a) to testify on behalf of a party fails to obsy
an order made under subdivision (a) of this rule or Rule 35, or If a party
fails to obay an order entered under Rule 268(4)334), the court in which
the action is pending may make such orders in regard to the failure M are
just, and among others the following:
(A) An order that the matters regarding which the order was made
or any other designated facts shall be taken to be established for
the purposes of the action in accordance with the claim of the
party obtaining the order;
(B) An order refusing to allow the disobedient party to support or
oppose designated claims or defenses, or prohibiting that party
from introducing designated matters in evidence;
(C) An order striking out pleadings or parts thereof, or staying
further proceedings until the order is obeyed, or dismissing the
action or proceeding or any part thereof, or rendering a judgment
by default against the disobedient perty;
(D) In Lieu of any of the foregoing orders or in addition thereto,
an order treating as a contempt of court the failure to obey any
orders except an order to submit to 0 physical or mental
examination;
(E) Where a party has failed to comply with an order under Rule
35(a) requiring that party to produce another for examination, such
orders as are listed in paragraphs (A), (B), and (C) of this
subdivision, unless the party failing to comply shows that that
party is unable to produce such person for examination.
In lieu of any of the foregoing orders or in addition thereto, the court
shall require the party failing to obey the order or the attorney advising
that party or both to pay the reasonable expenses, including attorney's
fees, caused by the failure, [unless the court finds that the failure was
substantially justified or that other] unless the court finds that special
circumstances make an award of expenses unjust.
(c) Expenses on Failure to Admit. If a party fails to admit the genuineness of
any document or the truth of any matter as requested under Rule 36, and if the
party requesting the admissions thereafter proves the genuineness of the document
or the truth of the matter, the requesting party may apply to the court for an
order requiring the other party to pay the reasonable expenses incurred in making
that proof, including reasonable attorney's fees. The court shall make the order
unless it finds that (1) the request was held objectionable pursuant to Rule
36(a), or (2) the admission sought was of no substantial importance, or (3) the
party failing to admit had reasonable ground to believe that the party might
prevail on the matter, or (4) there was other good reason for the failure to
admit.
(d) Failure of Party to Attend at Own Deposition or Serve Answers to
Interrogatories or Respond to Request for Inspection. If a party or an officer,
director, or managing agent of a party or a person designated under Rule 30(b)(6)
or 31(a) to testify on behalf of a party fails (1) to appear before the officer
who is to take the deposition, after being served with a proper notice, or (2) to
serve answers or objections to interrogatories submitted under Rule 33, after
proper service of the interrogatories, or (3) to serve @ written response to a
request for inspection submitted under Rule 34, after proper service of the
request, the court in which the action is pending on motion may make such orders
- 10 -
in regard to the failure as are just, and among others it may take any action
authorized under paragraphs (A), (B), and (C) of subdivision (b)(2) of this rule.
In lieu of any order or in addition thereto, the court shall require the party
failing to act or the attorney advising that party or both to pay the reasonable
expenses, including atterney's fees, caused by the failure, unless the court finds
that [the failure was substantially justified or that other) special circumstances
make an award of expenses unjust.
The failure to act described In this subdivision may not be excused on the
ground that the discovery sought is objectionable unless the party failing to act
has applied for a protective order as provided by Rule 26(c).
(s) [[Abrogated]]
(a) Duty to Confer. The court shell not consider any tion brought pursuant to
this rule or Rules 26 through 36, unless govent as part of the motion. shell make
a written showing that, after personal consultation with counsel for epposing
parties and good feith attempts to resolve differences, they are unsble to reach
agreement as to the discovery et issue. The showing shall recite additionally.
the date. time and, If not conducted by telephone. place of each such conference
and the names of all persons participating in the conference. A party opposing
motion pursuant to this rule or pursuant to Rules 26 through 36 shell make
written showing that. after making I personal consultation with counsel for
opposing parties and good faith attempts to resolve differences, they are unable
to reach agreement as to the discovery at issue and shall recite. additionally,
the date. time and place of each such conference and the names of all persons
participating in the conference. unless the party opposing the motion expressly
adopts the moving parties' written showing pursuant to this subdivision. Absent 1
written showing by moving or opposing counsel or express adoption of the moving
parties' statement by the opposing party pursuant to the subdivision. the court
shall decline to consider on opposition to a motion subject to this subdivision
absent good cause shown,
(f) [Repealed. Pub.L., 96-481, Title 11, ( 205(a), Oct. 21, 1980, 94 Stat.
2330.)
(g) Failure to Participate in the Framing of a Discovery Plan. If a party or a
party's attorney fails to participate in good faith in the framing of a discovery
plan by agreement as is required by Rule 26[(4)]{1), the court may, after
opportunity for hearing, require such party or attorney to pay to any other party
the reasonable expenses, including attorney's fees, caused by the failure.
503
DISE
- 11 -
AMENDMENTS TO THE FEDERAL RULES OF CIVIL
PROCEDURE TO IMPLEMENT THE AGENDA
FOR CIVIL JUSTICE REFORM IN AMERICA
Rule 56 CJR Recommendations 16-17
Introduction
Proposed additions to Rule 56 of the Federal Rules of Civil Procedure to Implement
Recommendations 16 17 of the Agenda for Civil Justice Reform in America are underlined below
and deletions to the present rules are bracketed.
RULE 56. Sumary Judgeent
(a) For Claiment. A party seeking to recover upon a claim, counterclain, or
cross-clain or to obtain a declaratory judgment may, at any time after the
expiration of 20 days from the commencement of the action or after service of a
motion for summary judgment by the adverse party, move with or without supporting
affidavits for a summary judgment in the party's favor upon all or any part
thereof.
(b)
For Defending Party. A party against whom a claim, counterclaim, or cross-
claim is asserted or a declaratory judgment is sought may, at any time, move with
or without supporting affidavits for a summary: judgest in the party's favor as to
all or any part thereof.
(c) Notion and Proceedings Thereon: The motion shall be served at least 10 days
before the time fixed for the hearing. The adverse party prior to the day of
hearing may serve opposing affidavits. The judgment sought [shall] must be
rendered forthwith if the pleadings, depositions, enswers to interrogatories, and
admissions on file, together with the affidavits, If any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to 8
judgment as a matter of law. A summary judgment, interlocutory in character, may
be rendered on the issue of liability alone although there is a genuine issue as
to the amount of damages. The district court's finding regarding whether
genuine issue of material fact exists shall not be set aside unless clearly
erroneous. Whenever a motion for summary judgment is granted or denied. the court
must set forth specific findings which support its ruling.
(d) Case Not Fully Adjudicated on Motion. If on motion under this rule
judgment is not rendered upon the whole case or for all the relief asked and a
trial is necessary, the court at the hearing of the metion, by examining the
pleadings and evidence before it and by interrogating counsel, shall [if
practicable) ascertain what material facts exist without substantial controversy
and what material facts are actually and in good faith controverted. It shall
thereupon make on order specifying the facts that appear without substantial
controversy, including the extent to which the amount of damages or other relief
is not in controversy, and directing such further proceedings in the action as are
just. Upon the trial of the action the facts so specified shall be deened
established, and the trial shall be conducted accordingly.
(e)
Form of Affidavits; Further Testimony; Defense Required. Supporting and
opposing affidavits shall be made on personal knowledge, shall set forth such
facts as would be admissible in evidence, and shall show affirmatively that the
affiant is competent to testify to the matters stated therein. Sworn or certified
copies of all papers or parts thereof referred to in an affidavit shall be
attached thereto or served therewith. The court may permit affidavits to be
supplemented or opposed by depositions, answers to interrogatories, or further
affidavits. When a motion for summary judgment is made and supported as provided
in this rule, an adverse party may not rest upon the mere allegations or denials
of the adverse party's pleadings, but the adverse party's response, by affidavits
or as otherwise provided in this rule, must set forth specific facts showing that
there is a genuine issue for trial. If the adverse party does not so respond,
summary judgment, if appropriate, shall be entered against the adverse party.
- 12 -
(f)
When Affidavits are Unavailable. Should it appear from the effidavits of a
party opposing the motion that the party cannot for reasons stated present by
affidavit facts essential to justify the party's oppositien, the court any refuse
the application for Judgment or may order a continuance to permit affidavits to be
obtained or depositions to be taken or discovery to be had or may make such other
order as is just.
(B)
Affidavits Made in Bad Faith. Should it appear to the setisfection of the
court at any time that any of the affidavits presented pursuant to this rule are
presented in bad faith or solely for the purpose of delay, the court shall
forthwith order the party employing them to pay to the other party the amount of
the reasonable expenses which the filing of the affidavite caused the other party
to incur, including reasonable attorney's fees, and any offending party or
attorney may be adjudged guilty of contempt.
- 13 -
AMENDMENTS TO THE FEDERAL RULES OF CIVIL
PROCEDURE TO IMPLEMENT THE MENDA
FOR CIVIL JUSTICE REFORM III AMERICA
Rule w CJR Recommendation $
Introduction
Proposed additions to Rule 68 of the Federal Rules of civil Procedure to Implement
Recommendation 4 of the Agenda for Civil Justice Reform in America are underlined below and
deletions to the present rules are bracketed.
Rule 68. Offer of Settlement
At any time more than 20 days [before the trial begins, a party defending
against 8 claim] after the service of the summons and complaint on 8 party but not
less than 30 days (or 20 days if it is 0 counter offer) before trial. either party
may serve upon the [adverse party an offer to allow judgment to be taken against
the defending party] other party. but shall not file with the court 0 written
offer. denominated as on offer under this rule. to settle 0 claim for the money
[or] property or Ito the effect] relief specified in the offer [with costs then
accrued.) and to enter into an agreement dismissing the claim or to allow judgment
to be entered accordingly. [If within 10 days after the service of the offer the
adverse party serves written notice that the offer is accepted, either party may
then file the offer and notice of acceptance together with proof of service
thereof and thereupon the clerk shall enter Judgment. An offer not accepted shall
be deemed withdrawn and evidence thereof is not admissible except in a proceeding
to determine costs. If the judgment finally obtained by the offeres is not more
favorable than the offer, the offeree must pay the costs incurred after the making
of the offer.] The offer shall remain open for 30 days unless sooner withdrawn by
a writing served on the offeree prior to acceptance by the offeree. Acceptance or
rejection of the offer by the offeree must be in writing and served Upon the
offeror. An offer that is neither withdrawn nor accepted within 30 days shall be
deemed rejected. The fact that an offer is made but not accepted does not
preclude a subsequent offer. Evidence of an offer is not admissible except in
proceedings to enforce a settlement or to determine senctions under this rule.
When the complaint sets forth a claim for money. If the offeree rejects the offer
and the judgment finally obtained by the offeree was not at least ten percent more
favorable than the last offer. the offeree shall Pay offeror's reasonable
attorney's fees and reasonable costs incurred after the rejection of the last
offer. When the complaint sets forth a claim for property or other non-monetary
relief, If the offeree rejects the offer and the judgment finally obtained by the
offeree is not more favorable than the last offer. the offeree shall pay offeror's
reasonable costs and reasonable attorney's fees incurred after rejection of the
last offer, [When the liability of one party to another has been determined by
verdict or order or judgment, but the amount or extent of the liability remains to
be determined by further proceedings, the party adjudged liable may make an offer
of judgment, which shall have the same effect as an offer made before trial if it
is served within a reasonable time not less than 10 days prior to the commencement
of hearings to determine the amount or extent of liability.]
This rule shall not apply to class or derivative actions.
- 14 -
AMENDMENTS TO THE FEDERAL RULES OF EVIDENCE
TO IMPLEMENT THE AGENDA FOR CIVIL JUSTICE
REFORM III AMERICA
Rule 702 CJR Recommendations 19 . 20; 25
Introduction
Proposed additions to Rule 702 of the Federal Rules of Evidence to Implement
Recommendations 19 . 20 and 23 of the Agenda for Civil Justice Referm in America are underlined
below and deletions to the present rules are bracketed.
Rule 702
[If scientific, technical, or other specialized knowledge will assist the trier of fact to
understand the evidence or to determine a fact in issue, a witness qualified as an expert by
knowledge, skill, experience, training, or education, may testify thereto in the form of an
opinion or otherwise.]
(a) Qualification of Expert Testimony. If the court finds
(1) that scientific, technical, or other specialized knowledge will
substantially assist the trier of fact to understand the evidence or to
determine a fact in issue:
(2) that a proffered witness is qualified as an expert in the field for
which the expert is called to testify by knowledge, skill, experience,
training, or education; and
(3) that the proffered witness' testimony is based on 8 widely accepted
explanatory theory:
then the witness may testify thereto in the form of an opinion or otherwise.
(b) Prohibition on Contingent Fee for Expert Witness. A witness shall be
qualified under Rule 702(a)(2) only if the court finds that any compensation to
the witness directly or indirectly will not vary as . result of any outcome of the
case.
- 15 -
AMENDMENTS TO THE FEDERAL RULES OF APPELLATE
PROCEDURE TO IMPLEMENT THE MENDA
FOR CIVIL JUSTICE REFORM ID AMERICA
Rule 35 CAR Recommendation 32
Introduction
Proposed additions to Rule 35 of the Federal Rules of Appellate Precedure to Implement
Recommendation 32 of the Agenda for Civil Justice Reform in America are underlined below and
deletions to the present rules are bracketed.
Rule 35. Determination of Causes by the Court In Banc
(a) When Hearing or Rehearing In Banc will be Ordered. A mejority of the
circuit Judges who are in regular active service may order that an appeal or other
proceeding be heard or reheard by the court of appeals in banc. Such a hearing or
rehearing [is not favored and) ordinarily will not be ordered except (1) when
consideration by the full court is necessary to secure or meintain uniformity of
its decisions, (2) when a decision of the court is in conflict with the decision
of another federal court of appeals on the same matter or resolves a federal
question in a way in conflict with a state court of last resort. or [(2)] (3) when
the proceeding involves a question of exceptional importance.
- 16 -
COMMENTARY ON PROPOSED AMENDMENTS
COMMENTARY ON PROPOSED CJR
AMENDMENTS TO RULE 11 OF THE
FEDERAL RULES OF CIVIL PROCEDURE
Rule 11 of the Federal Rules of Civil Procedure protects the
integrity of submissions to the court. It requires that, on
penalty of sanctions, pleadings, motions and other papers be
based on a reasonable inquiry that the paper is well grounded in
fact; be warranted by existing law or good faith argument for the
extension, modification, or reversal of existing law; and that
the paper not be interposed for any improper purpose. The
proposed CJR amendment to Rule 11 broadens the court's power to
impose sanctions to check these abuses.
Rule 11 (a) extends the court's power to impose sanctions to
include attorneys who are not signatories of papers but who are
responsible for the truth of the content of the submission to the
court.
Rule 11 (b) imposes a continuing obligation to correct any errors
or falsehoods in signed documents upon learning of the error or
falsehood.
- 18 -
CONNENTARY ON PROPOSED CJR
AMENDMENTS TO RULE 16 OF THE
FEDERAL RULES OF CIVIL PROCEDURE
Rule 16 of the Federal Rules of Civil Procedure authorizes
pretrial conferences to permit courts to manage litigation
effectively. The proposed amendments to Rule 16 require early
pretrial conferences and strengthen the court's management of
cases through pretrial conferences. The proposed amendments
revise Rule 16(a), Rule 16(c) and Rule 16(f)
Rule 16 (a) requires an early pretrial conference before the court
or a neutral third-party appointed by the court to discuss
settlement, possible use of alternative dispute resolution
procedures, and such other subjects as the court deems
appropriate.
Rule 16 (c) is amended to specify settlement and use of
alternative dispute resolution procedures as subjects to be
discussed at pretrial conferences.
Rule 16(f) permits sanctions against unrepresented parties and
attorneys representing them for failure to participate in a
settlement conference in good faith. This subsection also is
amended to clarify that refusal to agree to any proposal made by
- 19 -
a party, standing alone, does not constitute failure to
participate in good faith in a settlement conference.
- 20 -
COMMENTARY ON PROPOSED CJR
AMENDMENTS RULE 26 or THE
FEDERAL RULES OF CIVIL PROCEDURE
Rule 26 of the Federal Rules of Civil Procedure is the rule
containing general provisions governing discovery. The CJR
amendments to Rule 26 are designed to facilitate exchange of
limited basic information useful in formulating a discovery plan.
They will also permit the parties to reach the central issues in
dispute without extraneous, costly and unproductive disputes and
filings. Discovery subsequent to initial core disclosures is
limited, subject to exceptions specified in the rules, to avoid
abuse, and expert discovery is expanded to facilitate resolution
of the central issues. In addition, these amendments to Rule 26
add a flexible mechanism for developing discovery plans to
streamline and expedite litigation.
Subdivision (a) requires automatic early disclosure of "core
information" (i.e., the names of potential witnesses and the
location of directly relevant documents). Failure to disclose
the core information will bar a party from pursuing any discovery
absent a court order. The terms for relevance and personal
knowledge set forth in subdivision (a) are taken directly from
the Federal Rules of Evidence, and are intended to be interpreted
analogously. All persons known by the parties to have knowledge
of any fact of consequence must be identified. The fact that a
- 21 -
party does not intend to call a person as a witness is not meant
to be grounds for failure to make disclosure.
Subdivision (c) (4) (A), as amended, permits a more comprehensive
inquiry into expert witnesses' qualifications. Under the amended
rule a party may serve expert witness interrogatories to
determine the subject matter on which the expert is expected to
testify, the substance of the facts and opinions to which the
expert will testify, the expert's formal training, and the
expert's publications as well as the cases in which the expert
has testified or given a deposition. This subdivision also
allows for discovery of the expert's compensation, publications,
and expected testimony prior to trial.
Subdivision (c) (4) (B) allows a party to take an expert's
deposition prior to trial without court order.
Subdivision (c) (4) (c) permits a party to request all documents
the expert relies upon or has reviewed in preparation for his
testimony.
Subdivision (c) (4) (D) authorizes the court to order further
discovery subject to restrictions, including payment of fees and
expenses.
Subdivision (c) (4) (E) is the text of current Rule 26 (b) (4) (B).
- 22 -
Subdivision (c) (5) establishes reasonable presumptive numerical
limits on the number of interrogatories (15) and depositions
(10). The suggested limits may be waived by agreement of counsel
or modified by the court for good cause.
Subdivision (c) (6) relates to admissions of facts and confines
discovery to matters that are actually in controversy, thereby
helping to guard against discovery abuse.
Subdivision (e) (2) requires parties to explain the relevance of
requested materials through specific references to their
pleadings.
Subdivision (i) requires the parties to design a discovery plan
consistent with the numerical limits imposed by subdivision
(c) (5), unless other parameters have been agreed upon by the
parties or ordered by the court on good cause shown. Discovery
beyond that set forth in the plan may be taken only if the
requesting party pays all of the producing parties' reasonable
costs (including reasonable attorney's fees) caused by the
request.
- 23 -
COMMENTARY ON PROPOSED CJR AMENDMENTS
TO RULE 37 OF THE FEDERAL RULES
OF CIVIL PROCEDURE
Rule 37 of the Federal Rules of Civil Procedure sets forth
specific powers of the court to compel discovery and to impose
discovery sanctions. The CJR amendments provide a "Fairness
Rule" requiring the loser in discovery motion proceedings to pay
the prevailing party's attorney's fees. This result is achieved
by deleting language in subdivisions (a), (b) and (d) that bars
an award if a party's position is "substantially justified." The
proposed rule includes an exception that would permit the court
to bar or limit fee-shifting if "special circumstances" would
make it "unjust."
An amendment to subdivision (e) requires the parties to confer
prior to seeking court intervention in a discovery dispute.
Taken together, these changes encourage both sides to evaluate
carefully their claims and defenses.
- 24 -
COMMENTARY ON PROPOSED CJR AMENDMENTS
TO RULE 56 OF THE FEDERAL RULES
OF CIVIL PROCEDURE
Summary judgment is a well recognized and useful method for
terminating litigation when there is no genuine issue of material
fact and the moving party is entitled to prevail as a matter of
law. Under the current Rule 56, some parties urge the court to
decline to enter summary judgment even if there is no genuine
issue of material fact. As amended, Rule 56(c) precludes this
argument; the amended rule makes it plain that summary judgment
is mandatory in such cases,
Another amendment to subdivision (c) requires that judges make
explicit findings of fact. This amendment will encourage judges
to examine cases closely before granting or denying summary
judgment and will help focus issues for trial when summary
judgment is not granted. The amendments to subdivision (c) also
give greater weight to the trial court's findings when a material
fact exists by establishing a "clearly erroneous" standard for
reversal on appeal.
- 25 -
COMMENTARY ON PROPOSED CJR AMENDMENTS
TO RULE 58 OF THE FEDERAL RULES
OF CIVIL PROCEDURE
Rule 68, as amended, is intended to encourage dispute resolution
by giving parties incentives to offer and accept reasonable
settlement terms prior to trial. The revised Rule 68 provides
that either party may, before trial, serve on the opposing party
an offer to settle the dispute. It rewards careful evaluation of
settlements by requiring that the party rejecting the compromise
bear the opponent's additional costs of litigation, including
reasonable attorney's fees, unless that party obtains a judgment
that is 10 percent more favorable than the settlement offer (for
money claims) or is more favorable than the rejected offer (in
other than money claims).
This Rule does not apply to class or derivative actions.
- 26 -
COMMENTARY ON PROPOSED CJR
AMENDMENTS TO RULE 702 OF THE
FEDERAL RULES OF EVIDENCE
Unlike ordinary witnesses, who generally may offer only factual
testimony, expert witnesses are allowed to testify as to their
opinions. Expert opinion testimony, however, ought not to
contain unsupportable speculation. The expert's role as an
impartial and objective witness is fundamental. Thus contingency
fee arrangements with experts should be barred so an expert
witness will not have any direct financial interest in the
outcome of the trial. The CJR Amendments effect these reforms by
amending Rule 702 of the Federal Rules of Evidence.
Subdivision (a) sets forth the requirements for testifying as an
expert in civil cases. Under the amendment, expert testimony may
be admitted if the court finds that specialized knowledge will
substantially aid the trier of fact. To testify as an expert, a
witness must be qualified in the "field for which the expert is
called" and the testimony must be "based on a widely accepted
explanatory theory." This requirement eliminates testimony that
is too far afield from current knowledge. It is contemplated
that this requirement may be satisfied by expert testimony that
is accepted by at least a substantial minority of experts in the
relevant field.
Subdivision (b) bars contingency fees for expert witnesses.
- 27 -
310
Feb. 21 / Administration of George Bush, 1992
will be a leader in the administration's drive
And it's great to be here in South Carolina,
to create jobs, increase economic growth,
host for the first time, but I'm sure not the
and prepare America for a bright future.
last time of this prestigious Southern Repub-
I am sure that Transportation Secretary
lican Leadership Conference. Four years
Card will insure that America continues to
ago, the South led our party to a great victory
travel safely home and abroad and that the
across the entire country. And this year, the
Nation's transportation systems are ready to
South will lead us to victory in November
move into the 21st century.
1992.
And just to be perfectly clear about it, I
am confident of winning the Presidency for
4 more years. I come here fired up and con-
Remarks to the Southern Republican
fident. But I'll need your support. We have
Leadership Conference in
much to do these next few months because
Charleston, South Carolina
we have much to do these next few years.
February 21, 1992
Together, we can finish what we've started
and move this country forward.
The President. Thank you, thank you. It
Let me open with a true story from my
is great to be here in Charleston, I'll tell you.
own past about the days, Midland, Texas,
I'm delighted to be back in the South. And
1956, trying to organize-I hear Ernie An-
may I say to our Governor, my dear friend
gelo over to orga-
Carroll Campbell, we're grateful for your
nize a Republican Party. And this is the gos-
hospitality and, even more, for your leader-
pel truth. I was a precinct judge, a poll judge,
ship as one of the finest Governors in the
polling judge at primary election time. The
entire country, a real leader, Carroll Camp-
first time the Republican Party had ever held
bell. And I might say how pleased I am that
a primary in Midland County. And Barbara
Governor Campbell will serve as our national
and I were there alternating at the polls, poll
cochairman of the campaign and once again
watchers. She and I voted Republican, and
as southern regional chairman. I couldn't be
we represented two-thirds of the Republican
in better hands, and thank you very much.
vote that year, gospel truth. The only other
May I thank the Citadel Bulldog Band
guy that voted was a slightly inebriated Dem-
over there for some fine music. I appreciate
ocrat. He thought he was voting in the-
it very much. And this is a real star-studded
[laughter]-and you can go back and look
event. And I want to salute the Governors
up the records.
here today, past and present. I know Gov-
But some of you all are old enough to re-
ernor Jim Martin's here from North Carolina.
member those days. And sometimes if you
And Members of the United States Congress,
tried to register Republican, they'd tell you
I think four or five Congressmen with us here
not to bother because there was no Repub-
today, a couple of them with us right here:
licans to vote for in the primary. Or times,
out and out, there was intimidation, some-
Congressman Ravenel, hometown boy, and
others. And other distinguished guests. And
times violence. And we went through a lot
may I say that an early supporter and friend
back then. And in fact, I'm sure many of you
of mine is running for the Senate here,
can share similar experiences. And you say,
Tommy Hartnett. And I want to see him
"Well, why did we do it? Why did we build
elected to the United States Senate-former
a Republican Party in the South when some
said it was impossible?" We did it because
member of Congress. And I also want to ac-
we wanted change, and we did it because
knowledge key members of our political
we believed in some fundamental values:
team: Rich Bond is with us, our new chair-
man and Jeanie Austin, doing a superb job.
faith and family, responsibility and respect,
And of course, the conference chairman
community and of course country, the Unit-
ed States of America. And we did it because
Martha Edens' superb work here. Keep up
the good work and thank you very much,
we saw the Government getting too big and
Martha.
getting into our pockets and to every corner
of our lives. And we did it because we wor-
'orge Bush, 1992
Administration of George Bush, 1992 / Feb. 21
311
ried about our families and our schools and
and safe streets and a Government worthy
1 South Carolina,
our neighborhoods. And we did it because
of the people's respect. And so, we believe
I'm sure not the
Southern Repub-
our taxes always seem to go up at the same
in less Government, low taxes. Surely we be-
time America's problems got worse. And
lieve in a strong defense. And we believe that
ice. Four years
each of us in our own small way finally said,
we put America first when we put America's
to a great victory
nd this year, the
"Enough is enough."
families first.
And we were upstarts and mavericks. And
And so, we believe that parents, not the
"ry in November
we challenged the status quo. We challenged
Government, should make the big decisions.
the old, what was known as the "courthouse
Parents, not Government, should choose
clear about it, I
e Presidency for
crowd," the closed-door, one-party rule of
their children's schools. Parents, not the
the Democrats. And we did it because we
Government, should decide the family's
fired up and con-
support. We have
knew Republican principles were right. And
health care. And parents should choose who
! months because
they fought us every step of the way. But
cares for their children, not some bureaucrat
e next few years.
we fought hard, and we fought fair. And we
in Washington, DC, telling us how to do it.
hat we've started
took our message, smaller Government, bet-
And yes, we believe it ought to be okay to
ter Government, to the people of the Caroli-
have a voluntary prayer for children in the
ard.
nas and Virginia and Mississippi and Florida
classroom, and I'm not going to change my
de story from my
and the rest of this great region of America.
view on that ever.
S, Midland, Texas,
And we started winning, at first a House
Those are our beliefs. And those are why
-I hear Ernie An-
seat here and a Senate race there. But our
-]--trying to orga-
we built a party in the South and why we
and this is the gos-
momentum grew. Momentum grew, and it
continue, with your help, to build it today.
udge, a poll judge,
grew. And we owe a great debt of gratitude
Those beliefs don't change from one election
to our standard bearer in those early days,
election time. The
to the next. They still guide each and every
those that were out front: Howard Baker, the
Party had ever held
one of us each and every day.
unty. And Barbara
late John Tower, the Bo Calloways and Bill
And now we're at the beginning of a new
ng at the polls, poll
(
ou
Brocks, Drake Edens and Clark Reeds and
era in the history of our country. The cold
d Republican, and
fat
Bill Dickinson and John Paul Hammer-
war is over, and America won. The Soviet
schmidt and of course, the phenomenal fa-
; of the Republican
Union, as we remember it, has collapsed,
vorite son of South Carolina, right behind
th. The only other
me, Strom Thurmond. When I think back
gone. Imperial communism is finished for
ly inebriated Dem-
to one year ago almost to this very day, the
good. American leadership changed the
as voting in the-
go back and look
tough decision that had to be made about
world. Republican leadership will change
America.
committing your sons and daughters into a
e old enough to re-
war, Strom Thurmond was of more support
I know we've got tough times, but I am
d sometimes if you
to me than any single Senator in the United
totally confident about our future. But we've
States Senate. And we should be grateful for
got a lot of work ahead of us. There are some
can, they'd tell you
him.
things that are simply on the wrong track in
ere was no Repub-
Well, these leaders paved the way, and
our country. Take our courts, for example.
primary. Or times,
they inspired a generation of talent that
When fathers stop coaching Little League
intimidation, some-
transformed the Nation's political landscape.
because they're afraid of liability lawsuits,
went through a lot
m sure many of you
And I'm thinking now of another South Caro-
something is wrong. And when doctors stop
ences. And you say,
linian, a good man and a good friend, Lee
delivering babies because they fear a mal-
Atwater. We miss him. We miss him still.
practice lawsuit, something's wrong. Or when
? Why did we build
e South when some
And it was great to have Sally Atwater flying
people stop volunteering to help each other
down with us this afternoon on Air Force
because they fear ambulance-chasing law-
We did it because
One. Sally, we're so pleased to be with you.
yers, something is terribly wrong. These days
1 we did it because
fundamental values:
Well, today the Republican Party is the
a sharp lawyer would tell the Good Samari-
force for positive change in the New South,
tan, "Keep on walking."
sibility and respect,
se country, the Unit-
and I'm proud to have played a modest role
We've proposed reforms to our court sys-
nd we did it because
buld
in that success. Our message then and our
tem. They've got them sitting up there in the
.t getting too big and
message now is simple. Carroll said a lot of
United States Senate now to address the
it. We believe Government is too big and
questions of frivolous lawsuits, and that's a
; and to every corner
d it because we wor-
spends too much. We believe in good schools
good step. But the real answer for solving
312
Feb. 21 / Administration of George Bush, 1992
problems is to be more concerned with help-
I put forward a two-part plan. And the first
ing each other than suing each other.
part gets business growing again right now,
And then I think about our Nation's health
instantly upgrading plant and equipment
care system. Our health care system pro-
again, hiring workers again. It uses incentives
vides-and let's not forget this-the highest
like an investment tax allowance.
quality care anywhere in the world. But it's
And yes, it is clearly time for the Congress
not perfect. We all know that. And too many
to wake up and cut that tax on capital gains.
people do not have access to health insur-
And to get housing back on its feet, I put
ance. Too many people worry that they're
forth several commonsense proposals-
going to lose their coverage if they change
they're sitting right there in House now-
jobs or, worse still, if they lose their job. And
to get people buying and building homes.
anybody who's had even minor surgery
And perhaps the most easily understood pro-
knows that health care costs are going
posal is a $5,000 tax credit for first-time
through the roof.
homebuyers. With our plan, young people al-
The answer is not to go down the road
most able to buy that first home could do
of socialized medicine with its long lines and
it with the extra $5,000 in their pocket. And
faceless, impersonal service. If that's what we
the plan we're fighting against in the Con-
wanted, we'd put our doctors and nurses to
gress this very day gives them absolutely
work for the department of motor vehicles.
nothing, nothing to that first-time home-
Our plan, my approach, written out in detail,
buyer.
is to reform our health system, make insur-
You're worried about the Democrat's cur-
ance available to all, keep the quality high,
rent plan. I don't want to say too much about
the bureaucracy low, and preserve choice.
it. It's a nice evening here, and I don't want
And that is vital. And the last thing we want
to ruin it. Current plan, I say current because
is the Government standing between you and
it seems to change just about every hour as
your doctor.
they change it to garner in sóme votes from
(
And then there's the sorry welfare system.
the special interests, to buy votes. And that's
It's pretty obvious that the system now too
why it's really not a plan. It is simply a bad
often perpetuates dependency when it
deal. It smacks of, and you've heard it before,
should promote independence, promote ini-
class warfare. And listen to the tradeoff in
tiative. We need to encourage individual suc-
their deal: 25 cents a day in temporary tax
cess through personal responsibility, the dig-
relief for 2 years, paid for, true to form for
nity of a job. And so, I've asked the depart-
the Democrats, by a large permanent tax in-
ments and agencies to make it easier-and
crease.
this is upon the advice of Jim Martin and
Now, some Democrats in the Senate have
Carroll Campbell and others-to make it
other ideas. They want to get a bidding war
easier for State and local government to re-
going. But to pay for that they'd have to hike
form the system, reform policies that pro-
tax rates for the middle class, people making
mote broken families. We need to get people
$35,000, you know, people like teachers and
to work, go after the deadbeat fathers who
factory workers and everyday Americans.
run out on those little kids, or as they do
And they won't tell you that about their sorry
in Wisconsin, to make recipients work or
plan. But that's the estimate I've been given
study and to keep families together.
by our experts. Any economist will tell you,
But we all know what the number one
the last thing our economy needs now is a
issue on the minds of Americans is, and it
tax increase by that Democratic Congress.
is the economy. And it's people worried
And their plan adds almost $30 billion to this
about their jobs, providing for their families,
deficit. And the jobs it creates are more likely
meeting the everyday challenges of paying
to be for more tax collectors.
the bills and providing a home and teaching
I believe the American people have about
the kids and putting aside for our retirement.
had it with this tax-and-spend thinking. And
The American people, your neighbors,
we drew a line in the sand in the Persian
want this economy fired up again. And so
Gulf and kept our word, and I'll draw another
do I. And in my State of the Union Address,
line in the sand right here today. If the
orge Bush, 1992
Administration of George Bush, 1992 / Feb. 21
313
un. And the first
again right now,
Democrats send me this nonsense they're
nuity, American know-how, and the Amer-
and equipment
talking about now, I will send it right back.
ican can-do spirit are simply a bunch of hack-
t uses incentives
I will veto it the minute it hits my desk.
neyed phrases. I don't believe it. I don't be-
ice.
I sent them a plan, a good one. And that's
lieve that for one minute, and neither do you.
or the Congress
what they ought to work on, not some phony
America is not going to cut and run ever.
on capital gains.
partisan maneuver that they know won't fly.
We're going to stay involved, and we are
1 its feet, I put
And I'll say it again to the Congress: Here's
going to continue to lead the entire world.
se proposals—
the deadline: March 20th. And if we act by
1 House now-
then we can see some results this spring. No
Before I finish now, I have something to
say about this primary campaign. Of course,
building homes.
more games, no more empty gestures, just
pass this plan and get the economy going
this campaign is important, not just to me
understood pro-
it for first-time
again, and then we can have all the political
but to you and to our country. And for the
sake of our country we must not turn over
young people al-
fights we want. But let's set it aside now and
home could do
do something for the American people that
the Nation's leadership to the Democrats.
eir pocket. And
are hurting out there.
Republican leadership must continue.
1st in the Con-
I said the plan had two parts; you may re-
For 8 years, Ronald Reagan, I was at his
member that from the State of the Union.
side, led this country. For the last 3 years
hem absolutely
rst-time home-
The second part is a long-term plan to keep
I've stood on our principles and against a
this country competitive, keep us vigorous.
Democratic Congress that would undermine
Democrat's cur-
And it's a road map for competing and lead-
them. And with the help of our Republican
ing America in this fast-changing world of
leadership on Capitol Hill, 25 times our prin-
too much about
the 21st century.
ciples were upheld, vetoes of bad legislation
nd I don't want
Our plan revolutionizes America's edu-
sustained.
current because
t every hour as
cational system. Our plan gets the billions
And the next 5 years of American history
ome votes from
of dollars' worth of cutting-edge Government
are just too important to entrust to the inex-
otes. And that's
research and development into the hands of
perienced. I believe the American people
is simply a bad
our private-sector businesses and the workers
want to hear about how we're going to ad-
heard it before,
faster than ever before. And that helps us
dress our country's challenges, how we can
the tradeoff in
get a real return on your tax dollars, invest-
unite our people, create more opportunity
ment helping to create new jobs and prod-
and hope for all Americans. And I believe
temporary tax
:ue to form for
ucts.
the American people want to hear solutions,
rmanent tax in-
Our plan provides tax relief to strengthen
not just a lot of name-calling and running
the family. We raised the tax deduction for
this country down.
he Senate have
children by $500. Make no mistake, I want
And frankly, I also believe that sometimes
: a bidding war
this plan passed in this session of Congress.
somebody's got to stand up and say what's
/d have to hike
Keep the heat on the Congress, and we can
right about the United States of America.
people making
get that done.
And you can't hear it from this campaign
:e teachers and
But a central idea behind our approach
going on out there. We are number one, and
ay Americans.
is that to succeed economically at home we
make no mistake about it, and we're going
)out their sorry
have to lead economically abroad. Carroll
to stay that way.
I've been given
touched on this very eloquently. What he
And another thing, maybe this is just my
st will tell you,
means and what I mean is jobs right here
personal prejudice talking, let's not listen to
eeds now is a
in America by opening markets for our ex-
the gloom and doom from all those intense
atic Congress.
ports all over the world. And I'm going to
talking heads who are happy only when they
0 billion to this
fight hard in every foreign market to do just
say something negative. We are the United
are more likely
exactly that. We've made headway. We have
States of America, and we don't have to put
made dramatic headway with this increase
up with all that.
ple have about
in exports, but we are going to do even bet-
Audience members. Four more years!
ter.
thinking. And
Four more years! Four more years!
in the Persian
Some people wish the rest of the world
would just go away. That is naive, and that
The President. Let me just say, you and
1 draw another
is defeatist. They're saying that a level playing
I believe in America, and we are optimistic
today. If the
field isn't level enough, that American inge-
about its future. And we believe in our party.
And I am tremendously fortunate to serve
314
Feb. 21 / Administration of George Bush, 1992
as your President at this most exciting time
February 20
in our Nation's history.
Barbara and I count our blessings every
Volunteers of the Fort Smith Community Den-
day for the good fortune that we have to live
tal Clinic, of Fort Smith, AR
in that majestic White House and to do our
February 21
level-best to serve the people of this great
Volunteers of the Lend-A-Hand program, of
country.
Boulder City, NV
These next primaries are critical. I need
your help. I need your help to keep our party
strong and united so that we can win this
fall. And yes, we have much to do. But I
guarantee you, we will get the job done. And
Digest of Other
yes, we have many challenges before us. A
White House Announcements
I guarantee you, we will meet them, each
and every one of them. And yes, there's an
The following list includes the President's
election in November. And I guarantee you
public schedule and other items of general
this: We will win it. I want to be your Presi-
interest announced by the Office of the Press
dent for another 4 years.
Secretary and not included elsewhere in this
Thank you very much. Thank you very,
issue.
very much. Now let's go out and beat the
Democrats in the fall. And may God bless
February 15
the United States of America. Thank you.
In the morning, the President and Mrs.
Note: The President spoke at 4:40 p.m. at
Bush traveled to Nashua, NH, where they
visited Nashua Mall.
the Omni Hotel. In his remarks, he referred
In the afternoon, the President and Mrs.
to Richard N. Brown, chairman, and Jeanie
Bush traveled to Manchester, NH, where
Austin, cochairman of the Republican Na-
they met with Bishop Leo O'Neil of the arch-
(
tional Committee; Ernie Angelo, national
committeeman from Tennessee; and Martha
diocese of Manchester and toured a fishing
and outdoor show at the National Guard Ar-
Edens, chairman of the Southern Republican
mory.
Leadership Conference.
In the evening, the President and Mrs.
Bush visited Temple Adath Yeshurun.
February 16
Points of Light Recognition Program
In the morning, the President and Mrs.
Bush attended services at First Con-
The President named the following individ-
gregational Church. Following the service,
uals and institutions as exemplars of his com-
they greeted Sunday school students and par-
ents.
mitment to making community service
central to the life and work of every Amer-
In the afternoon, the President and Mrs.
ican.
Bush returned to Washington, DC.
February 17
February 15
In the morning, the President gave inter-
Bea Gaddy, of Baltimore, MD
views to New Hampshire radio stations.
February 17
In the evening, the President gave an
interview to New England television stations.
Volunteers of Specialink, of Covington, KY
February 18
February 18
The President met at the White House
Fred Stavinoha, of Rosenberg, TX
with:
February 19
-the Vice President; Samuel K. Skinner,
Nicole Bagley, of Alma, GA
Chief of Staff to the President; Brent
Scowcroft, Assistant to the President for
irge Bush, 1992
en will make a
Administration of George Bush, 1992 / Feb. 20
305
a deep and un-
marks a substantial milestone in implement-
ce, and Sweden
independence. And so we've asked the de-
ing the President's national energy strategy
r global non-
partments to go back and the agencies to go
issued one year ago today. This legislation
back and make it easier to obtain the waivers
el peacekeeper,
will lead to the creation of hundreds of thou-
nitment to this
that are necessary to institute welfare reform.
sands of jobs and keep billions of dollars from
ity many times,
Work Fair's a good example. Learn Fair, like
flowing overseas for the purchase of foreign
ed Nations sys-
oil between now and the year 2010. The bill
they're doing in Wisconsin, is a good exam-
m stand against
ple. And the States are innovating. It is their
includes increased conservation, promotes
forts to bring to
the use of alternative fuels for motor vehicles,
responsibility, and we are trying to give them
Pan Am Flight
and permits greater use of natural gas. We
the support through waivers. So, I would sug-
ar, Sweden pro-
gest where you see hangups on it, let us know
are extremely pleased that the Senate passed
nomic assistance.
because we are trying to see that there is
the President's legislation, and we urge the
rvice of freedom
House to also act soon on this vital adminis-
not bureaucratic opposition to moving for-
one. Americans
ward with these flexible approaches that re-
tration program.
an 350 years of
quire waivers.
1638 when the
These reforms create, actually, the most
lished a colony
important ingredients for success, and that
Delaware. Amer-
is personal power and personal responsibility.
gin fought in our
Remarks to the American Legislative
We're getting more money to States for the
Exchange Council
igned the Dec-
important things, programs that work. We've
Sweden was one
February 21, 1992
increased spending on education, on Head
1 treaty of friend-
Start, conservation fund grants, and I'm sure
Thank you for the welcome. May I thank
newly independ-
Fred Noye and Sam Brunelli and all the oth-
Sam mentioned this, transportation. And
don't think for a minute that we measure
ers assembled here. This has become an an-
P continues today
progress simply in terms of dollars; we do
for example,
nual ritual, one that I look forward to very,
not. We measure it by results, and we fund
very much. I don't know whether Jack Kemp
visa arrangements
these programs because they work. Head
is here-he was going to be-been here. And
upon today. And
Start helps us achieve our six educational
Sam spoke. I have great confidence in both
onfident that this
goals. Kids starting school ready to learn—
of them. But I really want to just come over
lourish.
this year we funded it so that every 4-year-
me explain to you
and say a few words, express my greetings
to all of you.
old will have that opportunity.
new spirit of co-
Thinking of ALEC, I wanted to talk here
So, we're moving forward on what we feel
It strengthens our
about how you get things done, the key to
works. Jack's program, that I'm supporting
has clearly helped
good government. And Americans, I think,
him on and have been trying to get through
partnership as we
sensible ones, know that the Federal Govern-
Congress, the HOPE program, H-O-P-E,
'es that lie ahead.
enabling low-income families to own homes.
ment simply cannot do everything and
our way. And the
shouldn't even try. It could get the job done
And I like HOPE for a simple reason: It is
and then let everybody else do his or her
a sensible program, and it makes good sense.
job. At ALEC, you get things done. And I
And when you own a home, I think we all
e at 1:19 p.m. on
want to help you do what you do best, and
understand, you own a piece of the commu-
te House.
that is to lead and to innovate.
nity. And you have a dignity and a self-re-
So, we want to take $14.7 billion, mavbe
spect that simply cannot be equaled in any
other way. You all look at the world dif-
Sam talked to you about this, in Federal pro-
gram funds and turn them over to the States
ferently. You have an interest in improving
cretary
your assets and you have an interest in safer,
ction on the
as a block grant. And that way people who
cleaner, better communities. And let me sim-
run the programs can do what works rather
rity Act
than following some distant bureaucrat's no-
ply say, HOPE works.
tion of what works. We tried it last year:
And this pork-barrel spending-there was
bassed S. 2166, the
didn't get it. We're trying it again this year.
an amazing article on that in the paper
Act of 1992, which
I hope we can make some headway, even
today-doesn't, and we've asked Congress to
though it is an election year.
eliminate, totally eliminate 246 programs. All
of them have noble titles. All of them have
Another one, welfare reform. Our system
too often promotes dependency and not
wonderful titles, and all of them have spon-
sors in Congress. But they are not needed.
306
Feb. 20 / Administration of George Bush, 1992
And we are in tough financial times, and so
people in the fall. It transcends party lines.
we're trying to get rid of 246 of them and
It transcends ideology-liberal, conservative.
put the money where it gets results.
It just does not make sense to have so many
And at the same time, we've asked Con-
of these lawsuits settled in such an out-
gress to take a few steps to bolster confidence
rageous fashion. So, we are going to take that
in Government and to strengthen the econ-
case clearly and loudly to the American peo-
omy. We need real tools to cut spending. And
ple this fall. The madness has got to stop.
I want that line-item veto. We're going to
We've drafted a model act to help people
keep on pressing for it. We have, in signing
engage in voluntary service without fear of
statements, I have said that we'll refute, we
unfair suits. And I hope your States will use
just are not going to accept some of the lan-
this model to draft your own tort reform laws.
guage, and so far that's gone on through in
Alabama, as Perry was telling me and re-
the bills that I have signed.
minding me because I've known it, put to-
But we want a line-item veto, and again,
gether such a statute, got it passed in less
I'm going to take the case to the people for
than 4 months. Perry Hooper-where is he,
this in the fall. I want a balanced budget
he was here right a minute ago-right over
amendment. We couldn't do it overnight, ob-
here, sponsored the legislation, and we're
viously. But if we got it, it would discipline
very proud of what he's done. It's a model
not just the executive branch, but it would
for other States, and it makes me redouble
discipline the United States Congress which
our efforts here to get something done on
appropriates every dime and tells us how to
the Federal level.
spend every single dime. We've got to cut
I've asked Congress to act upon our"Ac-
the deficit without raising taxes, and if that
cess to Justice Act" which encourages people
takes an amendment, let's get the amend-
to seek alternatives to court. And it used to
ment and get the job done.
be a joke; you'd get upset and someone
Secondly, I want Congress to stop passing
would say, "Don't make a Federal case out
these unfunded mandates. If there is one
of it." Now the joke's on us, and we've got
thing we hear the most about from States,
to turn-that around. People still turn small
from Governors or State reps or State sen-
squabbles into lawsuits, and they sit in court-
ators, it is unfunded mandates. And a Federal
rooms listening to lawyers bicker about prob-
mandate is a promise that's made up there
lems that should have been solved some way,
on Capitol Hill and then paid for back on
over a cup of coffee at home maybe.
Main Street. But the subcommittee chair-
The "Access to Justice Act," and I urge
men up there have not changed their think-
you to take a look at it, provides alternatives
ing at all. One program after another is man-
and puts an end to this madness. And I'd
dated, and thus a big burden placed on the
like to challenge you to pass your own "access
States. And so we say to Congress: Stop pass-
to justice" reforms. Lead the way. And then
ing the buck back. And if you pass a mandate,
I think that will send a powerful message to
pay for it, and don't go and raise taxes.
the United States Congress.
Third, I want to put a lid on nuisance law-
The Council on Competitiveness here,
suits. You know, the law should foster
under the able leadership of Vice President
progress, not hinder it. And when fathers
Dan Quayle, has prepared two model State
stop coaching Little League because they
statutes which are outlined for you in the
fear lawsuits, there's something wrong. And
packets that I am told you were given today.
we've gone way too far. When doctors stop
Take it home, and think it over, and craft
delivering babies because they fear lawsuits,
your own antilitigation laws. And wouldn't it
something's wrong. And when people stop
be nice to create a law that results in fewer
volunteering to help other people because
lawsuits.
they fear ambulance-chasing lawyers, some-
And I don't like to have this many influen-
thing is wrong. And the madness must stop.
tial people gathered here without soliciting
And we have legislation up there in the
your support, for you to ask Congress to do
Congress sitting dormant. And here's one
its part to help the economy. We've got a
where we can take the case to the American
good plan. It is good. There's a lot of special
Administration of George Bush, 1992 / Feb. 20
307
eorge Bush, 1992
interests don't like parts of it, but it is a good,
A lot of it can be done simply through innova-
ends party lines.
ral, conservative.
sound, stimulative plan. It will protect today's
tion at the State and certainly at the local
jobs, and it will create new jobs for tomor-
level.
to have so many
row.
The family really, when you look at the
1 such an out-
Congressional leadership also has a plan.
problems, is the key to our future. The may-
bing to take that
And it will protect today's congressional
ors of cities in the National League of Cities,
American peo-
seats, and it'll promise action tomorrow. So,
their executive board came in to see me. I
as got to stop.
we are locked in a real fight up there. We're
mentioned this in the State of the Union.
to help people
short on numbers, but we've got the facts
And all of them-Mayor Bradley of Los An-
without fear of
States will use
and we've got the merits on our side.
geles, a great, big city; the Republican mayor
rt reform laws.
So I've given Congress a long-term plan,
of a small town in North Carolina of about
g me and re-
longer-I'd like to see it pass this year-to
2,000; and in between, mayor of Plano,
build the foundations for the next American
Texas, and cities of that size-all came to-
wn it, put to-
passed in less
century. An America that is healthy and well-
gether, and they said, "The biggest worry
educated and confident and free and better
we've got that clearly works against these
-where is he,
to-right over
in research and technology, all of these
problems in the cities is the decline of the
things.
American family."
n, and we're
It's a model
The health care plan, incidentally, that I
And family is a key to our future. And it's
me redouble
came out with fits perfectly with yours. It
been said that the best Department of
ing done on
improves our health care system, which pro-
Health and Human Services is the family.
vides the highest quality care on Earth.
And it is. And it's also been said that what
We've got health care problems, but one of
happens in your house-this was a quote by
on our "Ac-
them is not the quality of American health
the famous Silver Fox that lives with me over
rages people
care. It is the best in the entire world.
in the White House, Barbara Bush-it's also
d it used to
d someone
And so, our program doesn't knock that
been said that what happens in your house-
ral case out
aside to pass some mandated nationalized
and this is the way she put it, and I think
d we've got
program. It gives everybody access to health
it's very relevant-is more important than
insurance. And it lets people choose where
what happens in the White House.
turn small
sit in court-
to get treatment, which doctors they like.
And it's true. It is very, very true. And so
about prob-
And when people make these choices, they
I've asked this Commission that these mayors
feel more comfortable; they get treatments
suggest we set up, this Commission on Urban
some way,
sooner, much sooner than under these na-
Families, to find family policies that work,
3.
and I urge
tionalized programs. And our plan provides
to ferret out Federal legislation that works
Iternatives
something better than socialized medicine's
against the family, to suggest Federal legisla-
i. And I'd
false promises: health care itself. So I urge
tion that might bring the family together and
vn "access
you to take a look at this one. I think philo-
might make an errant parent more respon-
And then
sophically it will be right in tune with what
sible.
we all believe.
And our laws shouldn't encourage a single-
essage to
My administration also understands that
parent household or fail to punish men who
we've got to meet the challenges that lie over
abandon their children and the mothers.
ess here,
President
the horizon, the challenges of the 21st cen-
They should promote whole and healthy fam-
del State
tury. And our America 2000 education strat-
ilies. And that's what the purpose of that
u in the
egy encourages revolution, a new generation,
Commission is. And then when we get its
in today.
literally, a new generation of American
suggestions, I really want to share them with
schools. It stresses excellence. It stresses ac-
nd craft
ALEC and other groups because I believe
uldn't it
countability. It stresses involvement. It
you'll find some real merit in what this Com-
n fewer
stresses choice. And choice closes the gap
mission will come up with. I'm confident I
between the kitchen table and the teacher's
know the direction they're going to take.
nfluen-
desk. It gets families involved in education.
So, these are in the longer term proposal.
And it gives parents power over their chil-
But I've also submitted a short-term eco-
oliciting
S to do
dren's schooling. And I urge you to take a
nomic plan. And that provides two essentials
look at that program again. A lot of it does
for families in our Nation, jobs and security.
: got a
special
not have to be enacted in Federal legislation.
And this plan-I've challenged the Congress
308
Feb. 20 / Administration of George Bush, 1992
to move on it by March 20-stimulates in-
And so, we really need help now trying
vestment. It energizes the real estate indus-
to encourage the Congress to pass this pro-
try, and it cuts taxes that inhibit growth. And
gram by March 20th. And out of the budget
I've asked Congress, as I say, to pass it by
agreement of 1990, which had things in there
March 20th, 4 weeks from today.
I didn't like, there was one good thing in
Now, very candidly, we're caught up in a
it. There were a couple of things that were
political season here. And I have not been
pretty good. But there was one good thing
happy with what's come out of the Ways and
in it: For the first time in history, we put
Means Committee so far. The Democratic
caps, meaningful caps, on discretionary Fed-
leaders have come up with a sorry plan. They
eral spending. The critics forget that. Those
want higher taxes, and they want higher
caps are in place. They can work. Federal
spending. And they hope to buy off the peo-
spending's up because you have S&L's,
ple with a tiny, temporary tax cut. If you be-
long to an average family of four, their
you've had bank problems, enormous prob-
lems outside of this. You've had the entitle-
scheme will give you about a quarter a day.
And even the tooth fairy pays more than that
ments going up; they're outside of the caps..
in there. [Laughter.]
But the caps are the only protection the tax-
And we Americans, we want a large and
payer has against the growth of discretionary
expanding economy that offers new options
Federal spending.
and challenges and that holds the promise
And now, as the election approaches, you
of job security and employment opportunity.
hear a lot of talk by the Democrats, "We
And frankly, I think the country has a reason
want to change it. We want to change the
to join me in being tired of the games being
caps, knock down the walls." Please help me
played. For 3 straight years we've tried to
keep those caps in place. I will veto any at-
get a capital gains tax reduction. It would
tempt to change it, but we're going to need
stimulate jobs. And all the people that control
help to keep those caps in place to protect
Congress do is say, "Well, it's a tax sop for
the taxpayer as best we can until we can get
the rich. This is a break for the rich." It isn't.
some Members of Congress on both sides
When the Steiger amendment was passed in
of the aisle to share the values that you cer-
78, new businesses were created; new jobs
tainly epitomize and advocate.
were created. And it would have the same
So we're in a fight here. And I am going
effect now.
to take this one all the way. After March 20th
And we're competing in this world. And
they say, "Well, what are you going to do?"
Japan has a capital gains tax, an effective tax
I say, "Well, I don't know," because I'm not
of about one percent; Germany, I think it's
going to give up until March 20th on trying
zero. And we're asked to compete then with
to get this sensible, short-term, stimulative
two hands tied behind our back in this impor-
program through the Congress. But I guaran-
tant world competitive market which we can-
tee you, if we fail, the message is going to
not turn our back on.
be loud and clear. And we'll put it in very
And so, we're going to keep fighting for
clear focus so the voters next fall are going
these things that stimulate this economy and
to be able to make their determination as
get it moving. It is my conviction that if our
to what should have been done and those
first-time homebuyer credit is passed, and if
who stood against it.
our incentive through rapid depreciation is
So again, I would solicit your help in the
passed, and if our capital gains cut is
time that remains between now and March
passed-these are three of our seven points
20. Help us on the short-term program. Ad-
in this short-time program-it would send a
vocate the things you agree with us on on
signal of confidence to this economy. You
the longer term program, all the things I've
don't have to see the effect of it when tax
mentioned on education and research and
time rolls around. It will give us stimulation
family credits. These things are very, very
of confidence to the small business guy that
helpful for the future.
might just say, "I'm going to take a chance.
So, thank you for what you're doing. I'm
I'm going to open a business here."
glad you came by. I wish we had a little more
of George Bush, 1992
Administration of George Bush, 1992 / Feb. 21
309
ed help now trying
ess to pass this pro-
time, but I'm heading off to the South. You
guess why.
Your job is one of the most difficult in gov-
d put of the budget
ernment. You have worked hard for freedom
h had things in there
Thank you all very much.
of expression; and yet, at times, as you have
one good thing in
Note: The President spoke at 11:42 a.m. in
ruled against certain grants that you felt were
of things that were
Room 450 of the Old Executive Office Build-
beyond the bounds of common decency, you
was one good thing
have been criticized.
in history, we put
ing. In his remarks, he referred to Fred Noye,
chairman, and Sam Brunelli, executive direc-
I thank you for the integrity and commit-
n discretionary Fed-
tor of the council, and Perry Hooper, a coun-
ment that you have brought to the National
:s forget that. Those
cil member from Alabama.
Endowment for the Arts.
can work. Federal
No two people can agree in every instance
you have S&L's,
on every grant or indeed on what is good
ms, enormous prob-
art; in fact some of the art funded by the
u've had the entitle-
outside of the caps.
Nomination of Sigmund A. Rogich To
NEA does not have my enthusiastic approval.
Be United States Ambassador to
I expect some did not have yours, but this
y protection the tax-
Iceland
should not obscure the overall work of the
wth of discretionary
NEA nor your contribution to it.
February 21, 1992
I thank you and wish you and your family
ion approaches, you
The President today announced his inten-
well for a very bright future.
ie Democrats, "We
tion to nominate Sigmund A. Rogich, of Ne-
Sincerely,
want to change the
vada, to be Ambassador to the Republic of
George Bush
alls." Please help me
Iceland. He would succeed Charles E. Cobb,
:. I will veto any at-
Jr.
we're going to need
Currently Mr. Rogich serves as an Assist-
Mr. President:
in place to protect
ant to the President for Public Events and
Last October I told you of my desire to
can until we can get
Initiatives at the White House in Washing-
return to private life. Accordingly, I submit
gress on both sides
ton, DC. Prior to this, he founded and served
my resignation effective May 1, 1992.
values that you cer-
as the president of R&R Advertising in Las
I have appreciated the opportunity to
cate.
Vegas and Reno, NV, and Salt Lake City, UT,
serve you and the arts; you know how much
re. And I am going
1973-89.
your personal support has meant to me dur-
y. After March 20th
Mr. Rogich graduated from the University
ing these difficult times. You and your ad-
: you going to do?"
of Nevada-Reno (B.A., 1967). He was born
ministration have accomplished a great deal
v," because I'm not
May 17, 1944, in Iceland. Mr. Rogich has
and I'm sure the best is yet to come.
arch 20th on trying
two children and resides in Washington, DC.
Sincerely,
rt-term, stimulative
John E. Frohnmayer
gress. But I guaran-
nessage is going to
Note: These letters were made available by
we'll put it in very
Letter Accepting the Resignation of
the Office of the Press Secretary on February
next fall are going
John E. Frohnmayer as Chairperson
ir determination as
of the National Endowment for the
releases. 21 but were not issued as White House press
en done and those
Arts
February 21, 1992
it your help in the
en now and March
Dear John:
-term program. Ad-
I received your letter of resignation today
Statement by Press Secretary
Fitzwater on the Confirmation of
gree with us on on
and, with sincere thanks and appreciation for
all the things I've
your service, I accept your resignation effec-
Andrew Transportation H. Card, Jr. As Secretary of
and research and
tive May 1.
I recall your coming to talk to me about
February 21, 1992
ngs are very, very
this on October 24. At that time you told
The President is delighted that the United
t you're doing. I'm
me you wanted to step aside. I told you then
that I certainly understood your reasons for
States Senate unanimously voted to confirm
.ve had a little more
desiring to return to private life.
Andrew Card to be Transportation Secretary.
As Transportation Secretary, Andrew Card
George Bush, 1992
Administration of George Bush, 1992 / Feb. 5
213
Virginia in 1962.
Metzger has worked on Capitol Hill for then-
ter] I'd say, no, but it's a good start, and we
former Maria T.
freshman Congressman Patrick L Swindall.
recognize that we've got many other things
Tony and Jamie,
In addition, she was the Atlanta office man-
to be working on, as I've been trying to do.
VA.
ager for the Georgia Reagan-Bush '84 cam-
And now that we can look past the burdens
paign.
of the cold war, we can do what we do best:
Ms. Metzger is a graduate of Samford Uni-
create, innovate, build, produce, and lead.
versity in Birmingham, AL, receiving a bach-
This afternoon, I'm going to be signing the
1 Eischeid
elor of arts degree in 1984. She was born
Economic Report to the President. And it
istant to the
in Decatur, GA, and currently resides in Al-
will not only describe and explain the causes
live Affairs for
exandria, VA.
of our current economic difficulties, it will
also explain why virtually all economic ana-
lysts expect this economy to improve. More
importantly, it will explain why if Congress
nced the appoint-
Remarks to the Small Business
enacts my progrowth policies, the improve-
arplin to be Special
Legislative Council
ment in the economy will be quicker, strong-
for Legislative Af-
February 5, 1992
er, and much more certain.
In the State of the Union, I presented a
olin has served as
Thank you all very much. And Phil, thank
comprehensive action plan for our economy.
ry for Legislation at
you for the welcome, the kind introduction.
Today I want to discuss what that means for
in and Human Serv-
Bob Banister, congratulations on being
you. Think of this as my "small business State
as the Director of
named chairman-elect of the SBLC. John
of the Union." My plans starts with what I
rislation for the Of-
Satagaj, thanks for your hard work in putting
can do as President without any congres-
ent Services, 1989-
this wonderfully successful meeting together.
sional action required. We've taken a whole
the Deputy Assist-
And greetings, also, to Ted Olsen and John
series of actions-I won't mention them all-
on, 1986-1989; and
Kemp, who has done wonderful work in
but a series of actions to stimulate investment
Representative Bill
helping small business implement the ADA,
and get the economy moving. These, as I say,
the Americans With Disabilities Act. It was
don't need congressional approval.
d from the Univer-
great a minute ago-I don't see him this sec-
A couple of initiatives have earned kudos
as born January 23,
ond-to see my friend, Josh Smith, the
from this crowd. First, I have ordered major
is married to Rich-
Chairman, sitting over here, of the Presi-
Departments and Agencies to put a 90-day
Arlington, VA.
dent's Council on Minority Business, a suc-
hold on implementing new regulations. Reg-
cessful businessman himself.
ulations ought to foster economic growth, not
Today, what I wanted to do is to follow
crush it. And we're going to make sure that
up on some of the things that I discussed
the days of overregulation are over once and
h Ann Metzger
in the State of the Union Address. I really
for all. So, we're going to take a fresh look
o the President
do enjoy going up to the Hill to deliver the
at the rules and regulations Washington hurls
State of the Union. It's the only time all year
your way. We'll get rid of those that do noth-
that you can get so many politicians so polite
ing more than destroy jobs and weigh down
and understanding for so long. [Laughter]
businesses. And in this, we will pick some
announced the ap-
It's a wonderful feeling.
that will speed up and foster growth and sup-
Metzger as Deputy
As you know, we've had a hectic week,
port jobs. We're going to emphasize those
t for Public Liaison.
from the State of the Union Address to re-
regulations.
er has served as Spe-
leasing the budget to meeting with Boris
But that's not all. We also declared war
dent for Public Liai-
Yeltsin. During this Presidency, I think it's
on nuisance lawsuits. Yesterday I announced
coalitions and orga-
fair to point out that the cold war has drawn
the "Access to Justice Act of 1992." That bill
National Republican
to an end. We led the coalition that shoved
will give Americans less expensive and easier
e and legislative di-
Saddam Hussein out of Kuwait. Peace talks
alternatives to trial. Let them solve problems
y's Eagle Forum in
between ancient enemies have begun in the
out of court. And we've got to stop America's
7, Ms. Metzger also
Middle East. The Soviet Union has col-
long liaison with the lawsuit. If we were as
of the Pornography
lapsed, and we've begun working with its suc-
good at rewarding success as we are at suing
oject, an effort de-
cessor States. The whole world has changed.
each other, this country would be a lot better
release of the Attor-
And still, some people say, "Hey, is that all?
off. And that goes for health care, too. With
ission report. Ms.
What have you done for us lately?" [Laugh-
those outrageous, sky-high malpractice
214
Feb. 5 / Administration of George Bush, 1992
awards, we've got to get those under control,
And I also want to reward everyone who
and we are going to try hard.
believes in the American dream, trying to
And now the American people know better
make it work. I want Congress to cut the
than to think that anyone, including a Presi-
long-term tax on capital gains. And I want
dent, can wave a magic wand and revive
it cut to a maximum rate of 15.4 percent.
something as complicated as our economy.
The world's fastest growing economies and
Congress needs to do its job. And that
our major competitors, including Germany
means-and we were talking with your lead-
and Japan, have one thing in common: They
ers about this earlier-that they should pass
tax capital gains at much lower rates than
the short-term compact economic growth
we do. And in many cases, capital gains isn't
package that I put before the Congress and
taxed at all.
pass it by March 20th.
It's ironic. Many politicians who oppose
You know, we're all realistic that we're
the capital gains tax cut also complain that
going into a political year. And I'm fairly real-
we're not competitive. Well, they can't have
istic that we're going into a political year-
it both ways. And if they really want us to
[laughter]-but I would simply point out that
be competitive then they'll slash the capital
we have time now. There's a period of time
gains rate and do it now in this com-
that we can lower that political controversy
prehensive short-term package. The capital
and get something done, a rifleshot approach
gains rate cut will help families who own
to stimulate this economy. And that's where
homes, help people who own farms, help
I'm going to need your help. So here we go.
business owners, and will help everyone who
The plan starts with the basics. It stimulates
invests in our future by purchasing stock.
investment by improving the alternative min-
Now, you've heard some people claim that
a capital gains cut serves, only the rich. Well,
imum tax and creating a new 15-percent in-
vestment tax allowance.
maybe those people should get out of Wash-
ington and talk to people around our country.
L.W. Locke of North Carolina-and I'm
Retirees say they can't sell their homes be-
told he's in the audience today-under-
cause capital gains rates punish them too
stands. He appreciates these changes. He's
much. Business owners say they can't expand
delayed building a convenience store/gaso-
their businesses; capital gains rates punish
line station because he just can't do it under
their success. A man from Florida, a retiree
our present system. The investment tax al-
who built his own business, invested, saved,
lowance would let him buy fixtures and gas
put it perfectly: He worked hard for years,
pumps and fuel storage tanks, a $1 million
and now he can't afford to cash in on his
commitment. So don't tell me-here's a
success. He said, "We are being penalized
practical example-don't tell me, or don't lis-
for having foresight." Well, I'm tired of peo-
ten to the voices that say this plan is a gim-
ple getting slammed because they risked
mick, and don't try to tell that to L.W., either,
their money and effort and succeeded. And
because he's right out there trying to move
it's about time the Congress realizes we
forward with investment.
should reward these people, not turn them
I also want to fire up the engine that tra-
into targets of envy. And that, of course, cre-
ditionally pulls us out of tough times. And
ates jobs. More people that take risks and
that's the real estate industry. My plan helps
start businesses, that means jobs.
builders. Ask Jay Buchert, a Cincinnati
So, let's get to the heart of this thing. The
homebuilder, also here with us today. He's
people in this room, small businessmen, in-
thrown his support behind this plan. The Na-
vestors from the National Venture Capital
tional Association of Home Builders predicts
Association, you understand the gritty fun-
that my bill will create at least 415,000 con-
damentals of business. And you are the real
struction industry jobs and set off $20 billion
experts. Well, America really needs your help
in economic activity associated with home-
now. So, don't accept no for an answer any-
building. Now, that's no gimmick. That is no
more. I'll take the heat on whether it's a tax
gimmick. That means jobs, good, solid Amer-
cut for the rich or not, but you make the
ican jobs.
case as to what it can do to stimulate jobs
in of George Bush,
Administration of George Bush, 1992 / Feb. 5
215
reward everyone
rican dream, trying
and new businesses in this country and de-
also proposed an ambitious long-term agenda
it Congress to
mand that the Congress cut the capital gains
to ensure that our economy will continue
ital gains. And I
rate now.
leading the world for decades to come.
rate of 15.4 percents
And I might remind you when you do this
And let me discuss a critical issue in that
rowing economies and
work, remember that there were majorities
plan, health care. I know health care has be-
rs, including Germany
in both Houses of Congress for what I'm pro-
come a problem for many of you and your
thing in common: They
posing right now not so many months ago.
employees. And tomorrow I'm going to be
nuch lower rates than
The field is there for fertile reaping. And I
announcing in detail my comprehensive
cases, capital gains iss't
tell you, I really hope that you can get up
health care plan. And I know you'll like it.
and help us do this job.
I believe you'll like it a lot. People today
politicians who oppose
I'd also like to ask you that you demand
worry about health care, yes. It costs too
cut also complain that
action on my short-term plan without delay.
much, great concern. It's tough to find good
Well, they can't have
You know, when I hear someone complain
comprehensive coverage. And you can't
they really want us to
that this short-term plan won't do much, I
make choices like you used to. And you can't
they'll slash the capital
wonder myself: Hadn't any of these guys ever
count on coverage if you move and change
it now in this com-
run a business? Do they appreciate the dif-
jobs or fall victim to a debilitating condition
1 package. The capital
ficulties of getting a loan, finding an investor,
or disease.
elp families who own
purchasing what you need, filling out all that
who own farms, help
Government paperwork? It's about time
I believe our plan solves these problems.
will help everyone who
somebody understands that you need just a
And my plan ensures that people can find
health care, choose health care, afford health
y purchasing stock.
few minutes to concentrate on the customer.
That's what some of this is going to do.
care, and keep health care. I know that every-
some people claim that
ves only the rich. Well,
one with a plan promises the same thing, and
You may have detected this, but I'm tired
hould get out of Wash-
that's why you have to use your common
of the term "fairness" being corrupted by po-
ple around our country.
sense in evaluating the various proposals.
litical demagogs. You want fairness? Here's
't sell their homes be-
And when you get right down to it, there
something fair: My plan will work for all
are two fundamental health care choices. We
ates punish them too
Americans, and it will create jobs. How's that
rs say they can't expand
can adopt a system that's been a proven fail-
for fairness?
ure all over the world, nationalized health
ital gains rates punish
Congress has the legislation. It has a
from Florida, a retiree
care. Or we can reform our present system,
March deadline, March 20th deadline. And
which has its faults, certainly, but which also
siness, invested, saved,
I ask you to circle the date on the calendar.
worked hard for years,
provides the highest quality care on Earth.
Much beyond that, politics takes over. We've
ford to cash in on his
People come from all over the world to par-
'e are being penalized
got a chance now to get something done. So
ticipate in our health care. And if you want
while you're in Washington, visit those con-
Well, I'm tired of peo-
the freedom to choose your own doctor, to
gressional delegations. Let them know that
because they risked
hold the line on costs, and to improve access
rt and succeeded. And
you want this package passed. You are at the
to health insurance coverage, push for my
Congress realizes we
center of this plan, and you create, small
plan. Look it over carefully. We're going to
people, not turn them
business, you create the vast majority of jobs
need your support. And it gives everyone,
nd that, of course, cre-
in this country. And I am determined to sup-
and I emphasize everyone, access to the
le that take risks and
port you to create more jobs.
world's best health care. And it doesn't ex-
leans jobs.
I believe it is in your power to help lift
clude anybody. So, take a look at this and
eart of this thing. The
this country and help get it moving again.
support us if you can.
small businessmen, in-
I really am confident that you will do just
And finally, I'd like your help on one other
tional Venture Capital
that. Since Members of Congress will be
item. The Federal Government is too big,
erstand the gritty fun-
home on break next week, drop by their of-
and it spends too much. And it's just that
And you are the real
fices, let them know how you feel. Send this
simple. Now, my budget holds the line on
really needs your help
message: No more delays, no excuses, no
new spending. It does not violate the only
no for an answer any-
substitutes. And don't delay. Decision day is
protection the taxpayer has, that's the spend-
it on whether it's a tax
6 weeks from Friday. I didn't mention all
ing caps that are now in the law. These caps
ot, but you make the
the ingredients, but that's the rifleshot, short-
are the only protection the taxpayer has
a do to stimulate jobs
term, incentive-building, job-creating part of
against more spending by Congress. And it
this package. Now, for the longer term, I've
pulls the trapdoor on a host of federally fund-
216
Feb. 5 / Administration of George Bush, 1992
ed programs, all with noble titles-246 pro-
Note: The President spoke at 10:38 a.m. at
grams to be exact-that we simply do not
the J.W. Marriott Hotel. In his remarks, he
need. And you shouldn't have to pay for
referred to W. Locke of Eastern Petroleum
them. And it's that simple. Each one has a
Corp., in Enfield, NC; Robert Buchert, of
protector, but I think the time has come, and
American Heritage Construction and Devel-
the times demand that we take action on
opment Corp., in Cincinnati, OH; John
these.
Kemp, executive vice president of the United
And also, get Congress to give me an im-
Cerebal Palsy Association; and the following
portant weapon to control spending. This one
officers of the SBLC: Phil Chisholm, chair-
may be a little difficult, but get them to give
man, John Satagaj, president, and Ted Olsen,
me that line-item veto and give me a shot
treasurer.
at it. Forty-three Governors have it; give the
President a shot. [Laughter]
We must stop imposing mandates on oth-
ers without paying for those mandates. Too
Proclamation 6402-To Amend the
often mandates, these mandated benefits dic-
Generalized System of Preferences
tated out of some subcommittee, mean man-
February 5, 1992
dated deficits. And that just isn't right. It's
not fair to the States; it's not fair to the local-
By the President of the United States
ities and the communities. And it's got to
of America
stop.
A Proclamation
The bottom line is we've got a lot of work
1. Pursuant to sections 501 and 502 of the
to do. And we can't let anyone stall us this
Trade Act of 1974, as amended (the 1974
time. Americans can't wait to get this econ-
Act) (19 U.S.C. 2461 and 2462), and having
omy moving. We want to throw off cynicism
due.regard for the eligibility criteria set forth
and fear. We want to shake away the gloom
therein, I have determined that it is appro-
and the doubt. And I am, frankly, very tired
priate to designate Estonia, Latvia, and Lith-
of the professional pessimists who don't have
uania as beneficiary developing countries for
any fresh ideas for the future and who lit-
purposes of the Generalized System of Pref-
erally feast on bad times and hard feelings
erences (GSP).
and who talk as if our best days have passed
2. Section 604 of the 1974 Act (19 U.S.C.
by. They just don't understand.
2483) authorizes the President to embody in
Wouldn't you hate to go through life think-
the Harmonized Tariff Schedule of the Unit-
ing the only way I can get a step up the lad-
ed States (HTS) the substance of the provi-
der is if somebody else is hurting? They just
sions of that Act, and of other acts affecting
ought to get out of the way, these gloom-
import treatment, and actions thereunder.
sayers and these pessimists. We can start a
Now, Therefore, I, George Bush, Presi-
new economic revolution in America, one
dent of the United States of America, acting
that builds on our innate optimism, our ambi-
under the authority vested in me by the Con-
tion, our determination, our willing to take
stitution and the laws of the United States
risks, and our pride. And we're going to do
of America, including but not limited to title
just that. And that revolution will start a lot
V and section 604 of the 1974 Act, do pro-
sooner if 535 people in Washington meet by
claim that:
the March 20th deadline that I've proposed
(1) General note 3(c)(ii)(A) to the HTS,
up there.
listing those countries whose products are el-
So let them know in no uncertain terms:
igible for benefits of the GSP, is modified
Business as usual won't get this job done;
by inserting "Estonia", "Latvia", and "Lith-
election-year politics as usual won't do. And
uania" in alphabetical order in the enumera-
tell them, we need action by March 20th.
tion of independent countries.
And with your help, I believe we can get it.
(2) Any provisions of previous proclama-
Thank you all very, very much. And may
tions and Executive orders inconsistent with
God bless the United States.
the provisions of this proclamation are here-
George Bush, 1992
Administration of George Bush, 1992 / Feb. 4
207
also. But it required
top, which he dem-
Statement by Press Secretary
port is required by the United Nations Par-
Fitzwater on the President's Meeting
ticipation Act (Public Law 264, 79th Con-
With President Ronald Venetiaan of
gress; 22 U.S.C. 287b).
's you all very much.
Suriname
rit of this visit, and
February 3, 1992
George Bush
is again. Thank you
The White House,
The President met today with President
February 3, 1992.
Ronald Venetiaan of the Republic of Suri-
name.
ke at 11:15 a.m. in
te House.
The President expressed his satisfaction at
the success of Suriname's elections and or-
Message to the Congress
derly transition to democratic civilian govern-
ment following the military coup in Decem-
Transmitting the Annual Report of
the Federal Labor Relations
ber of 1990. He stressed the United States
rters Prior to a
Authority
deep commitment to fostering democratic ci-
ent Ronald
vilian rule throughout the hemisphere and
February 3, 1992
e
emphasized that President Venetiaan enjoys
To the Congress of the United States:
our full support for his efforts to strengthen
In accordance with section 701 of the Civil
democratic institutions, undertake economic
Service Reform Act of 1978 (Public Law 95-
merican workers in
reform, and curb narcotics trafficking.
azawa said?
454; 5 U.S.C. 7104(e)), I have the pleasure
The two Presidents discussed the Suri-
of transmitting to you the Twelfth Annual
go by what Marlin
namese Government's plans for economic re-
Report of the Federal Labor Relations Au-
when you asked the
form and adjustment. The President pointed
thority for Fiscal Year 1990.
ours ago. [Laughter]
out that effective action in this area will en-
The report includes information on the
hance Suriname's ability to stimulate private
cases heard and decisions rendered by the
investment and trade, which are the key to
Federal Labor Relations Authority, the Gen-
ag support. I just
long-term growth.
eral Counsel of the Authority, and the Fed-
and I back it 100
The two Presidents also discussed the
eral Service Impasses Panel.
correction by Mr.
threat to Suriname of increased narcotics
o say. So, that was
trafficking, and the President pledged our
George Bush
support for Suriname's counternarcotics ef-
The White House,
forts.
sir, as an apology?
February 3, 1992.
President Venetiaan is making his first visit
pt it for what it was,
to the United States since his inauguration
om a good man. A
in September 1991. He entered office as a
1, that they're going
result of elections held in May 1991 with the
Remarks to the National Grocers
itments, and I sup-
participation of observers from the Organiza-
ve had a very good
tion of American States.
Association in Orlando, Florida
gone out of his way
February 4, 1992
as not denouncing
Thank you for that warm welcome, and
11 strongly support
please be seated. And Tom, thank you for
y so. We can com-
Message to the Congress
that wonderful introduction. Thanks also to
world if we're given
Transmitting a Report on United
Bill Confer, your chairman. And before we
-P our position very
States Government Activities in the
get started, I don't know where they are, but
United Nations
I'd like to recognize two outstanding Con-
February 3, 1992
gressmen from this area, Bill McCollum and
an at 4:31 p.m. in
Cliff Stearns. And also a former Con-
marks, the President
To the Congress of the United States:
gressman who is actively involved with me,
IT Kiichi Miyazawa
I am pleased to transmit herewith a report
Bill Grant, of Florida. You have three of the
of the activities of the United States Govern-
t available for ver-
best right here with you today.
ment in the United Nations and its affiliated
his exchange.
And it's a great pleasure, and I really mean
agencies during the calendar year 1990, the
second year of my Administration. The re-
that, to be here with this enthusiastic group.
I originally had planned to be at your dinner
208
Feb. 4 / Administration of George Bush, 1992
last night. But then I found out it was called
Americans always have. We'll combine our
the Asparagus Club Banquet. [Laughter]
common sense, our work ethic, and our de-
Thought I'd better not take a chance. And
termination with progrowth policies. With
you know why, dangerously close. [Laughter]
these, we'll carry the entire world into the
Okay, Barbara won the broccoli war. I said
next American century. You can bet on it.
what I thought, and she got out and received
You don't have to be some rocket scientist
all these broccoli growers. And sales shot up
to understand how. You stick with the basics.
about 500 percent. [Laughter]
And I proposed a commonsense com-
You all know, I think, of my love for sports.
prehensive action plan last week in my State
And this being an election year, my competi-
of the Union Address. It gets investment
tive juices are flowing more than ever. And
going, because you can't build new busi-
so, today I'm making an announcement that
nesses and create new jobs without new in-
many of you have been expecting for a long
vestment. It strengthens the industries that
time. I'm officially declaring my entry into
historically have led us into recoveries, espe-
your best bagger contest. Just one question:
cially real estate and housing. It hacks away
Paper or plastic? [Laughter]
obstacles to growth. It cuts the Federal defi-
I'll always remember-and Tom referred
cit by holding back spending. Government
to it-but from a personal standpoint, I'll al-
is far too big, and it spends too much. And
ways remember that warm reception that you
I am going to keep it within its limits of this
all, the NGA, gave me when I addressed that
budget agreement that is in place right now.
1985 convention. It was in New Orleans. You
Ask yourselves the question: How free are
gave me a good education about your indus-
we, really, when the Government gobbles up
try then, and I remember it still. A typical
25 percent of our GNP? I'm demanding, I
NGA member is a family-run business. Many
need your support, that Congress get serious
of you carry on legacies built through the vi-
about this. One thing, I've listed 246 pro-
sion and sacrifice of a grandmother or a
grams that I want cut out this year, 246. Each
grandfather. Just met one of your directors.
one has a protector; each one has a noble
She was a third-generation in the grocery
title. None of them is essential to the well-
business, perhaps an immigrant to this coun-
being of the United States of America. And
try, some were. You work on the thinnest
I want something else. I want that line-item
of profit margins. You challenge one another
veto so I can enforce real spending dis-
with bracing competition that clearly benefits
ciplines. Forty-three Governors have it.
our consumers like no others in the world.
We've got to get Washington back to com-
And today, as always, your success as commu-
mon sense. To do that, I really mean this,
nity grocers depends not just on the bottom
I need your help. I know you can deliver.
line but on the old-fashioned virtues of being
You know your neighbors; they know you.
a good neighbor.
The grocery business grows when your
Since I last met you all in 1985, the world
neighborhood grows, when the Nation's
has changed. We've got a lot to be grateful
economy grows. I've asked Congress to enact
for. We won the cold war. We led a coalition
some laws that will create jobs by getting our
in the Gulf to crush Saddam Hussein's ag-
economy growing again. And I've set a dead-
gression in Kuwait. We've created a world
line, March 20th. I ask you to circle that Fri-
with the prospects of unprecedented pros-
day on your calendar. Remember this dead-
perity and peace. But we've also run into
line. Congress needs to take a few simple
some hard times here. Our economy has
steps to create good American jobs, now.
slowed down. We must get it fired up again.
The Capitol Hill hearings on my program
The professional pessimists tell us America
begin today. But I must say, too often when
has become weak and disabled, that our
I send progrowth proposals to Congress, all
economy has fallen, and it can't get up. Well,
the public hears is sloganeering about fair-
that's just plain bunk. It's not true. And I'm
ness. This twists a good concept into a weap-
going to tell you what we can do about it.
on of envy and divisiveness, desire to divide
Day by day and step by step, we're going
America along class lines. I don't look at it
to get ourselves moving, and we'll do it as
that way. Here's what fairness means to me:
of George Bush, 1992
Administration of George Bush, 1992 / Feb. 4
209
We'll combine our
It means if you want to work, you can get
the economy moving without having to wait
k ethic, and our de-
a job. It means if you have a good idea, you'll
for Congress to act. I've imposed a 90-day
owth policies. With
get a chance to test it, or if you build a busi-
freeze on Federal regulations that could
ntire world into the
ness, you don't lose your earnings to exces-
hinder economic growth. And during that pe-
You can bet on it.
sive taxes or overregulation. That's what fair-
riod, all Departments and Agencies will re-
some rocket scientist
ness means to me. Above all, the most impor-
view regulations, old and new, and when pos-
stick with the basics.
tant test of fairness for my plan is that it will
sible, stop the ones that will hurt growth and
commonsense com-
work for all Americans. It will create jobs.
speed up those that will help growth.
1st week in my State
And now, here's what I want by March
I see from your convention schedule that
It gets investment
20th. And I set that date because I do believe
you have a workshop entitled "The Regu-
n't build new busi-
we have a window in which we get something
lators Are Back." No wonder. You can't get
obs without new in-
done, even though this is going to be a very
through a day without having to worry about
S the industries that
controversial and difficult national election
what some regulator is going to do to you
nto recoveries, espe-
year. Here's what I want: First, incentives
through some thoughtless regulation. Regu-
using. It hacks away
to make productive investments. These in-
lations may have stated aims as wholesome
uts the Federal defi-
volve a 15-percent investment tax allowance
as Mom and the apple pie. But you know
ending. Government
and needed changes to the alternative mini-
better than anyone that when regulators
ends too much. And
mum tax. Now, these will encourage business
carry that regulation too far, there won't be
ithin its limits of this
to invest in equipment and become more
any apple pie for Mom to buy.
is in place right now.
productive. I just took a tour through the ex-
I ran a council on deregulation for 8 years
estion: How free are
hibits here, amazed by some of the tech-
as Vice President. And I'm here to assure
vernment gobbles up
nology. These proposals will stimulate that
you, we've not lost the spirit of déregulation.
? I'm demanding, I
kind of investment and will help individuals
I want you to be able to spend your time
Congress get serious
invest in high technology or whatever ma-
working on what you can do for your cus-
I've listed 246 pro-
chinery is needed.
tomers rather than fretting about what some
t this year, 246. Each
Second, we need incentives to build and
regulator might do to you.
ch one has a noble
to buy real estate, a change in the passive-
And I'm also fighting hard against this epi-
essential to the well-
loss rules for active real estate developers.
demic of lawsuits. The costs and the delays
ites of America. And
We need penalty-free withdrawals from
in our legal system are a hidden tax on every
I want that line-item
IRA's for first-time homebuyers and a $5,000
single American consumer, on every business
real spending dis-
tax credit for the first purchase of a home.
transaction in America. And that's why I'm
vernors have it.
Housing economists predict that my plan will
sending to Congress today a reform bill, the
hington back to com-
mean an extra 200,000 homes built and
Access to Justice Act of 1992. And my reform
I really mean this,
415,000 new construction jobs to build them.
proposal will give Americans cheaper and
IOW you can deliver.
Real estate and housing, with this stimulus,
easier alternatives to trial. And my plan will
ors; they know you.
we'll lead our way into active recovery.
halt needless lawsuits by making changes in
grows when your
And third, incentives to succeed: Cut the
the way some attorney's fees are awarded.
when the Nation's
capital gains tax. This tax hurts anyone who
And let's stop America's love affair with the
ed Congress to enact
has made a sensible investment in a home,
lawsuit. If we're as good at rewarding success
te jobs by getting our
a business, or a farm. None of our key com-
as we are at suing each other, we'd be way
And I've set a dead-
petitors taxes gains at high rates, world global
ahead of the rest of the world. I might say
-ou to circle that Fri-
competitors. Let's stop penalizing savings
parenthetically, health care costs would be
Memember this dead-
and investment. Let's stop punishing excel-
an awful lot lower if we didn't have a lot
) take a few simple
lence. And yes, let's talk about fairness.
of frivolous lawsuits going after these doctors
erican jobs, now.
Lower capital gains mean more investment,
for malpractice.
rings on my program
and more investment means more jobs. So,
One of the great lessons of our times is
say, too often when
let's get that capital gains tax cut, now.
this: Freedom and cooperation work, big
sals to Congress, all
Three measures, three pieces of common
Government doesn't. And after 70 years, the
ganeering about fair-
sense, three things Congress should do by
new leaders in Moscow recognize that total
concept into a weap-
March 20th. I know that Congress will listen
Government regulation produces only one
ness, desire to divide
to you, you come right from the grassroots.
thing: total failure. And now, the Russians-
es. I don't look at it
And I'm counting on your help. In the mean-
I had a fascinating visit with Boris Yeltsin
airness means to me:
time, I've initiated some reforms that will get
up at Camp David on Saturday-the Rus-
210
Feb. 4 / Administration of George Bush, 1992
sians want to try something different, like
Second, let free choice and free markets
grocery stores with groceries on the shelves.
reform this health care system of ours. This
[Laughter] This man's put into some tough
week I'm going to ask for a new credit to
reforms there. Got to stay with him. Got to
help those without health insurance, em-
help him make them work.
ployed or not, to buy such coverage. My plan
Isn't it ironic, at the exact moment the
will assure that both American workers and
world is turning to our values of more eco-
the unemployed will have access to basic
nomic freedom and competition, some in the
health insurance even if they change jobs or
United States Congress want to go just the
develop serious health problems. We can't
opposite way. And here's an example of the
improve health care by threatening the
trouble brewing in Congress: That's the so-
health of job-intensive businesses. The last
called FDA enforcement bill. I'm sure those
thing we want is for companies to cut costs
of you who sell your own private-label gro-
by cutting workers. And I am wholeheartedly
ceries aren't exactly thrilled by the prospect
opposed, as I believe you are, to schemes
of more legal and accounting and paperwork
that cost jobs by mandating benefits that an
burdens. But that's just what some in the
employer must pay.
Congress want to do. Well, let me tell you
And thirdly, let's strengthen the family, the
in no uncertain terms: the time for overregu-
cornerstone of the American dream. Let's
lation is over. And if they send me any more
ease the burden of child-rearing. The per-
legislation with excessive regulation in it, I'm
sonal tax exemption has not kept up with in-
going to veto it and send it back. It's going
flation. I'm asking Congress, immediately, to
right back up there.
increase the exemption for each child by
Again, the Congress can help get the econ-
$500. It's a significant move in the right di-
omy moving if it will just do the right thing.
rection, and for our kids' sake, we must do
Last week one Member of Congress, a Dem-
no less.
ocrat, said it might be smart politics for the
Look at my economic proposals and you
Democrats to meet the deadline and pass my
will find straightforward, plain solutions to
plan intact. I can't say what their motives may
our problems. Some may complain that they
be, but I know one thing, my plan will help
lack the flash of an expensive new program
the American people. So let me take the heat.
or that they don't have quite the right politi-
I know that my program will get the economy
cal ring for this political year. But I'm not
moving again. And again, urge the Congress
seeking spending for spending's sake. I don't
to pass it intact by March 20th.
want a fancy title on a bill that will shoot
March 20 isn't a moment too soon to enact
interest rates right up through the roof. I
this short-term program. But we also must
want results. My plan is sound, and it will
take a longer look, look to longer horizons.
work.
And I proposed a long-term plan in my State
If you hear people in Congress gripe that
of the Union Address. Let me just give you
they can't get the job done by March 20th,
a couple of the highlights here, some of the
remind them, we won the Gulf war in 44
highlights.
days. Surely Congress can pass my urgent do-
First, let's create more American jobs by
mestic program in 52 days. Remember, Con-
opening up and expanding markets all over
gress can act with lightning speed when it
the world. A new GATT agreement, we're
wants to. So, accept no excuses. Accept no
working hard to get one, will make the world
delays. And accept no substitutes.
trading system come to grips with the dam-
Please don't leave this message behind
aging tariffs and export subsidies in agri-
when you leave this convention hall. Take
culture. And by tearing down economic bar-
it home to your families, to your customers,
riers with Mexico and Canada, a new North
to your neighbors. From February 8th till
American free trade agreement can lift us
February 17th, your Congressmen will be
to new heights of prosperity. And make no
home for the President's Day recess. That's
mistake about this: A sound, free trade agree-
a great time for you to go to their hometown
ment will mean more American jobs, not less,
offices and tell them to meet the deadline
more American jobs.
and to pass this plan. With an effort like this,
George Bush, 1992
Administration of George Bush, 1992 / Feb. 4
211
e and free markets
I know we'll get their attention, and we'll get
the Equal Access to Justice Act would
ystem of ours. This
America moving again.
for a new credit to
be amended to clarify and limit litiga-
Thank you very, very much for this recep-
tion over the amount of attorney's fees;
Ith insurance, em-
tion. And may God bless the United States
innovative "multi-door courthouses"
a coverage. My plan
of America. Thank you.
would be established to encourage utili-
erican workers and
zation of alternative dispute resolution
ive access to basic
Note: The President spoke at 11:35 a.m. at
mechanisms;
they change jobs or
the Orange County Convention/Civic Cen-
award of reasonable attorney's fees in
problems. We can't
ter. In his remarks, he referred to Tom
disputes involving the United States
y threatening the
Zaucha, president of the National Grocers
businesses. The last
would be permitted in appropriate in-
Association.
stances;
apanies to cut costs
am wholeheartedly
prior notice would be required, subject
ou are, to schemes
to reasonable limits, as a prerequisite to
bringing suit in any United States Dis-
ing benefits that an
Message to the Congress
trict Court;
Transmitting Proposed Legislation
flexible assignment of district court
then the family, the
on Access to Justice
rican dream. Let's
judges would be authorized;
d-rearing. The per-
February 4, 1992
immunity of State judicial officers
would be clarified and protected;
not kept up with in-
To the Congress of the United States:
the Civil Rights of Institutionalized Per-
ess, immediately, to
I am pleased to transmit today for your
sons Act would be amended to encour-
for each child by
immediate consideration and enactment the
age resolution of claims administra-
ove in the right di-
"Access to Justice Act of 1992". The purpose
tively; and
sake, we must do
of this proposal is to reduce the tremendous
improvements in case management in
growth in civil litigation that has burdened
Federal courts would be effected.
proposals and you
the American court system and imposed high
plain solutions to
I believe this proposed legislation would
costs on our citizens, small businesses, indus-
complain that they
greatly reduce the burden of excessive, need-
tries, professionals, and government at all
ensive new program
less litigation while protecting and enhancing
levels.
uite the right politi-
every American's ability to vindicate legal
A thorough study of the current civil jus-
year. But I'm not
rights through our legal system. I rec-
tice system has been conducted by a special
nding's sake. I don't
ommend prompt and favorable consideration
working group, chaired by the Solicitor Gen-
of the enclosed bill.
bill that will shoot
eral, Kenneth W. Starr. The working group's
through the roof. I
recommendations, which were unanimously
George Bush
sound, and it will
accepted by my Council on Competitiveness,
The White House,
are reflected in the bill. The legislation seeks
February 4, 1992.
Congress gripe that
to reduce wasteful and counterproductive
one by March 20th,
litigation practices by encouraging voluntary
the Gulf war in 44
dispute resolution, the improved use of litiga-
1 pass my urgent do-
tion resources, and, where appropriate,
S. Remember, Con-
Memorandum on Emergency
modified, market-based fee arrangements.
ning speed when it
Funding for the Organization of
Additional reforms would permit the judicial
excuses. Accept no
American States Mission to Haiti
system to operate more effectively.
stitutes.
The Access to Justice Act would accom-
February 4, 1992
is message behind
nvention hall. Take
plish reforms in significant areas of litigation:
Presidential Determination No. 92-13
a prerequisite for Federal jurisdiction
to your customers,
n February 8th till
over certain types of lawsuits (the
Memorandum for the Secretary of State
ongressmen will be
amount in controversy requirement)
Subject: Emergency Funding for OAS
would be redefined to exclude vague,
Mission to Haiti
; Day recess. That's
subjective claims;
) to their hometown
Pursuant to the authority vested in me by
prevailing parties could be entitled to
meet the deadline
section 614(a)(1) of the Foreign Assistance
award of attorney's fees in certain law-
h an effort like this,
Act of 1961, as amended, I hereby determine
suits brought in Federal court;
that it is important to the security interests
George Bush, 1992
Administration of George Bush, 1992 / Jan. 30
179
him a friend, as I
on all the challenges we confront. And let
Thank you very much.
er guests from over-
us pray that we will strengthen the values
imes you might feel
that this great land was founded on, that we
Note: The President spoke at 9:10 a.m. at
you overseas, those
will reverse any threat of moral decline, and
the Washington Hilton Hotel. In his remarks,
gislatures, and we're
that we will dedicate ourselves to the ethic
he referred to Senator Ted Stevens; evangelist
ighter]
of service, being what I call a Point of Light
Billy Graham; Prime Minister Kamisese
ideas really, inspire
to someone else, someone in need.
Mara of Fiji; and National Symphony Or-
hey're all here this
And in this work, we are not without inspi-
chestra director Mstislav Rostropovich.
he way or another:
ration. We need look no further than the
th, that Dan Quayle
handful of men who became heroes by their
I would add fellow-
courage, their strength, and above all their
rought together by
faith-last of whom returned in December.
Remarks to the Greater Philadelphia
le joy of praying to
I'm talking about our hostages. And in brutal-
Chamber of Commerce
izing conditions, as we've heard this morning,
January 30, 1992
mendously moving
they prayed together daily in what they called
t dramatic moments
the "church of the locked door." They
Thank you all very, very much for that wel-
ound-you referred
unwove floor mats in order to make rosaries.
come back. Please be seated, and thank you.
anything to do with
These men, who every day lived the story
Please be seated. I don't want to keep Boris
eve you can choose
of Job, treasured their first book, the Bible.
Yeltsin waiting later on. [Laughter] Thank
ous cloud in the fir-
When Terry Anderson was released, one of
you, Joe. Senator Specter and Joan, laboring
en you get there.
the first things he did was to thank strangers
in the vineyards of the city council here,
ru for your inspiring
across the world who had prayed that he be
we're delighted to be with you. And coming
set free. "Your prayers made a big dif-
up with us from Washington were two of our
ed us all of the pow-
ference," said this man who, imprisoned, had
great Congressmen from this area, Larry
.S played in the un-
rediscovered the faith that sets and keeps
Coughlin and Kurt Weldon, overhere.
he past year. Since
men free.
And may I, too, salute the mayor. I asked
been reshaped, and
There's another story from last year's news
Joe earlier on how was it going, realizing that,
red throughout the
that tells of the transformation of faith. While
as in Washington, things have been tough,
: entire world. And
it's a story familiar to all of you, it's intensely
and across the country in many ways. But
em, as we've heard
personal to Barbara and me and to others
I said, knowing a little bit about history in
e President to Gen-
in this room. We lost a dear friend last
Philadelphia, I asked this question, "How's
God. The link they
March, Lee Atwater, a restless, fiercely driv-
the mayor doing?" And Joe and everybody
en, fun-loving good ol' boy from South Caro-
else I've spoken to has said he's really hit
1 here, as Colin re-
lina who rode life as hard and fast as he
the ground in a wonderful way, going for-
war. Compelled by
could. But he also lived a kind of miracle
ward, bringing out the best in this city. So,
wisdom, we began
because his illness reintroduced him to
I want to salute Ed Rendell and his wife,
or God's protection
something he'd put aside, his own faith. And
Midge.
or God's love to fill
in his last months, he worked intensely to
Joe Paquette, who introduced me, is the
ice to be the moral
come to grips with his faith. And through
chairman of the Greater Philadelphia Cham-
S. Abraham Lincoln
reading the Bible and through prayer, he
ber. That was a very enthusiastic presentation
it, everyone in this
learned that, as he put it, "What was missing
he made about how things were going, so
t, "I've been driven
in society was what was missing in me, a little
much so that maybe he can make a little loan
by the overwhelm-
heart and a lot of brotherhood."
to those of us in Washington, DC, who can-
'e nowhere else to
He was so right. Prayer has a place not
not have quite that optimistic a report.
we came together
only in the life of every American but also
[Laughter] But I like that can-do spirit of
)ay of Prayer. And
in the life of our Nation, for we are truly
this chamber, and I'm grateful to Charlie, to
ed turned to our
one Nation under God.
Charlie Pizzi, and to Joe and all the rest of
peace, "peace
May God bless this very special gathering.
you that have put together this opportunity
anding." And at the
For those of you who have come from over-
for me, all of you at the chamber.
d as one during our
seas, for those of you from across our land,
And so, thank you very much. I am happy
iving.
for those of you right here in the Nation's
to be here in Philadelphia. As you can imag-
people we will con-
Capital, thank you for participating in this
ine, these last few weeks in Washington have
r of prayer to bear
celebration of faith.
been pretty high pressure, high pressure time
180
Jan. 30 / Administration of George Bush, 1992
for me, what with all the experts and the in-
to speed up progrowth expenditures. And we
stant analysis and the columnists giving unso-
estimate that will be as much as $10 billion
licited advice. Thank goodness the Super
worth in the next 6 months. We don't have
Bowl is over. [Laughter]
to go to Congress to get them to do that;
I am very pleased to be here, particularly
we just accelerate the spending plans to try
pleased to be here today because American
to give this economy an extra kick.
businesses, as represented by this group
I directed the Secretary of the Treasury
gathered here, have a unique perspective on
to change the Federal tax tables so that mil-
the tough times we've been going through
lions of Americans can choose to have the
recently. And as businessmen and business-
Government withhold less from their pay-
women, you can separate the sensational
checks. Now, that's a large number. That
from the sensible, the sweet-sounding quick
could pump as much as $25 billion into the
fixes from real solutions. When it comes to
economy this year alone. That is money in
America's economy, we can't accept empty
the pockets of working men and women to
symbols and slogans. We need to work to-
help pay for clothing or to help save for col-
gether-that's what I like, what Joe was say-
lege or to help buy a new car. And after all,
ing about the way the mayor and you all are
it is their money. And there has been this
approaching it in this city-we've got to work
schedule where really there has been
together nationally and turn this economy
overwithholding. And this I think will give,
around.
for those who elect to do it-if everyone
Tuesday night, I came before the Amer-
elected to do it, it would be $25-billion, and
ican people to outline a program for doing
I think that will give the economy a jolt.
just that. And we all know this is an election
I have asked Cabinet departments and
year. The air back in Washington has been
Federal agencies to institute a 90-day mora-
thick with feel-good gimmicks that have
torium on new Federal regulations that could
nothing to do with true prosperity and every-
hinder growth. We'll undertake a top-to-bot-
thing to do with politics. We need to get
tom review in the fields of energy, the envi-
down to business, literally. In the critical
ronment, transportation, exports, financial
weeks ahead, common sense must replace
services, and communications, among others.
partisanship. And I came here to ask for your
Here's the test: We will accelerate any regu-
help.
lations that encourage growth and the cre-
The plan that I put before Congress and
ation of jobs. And whenever possible, we will
the American people contained several ac-
scrap those that tie the hands of business and
tion steps. And one of the most critical was
impede growth. I know that I have regulatory
this, to free up American businesses by clear-
responsibilities affecting safety in the work-
ing away the obstacles to growth: High taxes,
place, for example, health, environmental
overregulation, and Government deficits.
protection. And I will not neglect those re-
And I've offered the only comprehensive
sponsibilities.
plan that doesn't raise taxes, doesn't throw
But you know as well as anyone how Gov-
away the spending discipline now in place
ernment, sometimes with the best of inten-
on the Congress, these spending caps, and
tions, can hobble innovation and risk-taking,
doesn't cut defense beyond what's necessary
the lifeblood of a successful business. Gov-
for this country's security. But let me tell you
ernment naturally tends to expand ever out-
the three words that really separate my plan
ward, its redtape oblivious to anything stand-
from what I think of the rest of them: "It
ing in its path. It touches everyone. Every
will work." Those three, "it will work."
regulation that reduces efficiency slaps a hid-
Each of us has a role to play, so I am mov-
den tax on the consumer as well. From the
ing forward with steps I can take right now.
tab on a bag of groceries at the checkout line
You may remember I divided that State of
to the sticker price on the showroom floor,
the Union Message into steps I can take,
every American takes a hit when the Govern-
short-term areas where we need legislation
ment overregulates.
and then a longer-term program. Right now,
American businessmen and women need
I have instructed every Cabinet department
this freedom to experiment, to compete with-
George Bush, 1992
Administration of George Bush, 1992 / Jan. 30
181
penditures. And we
out looking over their shoulders for Washing-
much as $10 billion
who owns a home, anyone who has a single
ton's approval. Small businesses and those
iths. We don't have
investment. We're talking about helping
just starting up feel the sting of overregula-
et them to do that:
every working man and woman and every re-
tion most of all. Yet these businesses drive
tired person in this country.
pending plans to try
America forward. They create most of our
xtra kick.
We don't have time now for any more of
new jobs. They reinvigorate our commu-
this demagoguery on this question. Let me
ary of the Treasury
nities. They embody the power of the Amer-
X tables so that mil-
remind you, in Japan the effective capital
choose to have the
ican dream. I make this pledge: We will set
gains tax rate comes to about one percent;
ess from their pay-
America's dreamers and doers free and put
Germany doesn't tax long-term capital gains
an end to this regulatory overkill.
at all. To create jobs, to restore a vibrant
arge number. That
$25 billion into the
In some of this area I will need the help
economy for all Americans, Congress must
of the Congress, and I promise I will take
e. That is money in
lower the capital gains tax. And it must lower
the message as strongly as I can to the Con-
men and women to
the capital gains tax now, 15.4 percent.
gress in this regard. Even now, an untold
to help save for col-
With a few simple steps, taken right now,
W car. And after all,
number of hard-working, responsible men
Congress can help get the housing industry-
and women go without needed bank loans
there has been this
builders, investors, buyers, and sellers-back
there has been
for starting up a new business or for investing
on its feet. To those young families who want
more in an existing one. We've got to ease
is I think will give,
to buy their first home but can't quite afford
the credit crunch and give these people a
do it-if everyone
it, I say this: We can help put your dream
chance. That's why we've given the bank reg-
within reach, and we will. I have offered a
1 be $25 billion, and
ulators more than 30 policy changes and
economy a jolt.
plan to allow first-time homebuyers to with-
clarifications to restore common sense and
et departments and
draw savings from IRA's without penalty and
balance to the regulatory system.
tute a 90-day mora-
to provide a $5,000 tax credit for the first
egulations that could
I've mentioned this before, but in regula-
purchase of a home.
dertake a top-to-bot-
tion, again, we have a responsibility. We
I might say parenthetically that Senator
don't want to go back to what is known as
of energy, the envi-
Specter, your Senator, has been in the fore-
forbearance, where we neglect the soundness
1, exports, financial
front of fighting for the change on how IRA's
that is required. But there is regulatory over-
are treated. He understands what this can
tions, among others.
kill. The people are afraid, I think, in some
accelerate any regu-
mean in terms of stimulating the economy
instances in the financial community because
growth and the cre-
and helping the homeowner.
:ver possible, we will
of the excesses of regulation. And we're going
And I have asked Congress to mark the
to try very hard to achieve a better balance.
ands of business and
calendar. They must put this recovery plan
hat I have regulatory
Now, I've mentioned some of the things
in place by March 20. Yesterday, right
that I can do, and there's a few more. But
safety in the work-
after-the State of the Union was the night
Tuesday night I told Congress, directly chal-
alth, environmental
before, and yesterday morning, I went up to
lenged it, told it directly what it must do.
the Congress. And I met with the leaders
ot neglect those re-
And I started with the obvious: No invest-
of both the House and the Senate up on Cap-
ment, no new jobs. Congress must reward
as anyone how Gov-
itol Hill, and I urged them to meet this time-
h the best of inten-
investment and stop punishing success.
table. I set the deadline because of a simple
For 3 years now, I have asked the Con-
tion and risk-taking,
fact: The American people want action. They
gress to lower the capital gains tax. And for
ssful business. Gov-
deserve action. Our States are working over-
3 years, that essential growth measure has
time; so are thousands of communities across
to expand ever out-
been pilloried and parodied as a windfall for
us to anything stand-
the country. They're tightening their belts,
the rich. Now, you and I know that claim
es everyone. Every
aggressively facing the future. And every day,
for what it is: it's nonsense. Sixty percent,
efficiency slaps a hid-
individual Americans are working hard to get
er as well. From the
sixty percent of the people who benefit from
this economy back on its feet, and it's time
lower capital gains have incomes under
at the checkout line
for Congress to do the same thing. It can
$50,000. A windfall for the rich? By freeing
be done in that timeframe.
the showroom floor,
up investment, a cut in the capital gains tax
it when the Govern-
What troubles me is if we let it drag on,
creates new jobs for those looking for work
it's going to get really caught up in the rough
and better jobs for those who want to move
n and women need
and tumble of 1992 national politics. People
up. A lower capital gains tax helps anyone
ent, to compete with-
are crying out for help now, and the Congress
who owns a small business or a farm, anyone
can move. We've seen them do it on a wide
182
Jan. 30 / Administration of George Bush, 1992
array of legislative initiatives, and they can
Government mandates, leading inevitably to
do it on these stimulative tax changes. So,
a state system of nationalized care, with the
I ask every Member of Congress-and please
long lines and indifferent service that such
tell them the same thing-to set aside now
a system creates. Or we can reform our pri-
partisanship for just 51 days and give this
vate system, preserving the greatest possible
plan a chance. Get the plan, put it to work.
patient choice, maintaining the quality of
Immediate growth, as I mentioned at the
care which, for all its faults, is still the best
outset, is just one part of the picture, one
in the entire world. That's the approach I
part of our program. We've got to look even
outlined in a rather broad detail Tuesday
further ahead to ensure that when the Amer-
night, and that's the approach that I will take
ican economy regains its strength, and inevi-
when we announce the full detail of our plan
tably it will, it stays strong.
next week.
We start by opening markets to American
We've proposed another reform, one that
goods. In our trade negotiations, we will con-
is crucial to creating jobs. America has be-
tinue to push for open trade, pulling down
come the most litigious society on Earth.
the barriers that stand in the way of inter-
Frivolous lawsuits are exhausting our ability
national competition.
to compete. If we were as good at rewarding
To guarantee that American goods and
success as we are at suing each other, we
services are the world's finest, we must guar-
would be a century ahead of the rest of the
antee America's preeminence in another
world. Lawsuit madness gums everything up.
field, in the field of education. Our America
Needed new products never reach the mar-
2000 strategy will revolutionize education in
ketplace because of concerns over liability.
this country, will create new American
In many areas, businesses are forced either
schools, places where our kids will learn the
to drive prices into the stratosphere or lit-
lessons they need for a new century. And it
erally close shop.
will allow parents to choose their children's
My Competitiveness Council that's
schools. Choice means competition, and you
chaired by the Vice President, Vice President
understand as well as anyone what comes
Quayle, has offered 50 concrete rec-
from competition. Competition inspires in-
ommendations to restore sanity to our civil
novation and creativity. It inspires excellence.
justice system. I've enacted some of these
And that's why we are going to push for our
recommendations by Executive order. Oth-
program, we're going to push for school
ers, however, require Congress to act. And
choice.
with all respect, there are 62 lawyers in the
As I look at education and the fact that
United States Senate, a lot of lawyers up
we are not where we should be in world
there on Capitol Hill. I realize that might
standing, it isn't a question of a change here
present a problem, but it also presents an
and there. It isn't a question of adding to
opportunity. And I'd like to see them move
programs that have failed, programs man-
forward now with these changes to cap some
dated in Washington. It is a question, lit-
of these outrageous areas of unlimited liabil-
erally, of revolutionizing. And that's what we
ity. It's driving our small businesses right flat
tried to do when we set the education goals,
into the ground and costing American work-
working with Republican and Democrat
ers jobs.
Governors. That's what we're trying to do
And finally, I can use Congress' help in
with Lamar Alexander in the lead for us, our
another all-important area. We must get the
Secretary of Education, as we take this Amer-
Federal deficit under control. Now, let's face
ica 2000 program all across the country. We
the facts: The Government in Washington is
need your help. It is the best possible invest-
too big, and it spends too much. I have pro-
ment for the future of this country.
posed a freeze on all domestic discretionary
Now, we need a healthy America, and that
budget authority as well as a freeze on Fed-
means reforming health care. I think every-
eral domestic Government employment. And
one would agree we cannot afford our
I have asked Congress to get rid of 246 fed-
present system. But we've reached a fork in
erally funded programs. Now, some of them
the road. We can either go the way of greater
have very noble titles. But in these times,
f George Bush, 1992
Administration of George Bush, 1992 / Jan. 30
183
leading inevitably to
none of them is indispensable. And I'm going
confidence and get this economy moving
lized care, with the
to call on Congress to get rid of them. I think
again.
nt service that such
we're talking about something like $4 billion
And here's where you come in. We need
can reform our pri-
in this regard.
your help. You can affect the way Congress
the greatest possible
For too long, Congress has been violating
approaches this program that I have outlined
ning the quality of
an important principle of good government:
in some detail. We need your help. And with
ults, is still the best
Do no harm. It's been imposing its own hab-
your help, we'll get that action, and we will
at's the approach I
its on State and local governments, and the
reaffirm our country's rightful place as the
oad detail Tuesday
taxpayer ends up, as you may all know, by
world's leader for this decade and for the
roach that I will take
footing the bill. These unfinanced Federal
next century.
ull detail of our plan
Government mandates, as they're called, re-
Thank you all very, very much for this op-
quire the cities, require the States to provide
portunity. Thank you.
her reform, one that
new services or institute new programs, but
S. America has be-
the Congress doesn't provide the money to
Note: The President spoke at 12:11 p.m. at
S society on Earth.
pay for them. That means the local govern-
the Wyndham Franklin Plaza Hotel in Phila-
chausting our ability
ments must pass along Congress' wish list to
delphia, PA. In his remarks, he referred to
is good at rewarding
the taxpayer in the form of higher taxes at
Joan Specter, Philadelphia city council-
ing each other, we
the local level.
woman, and Charles P. Pizzi, president of the
d of the rest of the
Now, the National Governors' Association,
Greater Philadelphia Chamber of Commerce.
gums everything up.
made up, obviously, of Republicans and
ever reach the mar-
Democrats, continually urge the Congress to
icerns over liability.
stop these mandates which are killing innova-
es are forced either
tion, killing savings at the State and local
Meeting With Japanese Prime
stratosphere or lit-
level. From now on, if Congress passes a
Minister Miyazawa in New York City
mandate, it shouldn't pass the buck. Con-
January 30, 1992
S Council that's
gress must pay for the mandates it imposes
dent, Vice President
without heaping on new taxes.
The President. This gives me a chance,
50 concrete rec-
I've spared you some of the detail. But
with our friends in the press here, to tell you
e sanity to our civil
taken together, these and other steps that
how much I appreciate your hospitality.
cted some of these
I've outlined will, in my view, reinvigorate
The Prime Minister. Let me tell, Mr.
:ecutive order. Oth-
our economy, give it the boost that it needs
President, to all the audience that we will
ongress to act. And
now, and ensure that it continues to provide
deliver all we promised to you.
re 62 lawyers in the
opportunity and create jobs for all who want
The President. I never doubted—
1 lot of lawyers up
to partake. That is the promise America
The Prime Minister. I make it very, very
I realize that might
makes to her citizens. They have a right to
clear to the audience.
it also presents an
expect no less.
The President. I never doubted it.
e to see them move
Almost two centuries ago, Philadelphia's
The Prime Minister. There will be no
changes to cap some
merchants gathered together at the city tav-
misunderstanding about
S of unlimited liabil-
ern to form this Chamber of Commerce.
The President. Let me make clear that
businesses right flat
They looked out on a Nation almost limitless
that was never a doubt in my mind. And sec-
ing American work-
in possibility. A special kind of faith brought
ondly, I'm very grateful for the many mani-
them here, that if they worked hard and
festations of friendship and hospitality. And
e Congress' help in
worked together, their young country would
you, yourself, just went out of your way on
ea. We must get the
allow them to fulfill their dreams.
a very personal basis.
ntrol. Now, let's face
America has changed dramatically in those
The Prime Minister. Oh, yes.
ent in Washington is
200 years. And yet, the essentials remain.
The President. So, it's most appropriate
o much. I have pro-
The pessimists are wrong; the pessimists are
that we see you when you first get off this
mestic discretionary
wrong. We are going to pull out of these
airplane. But I don't want to take too much
as a freeze on Fed-
tough times. Inflation is down; inventories
time.
at employment. And
are down. The market has been expressing
The Prime Minister. You are very kind,
get rid of 246 fed-
optimism in the future. Interest rates are
very kind.
low, some of them
down. This is no time for gloom and doom.
The President. They'll be leaving us very
it in these times,
It is time for action in Washington to restore
soon now and-[laughter]-and we can talk.
Weekly Compilation of
Presidential
EXECUTIVE OFFICE OF THE
Documents
Monday, February 10, 1992
Volume 28-Number 6
Pages 191-230
308
LISD
pres Documents
3
334
Feb. 25 / Administration of George Bush, 1992
At the end of December 1991 Ambassador
Message to the Congress
Ledsky prepared for his new consultation
Transmitting the Annual Report on
mission to the Eastern Mediterranean. His
Alaska's Mineral Resources
mission began on January 7, 1992, and will
February 25, 1992
be the initial item in my next bimonthly re-
port.
To the Congress of the United States:
I transmit herewith the 1991 Annual Re-
Like U.N. Secretary General Perez de
port on Alaska's Mineral Resources, pursuant
Cuellar, I am disappointed that cir-
to section 1011 of the Alaska National Inter-
cumstances did not allow the Cyprus issue
est Lands Conservation Act (Public Law 96-
to be resolved in 1991. I would like to take
487; 16 U.S.C. 3151). This report, containing
this opportunity to add my personal thanks
pertinent public information relating to min-
to Secretary General Perez de Cuellar for
erals in Alaska, as gathered by the U.S. Geo-
his tireless efforts over many years and share
logical Survey, the Bureau of Mines, and
with him the sentiment he expressed in the
other Federal agencies. This report is signifi-
final line of his final report on Cyprus:
cant because of the importance of the min-
the long overdue solution can be reached and
eral and energy resources of Alaska to the
the two communities can live together in Cy-
future well-being of the Nation.
prus in harmony, security, and prosperity."
George Bush
Sincerely,
The White House,
George Bush
February 25, 1992.
Note: Identical letters were sent to Thomas
S. Foley, Speaker of the House of Rep-
Remarks at a Bush-Quayle
resentatives, and Claiborne Pell, chairman of
Fundraising Dinner in Los Angeles,
the Senate Committee on Foreign Relations.
California
February 25, 1992
Thank you all very, very much. And what
a pleasure it is to be here with Pete Wilson,
Letter to Congressional Leaders
to be introduced by this man who is doing
Transmitting a Report on
so much for the State. And thank you for
International Agreements
heading our campaign and being at our side
February 25, 1992
today. It is a pleasure to see you and Gayle.
May I thank our master of ceremonies, John-
Dear Mr. Speaker: (Dear Mr. Chairman:)
ny Grant; say to the next team, Rabbi Green-
baum and Cheryl Ladd, who did a great job
Pursuant to subsection (b) of the Case-Za-
on the pledge without missing a beat; and
blocki Act (1 U.S.C. section 112(b)), I trans-
Bobby Britt who did the national anthem.
mit herewith a report prepared by the De-
And thanks to everyone who has organized
partment of State concerning international
this extraordinary gathering. What did you
agreements.
do? Tell these folks that they had moved the
Sincerely,
Academy Awards to tonight, I think, when
we look around back here. And I'm very
George Bush
grateful.
And let me just say it's also a great pleasure
to see Don Bren, who is one of our national
Note: Identical letters were sent to Thomas
cochairmen, and Lod Cook, another one.
S. Foley, Speaker of the House of Rep-
And thanks to both of you for making this
resentatives, and Claiborne Pell, chairman of
a highly successful event. Greetings also to
the Senate Committee on Foreign Relations.
Bobby Holt, who is our national finance
George Bush, 1992
Administration of George Bush, 1992 / Feb. 25
335
ess
chairman; former Secretary Bob Mosbacher,
instead of working on my plan, the House
ual Report on
who did a superb job as our Secretary of
Democrats surfaced their own. And true to
urces
Commerce, who is the chairman of our cam-
form, it is a temporary tax cut in exchange
paign; and all the other Bush-Quayle vice
for a permanent tax hike. And that tax cut
chairmen here tonight.
'ed States:
works out to 25 cents per person. Sounds
What an amazing crowd and what enthu-
1991 Annual Re-
big in a package for the consumption in the
siasm. And you all make me feel so young,
political arena, but that's what it makes, 25
esources, pursuant
especially Bob Hope. [Laughter] You know,
ska National Inter-
cents per person. And to make it permanent
Bob told you only half the story. That story
st (Public Law 96-
the Democrats would have to jack up the
he told was true about Desert Storm. He
report, containing
income tax rate for every American making
went over there, but what he forgot to tell
on relating to min-
more than $35,000 a year, $35,000. For a
you because of his modesty is I got more
d by the U.S. Geo-
plan that is supposed to help the middle
reports back from Norm Schwarzkopf and
1u of Mines, and
class, that's going to come as real news to
from Powell and from all of them about the
is report is signifi-
a lot of factory workers and schoolteachers
lift that gave to those kids, many of whom
rtance of the min-
had been months sitting out in the desert.
and everyday Americans struggling to make
; of Alaska to the
ends meet.
And we're very, very grateful to him.
tion.
And I'm touched, to paraphrase John Ken-
So let's face it, the Democrats are going
to tax the middle class for the same reason
George Bush
nedy, I'm touched by your warm response,
but not half as touched as all of you have
that Willie Sutton robbed banks, because
been. This has been a big success.
that's where the money is. They say. they're
Let me start tonight by sharing my concern
going to hit the rich, and they end up hitting
for all the many southern Californians who
the small guy.
have been ravaged by the record floods here.
Now, my economic plan is built on seven
And I'm pleased to say that today, on Air
specific proposals to stimulate this tired
layle
Force One, I signed a declaration to provide
economy. And if you want to give American
1 Los Angeles,
much-needed disaster relief to flood victims.
companies a reason to expand, then give
You're hurting, and we'll get you help. And
them-and this can be done in the remaining
the Governor promptly moved on that for
days-my investment tax allowance. Speed
the State.
up depreciation. And if you really want to
much. And what
I want to talk tonight about some of the
do something about boosting the sagging
with Pete Wilson,
challenges that we face, about the decisions
housing market and if you want to give Amer-
man who is doing
that will make this election year, that really
ican families a shot at the American dream,
nd thank you for
are going to chart this country's history for
then give those first-time homebuyers what
I being at our side
the next 5 years. And let me say it straight:
my plan does, a $5,000 tax credit toward that
ee you and Gayle.
What Government can do and what it can't
first home. Give those young families a
ceremonies, John-
do, and what I will do as President, and then
chance.
am, Rabbi Green-
where I'll need your help.
And finally, let me say this to the Congress:
ho did a great job
Let's start with the number one issue on
If you are serious about competitiveness and
issing a beat; and
national anthem.
everyone's mind, and that is the economy.
if you are serious about creating the jobs,
One month ago, as Pete said, in that State
then cut the tax on capital gains and stimulate
who has organized
of the Union, I laid out a two-part economic
investment.
ig. What did you
action plan: for the short term, a plan to get
ey had moved the
That's not the only fight I've got with the
this economy moving as early as this spring,
Capitol Hill crowd. Take a look at national
ht, I think, when
and then a longer term plan to keep America
defense. And it is important to remind our-
re. And I'm very
competitive in the next century. And I asked
selves that 365 days ago to this very minute
the Democrats who control the Congress to
so a great pleasure
we were starting that flanking movement
ne of our national
act for the good of the country, to lay politics
around the Iraqi army in the sands. And a
ok, another one.
aside. And I gave Congress those 52 days to
few months before that, nobody dreamed
pass my plan.
u for making this
we'd be faced with that kind of aggression.
And since then, some Democrats have
Greetings also to
For decades, we faced a dangerous enemy
been wrestling with their consciences. It's
national finance
abroad. And we fought those at home who
still too early to predict who will win. But
would have stripped this Nation of the
336
Feb. 25 / Administration of George Bush, 1992
strength that it needed to defend itself, those
cuts would touch off in the construction and
that always wanted to cut defense.
in the electronics and aerospace industries
Republicans fought hard on both fronts.
and the aftershock for the real estate mar-
And winning the defense battle on Capitol
kets. Think of the workers, the welders to
Hill helped us win the cold war. And no one
the engineers, thrown out of work and onto
understood that better than my predecessor,
welfare. For the sake of national security and
Ronald Reagan. He stood for a strong de-
for the sake of just plain economic common
fense and stood up for our principles. And
sense and for the sake of this State and the
now, with the collapse of the Soviet Union,
country, I ask you to draw the line and say
imperial communism as we know it gone, we
no to those who want to recklessly gut the
can reduce defense spending substantially.
national defense of this country.
I sat down with the Joint Chiefs and Chair-
We can turn this economy around pro-
man Powell and the Secretary of Defense,
vided we deal in economic reality. And it all-
and we worked out a sensible defense build-
comes down to this: To succeed economically
down. We're talking about $50 billion more
at home, we've got to lead economically
cut. One that will recognize post-cold-war re-
abroad. And there's no better case in point
alities, but still leave this country with the
than California. This State accounts for $1
muscle that we need to meet whatever dan-
in every $7 of American exports. In 1990
ger comes our way.
alone, two-way trade reached nearly $166 bil-
I know that's a concern here in southern
lion. Statewide, that means 725,000 jobs,
California, with its proud tradition of pushing
close to three-quarters of a million jobs tied
the frontier in aerospace and producing
to trade.
weapon systems that redefined state-of-the-
And it's more true than ever before today
art. We have a number of Federal programs
aimed now, as we cut down on defense
that America's future lies in opening markets.
spending, at helping those workers, those
But our opponents aren't about to let fact
good workers, those defense industry work-
intrude on fantasy. Their prescription for the
nineties is to sound an economic retreat and
ers as they seek new careers. And we're tak-
raise the trade barriers and build new barri-
ing steps to ease the transition that many
firms will face as they shift from defense-
cades to keep imports out and take this coun-
related work to the commercial economy.
try back to the dangerous pre-World War II
And that's what my technology transfer ini-
isolationism. I am not going to let that hap-
tiative is all about, getting research done in
pen as long as I am President of the United
Government labs out into the private econ-
States. We are going to stay engaged and lead
omy. And in May we're going to bring that
the world.
message to Cal Tech through our national
That is not the American way. And we
technology initiative. Our approach is the
don't cut and run; we compete. And I'll put
sensible way to go, the right way to keep the
my faith in the American worker. So clear
economy sound and at the same time keep
away the trade barriers, go head-to-head, and
our Nation strong and safe.
the American worker will outthink and out-
But there are Democrats with a very dif-
perform and outproduce anybody, anyplace,
ferent plan in mind. And they want to use
anytime.
the end of the cold war to open a bidding
People here want to know that increased
war to see who can gut defense the fastest.
trade doesn't mean a tradeoff when it comes
And one scheme would cut defense by an
to concerns about our environment. And ear-
additional $200 billion. And nationwide, cuts
lier this afternoon we had a wonderful meet-
on that scale would wipe out hundreds of
ing. I announced the new initiative to ensure
thousands of jobs, to say nothing about ren-
that the promise of free trade includes pro-
dering us incapable of responding to aggres-
tection for the environment. And we're work-
sion overseas.
ing with the Government of Mexico. And we
Right now, $1 out of every $5 spent on
will commit well over $1 billion in new re-
defense is spent right here in California. And
sources over the next 3 years to protect drink-
think of the shockwaves that reckless defense
ing water, pay for cleanups, and enforce haz-
'George Bush, 1992
Administration of George Bush, 1992 / Feb. 25
337
ne construction and
ardous waste laws along the U.S.-Mexican
border.
Let's test our kids to see where we're doing
erospace industries
well and where we need more work. And our
e real estate mar-
And I can say to the people of this great
schools need a dose of competition with each
ers, the welders to
State: Here's proof that we can sustain a
other. Right now in public schools in Los An-
t of work and onto
strong economy and a sound environment.
Whether it's the environment, the economy,
geles and across the country, kids are a cap-
ational security and
economic common
or any other issue, there's a new reality now
tive audience. Now, give parents a chance
this State and the
in the way people live and work and look
to choose their children's schools, and you'll
W the line and say
at Government. People don't really buy the
see our schools start doing their homework.
old, big Government rhetoric. They've seen
School choice is right, and it is working in
recklessly gut the
enough social engineering. And they know
many States. School choice will work across
untry.
this Nation.
nomy around pro-
America's greatness doesn't spring from Gov-
ernment. Our strengths are in our people,
And because we believe in responsibility
c reality. And it all
in our families, in our communities. And
we back legal reform. Sorry to say this in
cceed economically
Government can't raise your kids to know
"LA. Law" country, but here's the plain fact.
lead economically
right from wrong. It can't legislate happy
America has become the land of the lawsuit.
etter case in point
te accounts for $1
endings. Government isn't why people work
And we put forward a plan to cut down the
hard, raise a family, save for retirement.
number of frivolous suits. They sap our econ-
I exports. In 1990
Year after year, the folks who control the
omy, and they strain our patience. And when
ed nearly $166 bil-
Congress have pushed spending higher and
a father can't coach Little League because
ans 725,000 jobs,
higher. In 1993, the Federal Government
he's worried about getting sued, something's
a million jobs tied
will spend $1.5 trillion of taxpayers' money.
wrong. And when your neighbor- becomes a
And people are entitled to ask, "Am I getting
plaintiff, something's wrong. Our country
ever before today
my $1.5 trillion's worth?" We need to get
would be a lot better off if we spent as much
n opening markets.
back to the basics. Government is too big,
time helping each other as we do suing each
t about to let fact
and it spends too much. So give me the line-
other. And so I will challenge the Congress
prescription for the
item veto, and let the executive branch try
again and again to do something about the
onomic retreat and
to cut some of the fat out of the budget.
reforms that we have pending up there on
d build new barri-
Forty-three Governors have it, and 43 Gov-
Capitol Hill right now.
and take this coun-
ernors do a good job utilizing it. We need
Because we believe in responsibility, we
pre-World War II
for Government to do less but do better and
take a hard line on crime and drugs. Tomor-
ng to let that hap-
to focus on what people want and deserve,
row Barbara and I fly down to San Antonio,
dent of the United
safe streets, good schools, a strong economy,
and there I'll meet with five Presidents of
y engaged and lead
and a strong country.
Latin American countries, Latin American
And today we see the return of responsibil-
leaders, work with them to sharpen our strat-
can way. And we
ity, an old idea that never really went out
egy to beat this scourge. And yes, we're wag-
npete. And I'll put
of style. People have had it with the no-fault
ing a war to cut the supply lines that funnel
worker. So clear
lifestyle. And in their private lives they know
drugs into the crack houses that plague good
head-to-head, and
actions have consequences. And what they
neighborhoods across L.A. County. Intercep-
outthink and out-
want is a Government whose policies and
tion of drugs coming in is way, way up.
anybody, anyplace,
programs recognize that people are respon-
But we're battling, also, on the demand
sible for their actions and that Government
side. And we set a goal to drive down current
ow that increased
is responsible to the people. And if you think
adolescent cocaine use by 30 percent. And
off when it comes
about it, that's nothing more than a working
ronment. And ear-
definition of freedom.
we've seen a dramatic 60-percent decrease.
Now, that's good news. But we all know we
a wonderful meet-
Because we believe in responsibility, we
believe in education reform. And we've laid
can't claim victory yet. We must show that
nitiative to ensure
here, too, actions have consequences. And
ade includes pro-
out a strategy called America 2000. It literally
t. And we're work-
revolutionizes our schools. Doing it the old
that's why we need stiffer sentences for drug
of Mexico. And we
way isn't good enough anymore. And we
dealers. We need courts that punish crimi-
billion in new re-
need to hold our kids and our teachers to
nals, not honest cops, out there trying to do
S to protect drink-
a higher standard. And here's a radical no-
their jobs. We need laws that make life
tougher on the criminals than on the victims
and enforce haz-
tion, as our national education plan calls for:
of crime. And we need to get that House
338
Feb. 25 / Administration of George Bush, 1992
of Representatives to pass my crime bill and
Note: The President spoke at 8:58 p.m. at
pass it now.
the Century Plaza Hotel A tape was not
Because we believe in responsibility, we
available for verification of the content of
believe in welfare reform. And people are
these remarks.
willing to support benefits. Look, we care.
We're Americans. We care about the other
guy. But Americans want to see some con-
nection between welfare and work. They
Exchange With Reporters Prior to a
want to see governments at every level work
Meeting With President Alberto
together to track down the deadbeat fathers,
Kenyo Fujimori of Peru in San
those who can't be bothered to pay child sup-
Antonio, Texas
port. And they want to see us break the cycle
February 26, 1992
of dependency that destroys dignity and
passes down poverty from one generation to
the next. That's wrong to do that, and we're
Drug Summit
going to do something to change it.
Q. Mr. President, what do you hope to
Right here in California, your able Gov-
accomplish at the drug summit, sir?
ernor Pete Wilson's got a plan that will en-
President Bush. Well, I think we've al-
courage people on welfare to take work when
ready-we're going to build on the first
they can find it; for pregnant teens or parents
meeting, the Cartagena meeting, and we're
to stay in school, get the education they'll
going to get maximum cooperation. We're
need to make a better future, a future where
going to redouble our efforts on the demand
they won't need that next welfare check. And
side and on the supply side. So, it's the big
we support him. You say, what can we do
picture with very able leaders from south of
to help California? Simple, we can start by
our border that continue to address them-
getting Washington out of the way. And I'll
selves to this problem. And there's been mar-
tell you, we will do all that we can to remove
velous cooperation between the countries.
the burdensome Federal regulations, to help
Q. The Ecuadorean President said today
you cut through the web of redtape to real
that his country needs more U.S. dollars.
reform.
What's your response to him, sir?
The reforms I've spoken about tonight can
President Bush. Well, I'll be discussing
it with him when I see him.
spark a revolution to bring this country home
to the bedrock beliefs that have made us
Q. President Fujimori, will cutbacks in
great. Faith and family, responsibility and re-
U.S. aid hamper your drug-fighting efforts?
spect, community and country. Simple
President Fujimori. From the supply
side, we can, we think we can do a lot on
words, certain truths that hold a world of
this side, but also we need the better com-
meaning for every American.
prehension and coordination.
And I might say parenthetically, if I could
be prideful in my comment, I am very, very
President Bush. And that's all the things
we'll be talking about.
proud of what Barbara does to demonstrate
strength of family and the caring that we all
Q. Do you need more U.S. money?
feel in our hearts.
President Fujimori. Also. [Laughter]
President Bush. Everybody does, includ-
But here's what I know about this coun-
ing us.
try's future. No matter how tough times are
President Fujimori. That's the answer
right now, no matter what trials we face,
they want? [Laughter]
America's best day always lies ahead. And I
Q. President Bush, do you believe this
believed that when I was a little boy. I believe
summit is going to be of any value?
it now. I believe it every day I live because
President Bush. I think there's a lot of
that is the great glory of the United States
value. I think the first one was-President
of America.
Fujimori was not at it-but I believe that
Thank you all, and may God bless our
it set the ground rules, it set some objectives.
great country.
I think this one will do the same thing. We
George Bush, 1992
Administration of George Bush, 1992 / Feb. 25
327
get this economy
Q. Pretty confident?
The President. I haven't heard it yet, but
~hat's what's need-
The President. Yes, I am.
I might be the last to know. [Laughter]
ng the Congress to
Southern Primaries
Q. We probably would.
Q. Patrick Buchanan-fire Bush imme-
The President. Have a nice trip to Cali-
fornia, everybody.
diately. Do you think he's getting a little per-
Q. See you there.
sonal in his attacks and his charges?
Q. Thank you.
aq? What was be-
The President. I haven't seen that, John
loans?
[John Cochran, NBC News]. I wouldn't
Note: The exchange began prior to the Presi-
en't read all the
worry too much about that.
dent's departure from Andrews Air Force
S. you may remem-
Q. Those FBI-
Base in Camp Springs, MD, for San Fran-
a lot of support at ?
ce to a much more
The President. Yes. I think we're going
cisco, CA. A tape was not available for ver-
to do all right down South. I feel good about
ification of the content of this exchange.
meini. So that was
Reagan administra-
it. We've got good people working, and I
think the people down there understand my
to support it.
message. And I think as people compare the
two candidates, why, we'll be fine.
Remarks at a Bush-Quayle
pass the loan guar-
Q. Will you be mentioning Buchanan by
Fundraising Luncheon in San
ents freeze, would
name? Last week you said you were going
Francisco, California
on?
to take the gloves off. Do you intend to do
February 25, 1992
too hypothetical.
so, sir?
y, and there it is.
The President. Well, I'm still sorting all
Thank you so much for that welcome back.
olicy. We haven't
that out. You heard me last night. I'd rather
Pete mentioned this was my 15th visit. But
policy of the U.S.
define it on the issues. There are plenty of
you have a wonderful way of making people
g time.
surrogates that are willing to make it more
feel at home in this State. Thank you very
or you to now take
specific. I think that's a good way to leave
much. And may I just say from halfway across
it.
the world, or at least in the east coast, watch-
at be, but I'm not
Q.--ads starting up in Georgia against
ing with wonder, what a superb job, fighting
policy of this coun-
Buchanan?
difficult conditions, your Governor is doing.
xpediency. I can't
The President. I think that there will be
It's an inspiration to all of us in politics, I'll
dibility worldwide.
ads that define the differences in position,
tell you. And Gayle, our greetings to you.
worldwide. Other-
yes. And I expect that people will understand
May I thank the Skyline College Musicians
en able to facilitate
that, after the ads from the Democrats in
over there and pay my respects to Eric
place. So, we just
New Hampshire against me and from him
Stratman, who got up and gave us that won-
tions, and they're
against me. But I'll try to keep it on a high
derful rendition of the Star-Spangled Ban-
plane-together and go on and win.
ner; no pitch pipe, no nothing; just the beau-
Q. You seem kind of subdued today, Mr.
tiful music. And we were all so moved by
President. Are you feeling okay?
that. And though he didn't confess to this—
making a lot more
The President. Yes, I feel good, Rita [Rita
your bishop or our bishop, my bishop, put
re you going to try
Beamish, Associated Press].
it that way, and Barbara's-he used to be
tion there?
Q. How come you're so subdued? It's
our pastor in Washington, DC, before he was
about our game
early.
elevated to being bishop here in San Fran-
nessage out there.
The President. Do you remember Lesley
cisco. And Bill, thank you, sir, for being with
xtraordinarily suc-
out there, so that
Stahl [CBS News] asking when the Berlin
us today and for those inspiring words.
Wall came down why I wasn't jumping with
And of course, let me single out the master
aybe that will get
joy? I said, "We're taking care of this." It's
of ceremonies. I've seen him in all kinds of
a little early. We're going on a long trip, and
roles in terms of dealing with world leaders.
ou think you'll be
r? Do you think
it's kind of a calm but determined approach.
I've never seen him, I don't believe, as mas-
ter of ceremonies. But George Shultz is one
Q. Have you added any additional stops
of the truly great public servants. And I'm
Yes.
on this trip? We heard you might add some
on the end, Saturday or Sunday, additional
delighted to see he and Obie again.
And I want to salute our former Cabinet
stops.
member Bob Mosbacher; and Bobby Holt
328
Feb. 25 / Administration of George Bush, 1992
here is our national campaign finance chair-
early to predict who will win. But instead of
man; Jim Dignan, the California State chair;
working on my plan, the House Democrats
Katie Boyd and Howard Leach, who have
surfaced their own, a tiny tax cut across the
done a superb job on this overflow luncheon.
board, written in invisible ink, in exchange
And also, Gretchen is out here who gra-
for a huge tax increase chiseled into stone.
ciously met us at the airport. Thank you for
Ask the people out there, your neighbors, is
all the work on the luncheon. And to all the
it really worth borrowing from our children
other national vice chairs-Alex Spanos and
to give families an extra 25 cents a day? That
Don Bren and Craig Berkman and Flo
two-bit tax cut would make even the tooth
Crichton of the finance team. And a special
fairy blush. It is not good legislation.
thanks to Mr. Yong Kim over here, and to
When the cameras are on, the Democrats
my old friend, Johnny Tsu over there, who
say all the right things, especially in a political
have done a great job on this. Thank you
year, talk about a blueprint for an economic
all.
recovery. But then the doors close and the
To paraphrase John Kennedy, I'm touched
backroom brokering begins. And in the end,
by that warm response, but not half as
it is the same old Democratic deal, another
touched as all of you have been.
"jobs bill," but this one for the tax collectors.
Before I begin, let me just share and ex-
Now, if the Senate Democrats want to
press my concern for all the Californians
make their temporary tax cut permanent, and
who, after seemingly endless years of
this is a fact, they would have to jack up the
drought, have been ravaged by record floods.
income tax rate for every American making
I am pleased to announce that today, as I
more than $35,000. You. heard that right,
came out on Air Force One, I signed a dec-
$35,000, for a plan that's supposed to help
laration to provide that much-needed disas-
the middle class. And that's going to come
ter relief to these flood victims. They're hurt-
as real news to a lot of factory workers and
ing, and the Federal Government ought to
school teachers and everyday Americans that
do its part.
are just struggling to make ends meet. So
I want to talk to you today about some
they are going to tax the middle class for the
of the challenges that we face, Pete men-
same reason that Willie Sutton robbed the
tioned some of them, about the decisions
banks, because that's where the money is.
we're going to make in this election year that
If you want to give American companies
are going to really chart the course of this
reason to expand, then give them what we
country's future for the next 5 years. And let
are calling for, an investment tax allowance.
me lay it out straight, what Government can
Speed up the rates of depreciation. If you
do and what it can't do, and what I will do
want to boost the sagging housing market and
as President, and where I will need your
if you want to give American families a real
help.
shot at the American dream, then don't look
Start, if you will, with the number one
to the liberal leadership in the Congress.
issue on everybody's mind, and that is the
Give first-time homebuyers what our plan
economy, the Nation's economy. One month
does, a $5,000 tax credit toward that first
ago, as the Governor said, in my State of the
home.
Union I laid out a two-part economic plan:
Finally, let me just say to the Congress
for the short term, a plan to get the economy
here: If you're serious about competitiveness,
moving as early as this spring, seven points
if you're serious about creating jobs, then cut
to stimulate investment; and a longer-term
the tax on capital gains.
plan to keep America competitive in the new
These points I've listed, and four more,
century ahead. I asked the Democrats who
will stimulate the economy right away. Now,
control all the committees in the Congress,
let's switch over to the defense side of the
both Houses of the Congress, to act for the
equation. I'm sure you're reading a great deal
good of the country. And I gave Congress
about defense cuts. For decades we faced
52 days to pass the plan.
a very dangerous enemy abroad, and we
Since then, some Democrats have been
fought the Democrats, those liberal ones at
wrestling with their consciences. It is too
home, who would have stripped this Nation
of George Bush, 1992
Administration of George Bush, 1992 / Feb. 25
329
I win. But instead of
of the strength that it needed to defend itself
ing about rendering us incapable of respond-
e House Democrats
and to defend freedom. Republicans fought
ing to aggression overseas.
ay tax cut across the
hard on both fronts-Pete Wilson was a lead-
You might think about that. Right now, $1
le ink, in exchange
er in this fight when he was a United States
out of every $5 spent on defense is spent
chiseled into stone.
Senator-and winning the defense battle on
right here in California. Think of the shock
e, your neighbors, is
Capitol Hill, as George Shultz will tell you,
waves that would touch off in the construc-
g from our children
helped us win the cold war. No one under-
tion and electronics and aerospace industries
25 cents a day? That
stood that better than my predecessor, Ron-
and the aftershock for the real estate mar-
hake even the tooth
ald Reagan. He understood it from day one
kets. Think of the workers and the welders
legislation.
e on, the Democrats
and fought for a strong defense.
to the engineers thrown out of work and onto
pecially in a political
Now, given the changes in the world-and
welfare. You can call it a double play, a
int for an economic
they're dramatic and they are wonderful in
Democratic double play, cripple our de-
doors close and the
terms of the future of our kids-given the
fenses and the same for the economy, all at
collapse of the Soviet Union, we know now
the same time.
ins. And in the end,
cratic deal, another
we can reduce defense spending substan-
For the sake of national security-and I
tially. So I went to the Joint Chiefs and to
still view that as my most fundamental re-
or the tax collectors.
Dick Cheney and based on the rec-
sponsibility, the national security of this
Democrats want to
cut permanent, and
ommendation of the Joint Chiefs and the
country. I think that is the prime responsibil-
have to jack up the
Secretary of Defense, I've proposed a sub-
ity of the President-for the sake of just plain
stantial but a sensible defense build-down,
economic common sense as well, and for the
y American making
one that will recognize post-cold-war reali-
sake of California and the country, I ask you
u heard that right,
ties, but still leave this country with the mus-
to draw the line and say no to those Demo-
is supposed to help
hat's going to come
cle that we need to meet whatever danger
crats who want to recklessly cut the muscle
factory workers and
comes our way or help defend those whose
out of the national defense of this country.
vday Americans that
freedom are at stake.
We can turn this economy around, pro-
vided we deal in economic reality. It all
ake ends meet. So
And we have a number of Federal pro-
middle class for the
grams aimed at helping defense industry
comes down to this: To succeed economically
Sutton robbed the
workers as they seek new careers now be-
at home, we've got to lead economically
abroad.
here the money is.
cause of our defense cuts. We're taking steps
to ease the transition that many firms will
There is no better case in point than this
merican companies
wonderful State of California. None. This
give them what we
face as they shift from defense-related work
ment tax allowance.
to the commercial economy. That's what this
State accounts for one in every seven dollars
lepreciation. If you
technology transfer initiative is all about that
of American exports. In 1990 alone, two-way
trade reached nearly $166 billion. For the
housing market and
I've proposed, getting research done in gov-
rican families a real
past 5 years that's an average annual increase
ernment labs out into the private economy.
of 20 percent, and statewide, I think Pete
am, then don't look
And in May we're going to bring that mes-
would agree, it means something like three-
, in the Congress.
sage to Cal-Tech through our national tech-
quarters of a million, I believe the figure is
ers what our plan
nology initiative. And that's good news for
it toward that first
725,000 jobs, close to three-quarters of a mil-
the high-tech firms right here in the Silicon
lion tied into trade. It is more true than ever
Valley, and all across this State. Our approach
before: America's future lies in open mar-
y to the Congress
is the sensible way to go, the right way to
kets. It does not lie in this negative view of
ut competitiveness,
keep the economy sound, and our Nation
protection.
rating jobs, then cut
safe.
But the people we are battling in the Con-
But there are political problems. There are
gress today aren't about to let the fact intrude
d, and four more,
Democrats with a different plan in mind in
on the fantasy. Their prescription for the
ly right away. Now,
the United States Congress. They want to use
lefense side of the
nineties is to sound-really to pull back, not
the end of the cold war to open a bidding
reading a great deal
all of them but some of them-to pull back
war to see who can gut the Defense Depart-
and sound an economic retreat, and then to
decades we faced
ment the fastest. One plan would cut defense
raise up trade barriers-all in the name of
y abroad, and we
by an additional $200 billion over 5 years.
lose liberal ones at
fair trade-but to raise up trade barriers,
Nationwide, cuts on that scale would wipe
tripped this Nation
build new barricades to keep imports out,
out hundreds of thousands of jobs, say noth-
and take this country back to a dangerous
330
Feb. 25 / Administration of George Bush, 1992
pre-World War II isolationism. As long as I
and that Government is responsible to the
am President that will not happen to the
people. Now, if you think about it, that's
United States of America.
nothing more than a working definition of
That's not the American way, certainly not
freedom.
the California way. We don't cut and run.
Because we believe in responsibility, we
We compete. And we work hard. And I've
believe in education reform, fundamental re-
got a lot of faith in the American worker be-
form. We've laid out a strategy called Amer-
cause our workers have a lot of faith in them-
ica 2000, to literally revolutionize our
selves. If we can do better and make more
schools. It's not Democrat. It's not Repub-
progress in clearing away the trade barriers
lican. It's not liberal. It's not conservative.
and go head to head, the American worker
It is American, supported by the 50 Gov-
will outthink and outperform and outproduce
ernors to meet our six education goals.
anybody, anyplace, anytime. It's that direc-
We need to hold our kids and our teachers
tion that we've got to take this country.
to a higher standard; that's part of it. And
There's a new reality now in the way peo-
here's a radical notion: Let's test these kids
ple live and work and look at Government.
at the 4th and the 8th and the 12th grade,
People really don't buy that old "big Govern-
see what we're doing, where we're doing it
ment" rhetoric. The American people have
well, and where we need to do more work.
seen enough of what we call social engineer-
Our schools need a good dose of competition,
ing. They know the limits of Government.
with each other. Right now, kids are a captive
They know that our greatness doesn't spring
audience. You give the parents a chance to
from Government: America's strengths are in
choose their children's schools, and you'll see
her people, in our families, in our commu-
our schools start doing their homework. And
nities. Government can't raise your kids to
the bad schools will be picked up by the com-
know right from wrong. It can't legislate
petition. School choice is working where it's
happy endings. Government isn't why people
in effect, and it will work nationwide.
work hard, raise a family, save for retirement.
Because we believe in responsibility, we
And people know, as Government tries to do
back legal reform. Here's the fact: America's
more and more, it delivers less and less.
become the land of the lawsuit. We've put
And year after year, the main opposition
forward a plan, it's up on the Hill, to cut
on the Hill, the liberal Democrats who con-
down a number of frivolous lawsuits. They
trol the Congress, have pushed spending
sap our economy. They strain our patience.
higher and higher. In 1993, the Federal Gov-
When a father can't coach Little League be-
ernment will spend $1.5 trillion of taxpayers'
cause he's worried about getting sued, some-
money. People are entitled to ask, "Am I get-
thing's wrong. When your neighbor becomes
ting my 1.5 trillion's worth?"
a plaintiff, something's wrong. Our country
We need to get back to the basics that
would be a lot better off if we spent as much
Government is too big, and it spends too
time helping each other as we do suing each
much. And that leads me to ask you to urge
other.
your Congress to give me the line-item veto.
Because we believe in responsibility, we
Forty-three Governors have it, and give the
take a hard line on drugs and crime. Tomor-
President, the executive branch, a chance.
row I go to San Antonio, Barbara and I go
We need for Government to do less but do
down there, and will meet with five or six
better. To focus on what people want and
Latin American Presidents, working with
deserve, safe streets, good schools, strong
them to sharpen our strategy to beat the
economy and, certainly, a strong country.
scourge. Yes, we're waging a war to cut the
Today we see the return of responsibility,
supply lines that bring drugs into this coun-
an old idea that never really went out of style.
try. Interdictions are at an all-time high. But
People have had it with the no-fault lifestyle.
we're battling on the demand side as well.
In their private lives, they know actions have
We set a goal to drive down the current ado-
consequences. What they want is a Govern-
lescent cocaine use by 30 percent. That was
ment whose policies and programs recognize
our national goal. And we've seen a dramatic
that people are responsible for their actions
60 percent decrease. Now, that's good news.
George Bush, 1992
Administration of George Bush, 1992 / Feb. 25
331
responsible to the
nk about it, that's
That's good news for families across this hold a world of meaning, I still believe, for
rking definition of
country.
every single American.
But we all know that we can't begin to
Here's what I know about this country's
responsibility, we
claim total victory yet. We must show that
n, fundamental re-
future: No matter how tough times are now,
here, too, actions have consequences. And
no matter what trials we face, America's best
utegy called Amer-
that's why we need stiffer sentences for these
revolutionize our
day always lies ahead. I believed that when
drug dealers, courts that punish criminals,
it. It's not Repub-
I was a little kid. I believe it now. I am totally
not honest cops trying to do their job out
not conservative.
confident about the recovery of this country.
there, and laws that make life tougher on the
d by the 50 Gov-
And I'll believe it every day I live because
criminals than on the victims of crime.
cation goals.
that, in essence, is the great glory of our won-
is and our teachers
Because we believe in responsibility, I be-
drous country.
t's part of it. And
lieve as Pete does, we believe as your Gov-
et's test these kids
ernor does in welfare reform. People are will-
Thank you all, and may God bless the
United States of America.
id the 12th grade,
ing to support benefits. They've always been
ere we're doing it
willing to give a hand up. Americans care.
to do more work.
But they want to see some connection be-
Note: The President spoke at 1:13 p.m. at
ose of competition,
tween welfare and work. They want to see
the Westin St. Francis Hotel. In his remarks,
v, kids are a captive
governments at every level work together to
he referred to Governor Pete Wilson and his
arents a chance to
track down the dead-beat fathers, the ones
wife Gayle; George P. Shultz, former Sec-
ools, and you'll see
who can't be bothered to pay child support.
retary of the Treasury, and his wife Obie;
:ir homework. And
And I think most of all they want to see us
Katie Boyd, cochairman of the dinner and
ked up by the com-
break this cycle of dependency, a cycle of
vice chairman of the California Bush-Quayle
working where it's
dependency that destroys dignity, and says
campaign; Howard Leach, dinner cochair-
ationwide.
to a little guy when he's just starting up, you
man and regional vice chairman of the Bush-
responsibility, we
really don't have much of a chance. Passes
Quayle campaign, and his wife Gretchen;
the fact: America's
down poverty from one generation to an-
and Yong Kim and Johnny Tsu, national vice
awsuit. We've put
other. That's wrong. We're going to do some-
chairmen of the Bush-Quayle campaign.
n the Hill, to cut
thing to change it.
ous lawsuits. They
rain our patience.
Right here in California, Governor Wil-
Little League be-
son's got a plan that will encourage people
tetting sued, some-
on welfare to take work when they can find
neighbor becomes
it; for pregnant teens or parents to stay in
Statement by Press Secretary
rong. Our country
school, get the education they'll need to
Fitzwater on General Motors Plant
we spent as much
make a better future, a future where they
Closings
we do suing each
won't need that next welfare check.
February 25, 1992
What can we do to help California? What
responsibility, we
can we in Washington do? Simple: We can
The White House made no attempt what-
.nd crime. Tomor-
start by getting our bureaucracy out of the
soever to influence General Motors' decision
Barbara and I go
way. And we'll do all we can, Pete, to remove
over which plants to close and which plants
et with five or six
those Federal regulations, to help you cut
to keep open. The White House considers
its, working with
through that web of redtape to real reform.
such matters to be internal corporate deci-
ategy to beat the
sions.
g a war to cut the
These reforms-changes we make now to
igs into this coun-
boost the economy and to transform our
The President is very much aware of the
all-time high. But
schools and our legal and our welfare sys-
human costs associated with these tough eco-
and side as well.
tems-can really spark a revolution. A rev-
nomic times. This recent plant closing an-
n the current ado-
olution to bring this country home to the
nouncement underscores the critical impor-
percent. That was
bedrock beliefs that have made us great. And
tance of the Congress acting promptly on the
e seen a dramatic
they are fundamental: family and faith, re-
President's economic growth package before
that's good news.
sponsibility and respect, community and
the March 20 deadline set down in the Presi-
country. Simple words, certain truths that
dent's State of the Union Address.
NEWS RELEASE
R.
F
RUDER FINN
From:
For:
Ruder . Finn
The Defense Research Institute
444 N. Michigan Ave.
750 N. Lake Shore Dr.
Chicago, IL 60611
Chicago, IL 60611
(312) 644-8600
(312) 944-0575
Contact: Sharon Peters
Contact: Susan Zeller
For Immediate Release
New Study Examines Judges, Lawyers and Other
Key Players' Views of Civil Litigation in State Courts
Assesses Key Players' Roles/Shortcomings
in the Civil Litigation Process
Reveals Many Perceived Problems, Reform Preferences
Compares Views of State Versus Federal Court Systems
Most Survey Respondents Say:
Page
State Courts Perform Only Moderately Well
3
Efficiency is Leading Court Problem
3
Media Coverage Contributes to Clogged Dockets
4
Court Delays Increasing
5
Fault-Based Systems Best (But Many Judges Disagree)
6
Attorneys Main Culprits in High/Rising Costs
7
Lawyer Restraint Called For
8
Discovery Should be Controlled
9
More Active Judicial Case Management Needed
10
Bush Administration's Tort Reform Proposals
Have Merit
11
Other Reforms Called For
12
Alternate Dispute Resolution Under-Utilized
12
"Loser Should Pay" Concept has Merit
13
State and Federal Court Problems Similar
13
And More
RUDER FINN INC., 444 NORTH MICHIGAN AVENUE, CHICAGO, IL 60611 TEL. (312) 644-8600 FAX (312) 644-6454
CHICAGO, LOS ANGELES. NEW ORLEANS, NEW YORK, TORONTO, WASHINGTON, D.C. AND INTERNATIONAL OFFICES AND BUREAUS
DRI Survey
Page 2
Chicago, IL, Feb. 7, 1992 - Acknowledging numerous and
growing problems with the civil litigation process in state courts, a
nationwide sampling of lawyers, judges and other key players in the
process believes that multiple reforms are needed. And while these
key players reject making radical changes in the civil justice system as
we know it, most do support more rational, self-governed and cost-
effective approaches to resolving civil disputes.
These are among the key findings and conclusions of a major
study released today by the 18,000-member Defense Research
Institute (DRI), the nation's largest association of defense trial
lawyers. Titled "Civil Litigation in State Courts: Perspectives on the
Process and Preferences for Reform," the study was sponsored by
Chicago-based DRI and conducted by Research & Forecasts, Inc.,
New York City. Study findings are drawn from 30-minute telephone
interviews nationwide with a representative cross-section of 803
defense and plaintiff attorneys, state civil court judges and
administrators, insurance claims executives, corporate legal counsel
and state legislators serving on judicial committees. The study has a
margin of error in the range of plus or minus 4 percent on the totals.
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DRI Survey
Page 3
Study Objectives
The overall goals of the study, according to DRI President
Robert D. Monnin, are to evaluate how the various parties directly
involved in -- or in a position to influence - civil litigation view state
civil court systems, the civil litigation process overall and each other's
role in the process. "Most importantly," says Monnin, "the study
reveals prevailing views of what can and should be done to make the
state civil courts and the civil justice system more efficient."
Most Only Moderately Satisfied with State Civil Courts
Six in 10 (59%) respondents queried in the DRI survey believe
the civil litigation process in state courts today works only "somewhat
well." This compares with almost two in 10 (18%) who think it
functions "very well" and a slightly higher percentage (22%) who view
the process negatively.
Of the seven groups surveyed, state civil court judges and court
administrators have the most favorable views of civil litigation in
state courts, whereas insurance executives and corporate counsel
seem the least satisfied with the way the process works.
Efficiency Cited as Leading Problem, By Far
When asked to describe faults in their state court systems,
almost seven in 10 (69%) survey respondents volunteered a criticism
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related to "efficiency" -- and most of them particularly faulted the
long duration of the court process (cited by 44%). In contrast, only
one in four (25%) criticized the "quality" of the system (such as "poor
judges" or "unprepared lawyers"), an almost equal percentage (23%)
faulted "rules/procedures" such as the "excessive use of discovery"
and one in five (20%) offered criticisms related to the "cost of
litigation." Only five percent of respondents perceive the process to
be working fine as is.
Media Coverage Contributes
Why do certain state court systems appear to be overwhelmed
and perhaps even breaking down? Of several specific reasons
evaluated by survey respondents, the two perceived to contribute
most to the problem are "media sensationalize settlements and jury
awards" (77% agree) and "the court process is too slow" (72% agree).
In addition, 69% of all respondents agree that the "courts are not
getting sufficient resources to operate efficiently," 60% agree "there is
simply too much litigation" (though two-thirds of plaintiffs' lawyers do
not agree), and 61% agree that "litigation is becoming too complex."
Judges Leading Controllers of Litigation Pace
When survey respondents were asked, "Who controls the pace
of litigation in state courts?," judges were mentioned first by 37%,
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DRI Survey
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followed closely by plaintiff attorneys (cited by 32%) and a distant
third by defense attorneys (cited by only 12%). And while both
defense and plaintiff attorneys agree that judges are the leading
controllers of the litigation pace, defense attorneys overwhelmingly
believe plaintiff attorneys have more control than they do -- whereas
plaintiff attorneys believe the control is equally split between defense
and plaintiffs' counsel.
Increase Seen in Court Delays
Two-thirds (66%) of all those interviewed believe delays in
disposing of civil cases in state courts have increased over the past
decade, including 45% who believe they have "increased somewhat"
and 21% who believe they have "increased greatly."
When respondents were asked to estimate the average time to
trial of civil cases in the states where they work, the nationwide
average computed from these estimates is 22 months. However,
when responses are compared on a regional basis, the average time to
trial indicated by respondents in the eastern region of the U.S. is 30
months - considerably longer than estimates for other regions of the
country.
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DRI Survey
Page 6
Fault-Based Personal Injury Systems Preferred Over Compensation-
Based Systems by a 3-to-1 Ratio
Almost six in 10 (59%) respondents work in states with fault-
based personal injury laws, 15% work in compensation-based states
and 15% work in both fault and compensation-based states. When
asked which system they would prefer if given a choice, respondents
favoring a fault-based system exceeded those favoring a
compensation-based system by a 3-to-1 ratio.
Plaintiff attorneys and defense attorneys are the most likely to
prefer fault-based laws (75% and 62%, respectively, favor), whereas
judges and court administrators are the least likely to prefer them
(only 44% and 31%, respectively, favor). In contrast, the strongest
supporters of compensation-based systems typically are judges and
corporate counsel (25% of each group favor), with defense and
plaintiffs' attorneys the least likely supporters, (only 13% and 7%,
respectively, favor).
Among those who prefer fault-based systems, the main reasons
cited are "only entitled to compensation if someone causes injury and
if there is negligence proven" (cited by 46%), and "it's the fairest way
it's more equitable, it's more objective" (cited by 44%).
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DRI Survey
Page 7
Among those favoring compensation-based systems, the main
reasons expressed are "fairest way/more equitable/objective" (cited
by 45%), "the purpose is to compensate, not blame" (cited by 21%),
and "awards what's lost/restores plaintiffs" (cited by 20%).
Increased Transaction Costs a Problem
Defining transaction costs as "the total costs incurred by all
parties to civil litigation, excluding any decisions about liability or
monetary damages," these (transaction) costs are perceived by the
vast majority of survey respondents either to have "increased greatly"
(52%) or to have "increased somewhat" (40%) over and above
inflation in the past decade. Moreover, rising transaction costs are
thought to be a "major problem" by 50% and a minor problem by
28% of the total survey sample.
Survey respondents offer several reasons for increased
transaction costs. Those most frequently mentioned are "high
attorneys fees/too many lawyers" (cited by 26% of all queried), "costs
of expert witnesses" (cited by 24%), and "higher discovery costs"
(cited by 19%).
Plaintiff and Defense Attorneys The Main Culprits
Plaintiff attorneys are perceived to be the leading cause of
high transaction costs (cited by 47%), followed relatively closely by
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DRI Survey
Page 8
defense attorneys (cited by 40%). Insurance executives and
corporate counsel are especially likely to fault plaintiff attorneys for
these rising costs, whereas plaintiff attorneys are more apt to
attribute the problem to insurance companies and defense lawyers.
Attorneys Called Upon for Restraint
When respondents were asked to evaluate three suggested
changes in the litigation process in terms of their ability to
"significantly" reduce transaction costs, the action most highly favored
(endorsed by 83% of the total sample) is making improvements/
changes in "the manner in which defense and plaintiff attorneys
exercise restraint." Approximately three-quarters of the survey
sample also endorse making improvements/changes in "the discovery
process" (favored by 74%) and making improvements/changes in "the
manner in which judges manage cases" (endorsed by 73%).
Plaintiff and Defense Counsel Faulted Equally for Discovery Abuse
When it comes to discovery abuse, defense attorneys and
plaintiff attorneys are both thought to abuse the process -- and to do
so equally.
Insurance executives and corporate counsel are especially
likely to view plaintiff attorneys as the prime abusers of discovery,
whereas plaintiff attorneys are highly likely to put the blame on,
- more -
DRI Survey
Page 9
rather than share blame with, defense attorneys.
On a related note, more than half (54%) of the respondents
believe discovery accounts for upwards of 50% of all transaction
costs.
Controlling Discovery Has Widespread Support
Six specific methods to control discovery were suggested in the
survey and all are favored by at least a majority of the survey sample.
The most highly favored option (by 91%) is "requiring counsel to
negotiate discovery conflicts among themselves before seeking
resolution." The others, in order of preference, are: "requiring early
discovery conferences soon after the case is filed" (88%); "limiting the
number of interrogatories and depositions in certain types of cases"
(79%); "granting judges the discretion to impose some or all
discovery costs on the requesting party" (75%); "limiting the scope of
discovery to materials likely to be admissible in evidence" (64%);
and, "limiting discoverable information beyond that initially
exchanged to a standard of 'substantial need" (55% of the total
sample, but by only 39% of defense attorneys and 35% of plaintiff
attorneys).
To augment the above findings, DRI survey respondents were
asked to choose (from among three options) the one action that
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DRI Survey
Page 10
would most improve the discovery process. Equal percentages (40%
each) of respondents selected "greater exercise of judicial discretion"
and "restraint in the informal unwritten practices of attorneys
involved," with only one in six (16%) selecting "changes in the rules."
Clearly, then, most respondents want to improve the discovery
process through means other than rules changes.
Strong Support for More Active Case Management by Judges
Very few attorneys say they avoid judges or courts because of
forceful case management. In fact, majorities of all survey
respondents strongly support more active case management by state
court judges.
More specifically, 86% of respondents believe "judges should
schedule early and firm trial dates," an equal number favor "more
pre-trial and status conferences to monitor and limit discovery," and
83% favor "using lawyers or judges with special expertise in the
subject of dispute resolution as neutral evaluators at an early point in
litigation." In addition, 70% favor "evaluating judicial nominees in
part on the basis of their record as case managers," 63% favor
"greater use of protective orders," and 62% support "more frequent
use of sanctions."
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DRI Survey
Page 11
On a related note, almost three-quarters (72%) of respondents
believe "developing improved systems for classifying and grouping
cases," is a desirable method for better case management, with far
less enthusiastic support expressed for lengthening the official court
work day (44% favor) or electing or appointing judges to longer
terms of office (26% favor).
Bush Administration's Tort Reform Proposals Viewed Positively
Only 50% of survey respondents either are "familiar" with
(16%) or have heard of (34%) the President's Council on
Competitiveness' "1991 Agenda for Civil Justice Reform." Of this
group (half of the survey sample), upwards of 70% either "strongly
favor" or "somewhat favor" each of the six categories of reform
proposed in the report.
The category most "strongly favored" (by 57%) is "more
efficient trial procedures," followed by "discovery reform" (strongly
favored by 54%), "voluntary dispute resolution" (strongly favored by
50%) and "punitive damages reform" (strongly favored by 50%). The
other two reform areas - which call for "expert evidence reform" and
"enhanced incentives for encouraging meritorious litigation" - are
"strongly favored" by 40% and 38% of respondents, respectively.
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DRI Survey
Page 12
Other Reforms Endorsed
In addition to evaluating the various categories of reform
proposed in the "1991 Agenda for Civil Justice Reform," the DRI
survey evaluated seven specific (vs. categories of) proposals for
litigation reform. The one most highly favored (by 75% of the total
survey sample) is "creating multi-door courthouses" where several
methods of resolving disputes are available. A close second (favored
by 72%) is the concept that "compliance with government standards
should be considered a strong defense in a lawsuit and a guarantee
against punitive damages."
Majorities of the total respondent base also favor "more power
to authorize class action suits" (66%), "abolishing/modifying the
collateral source rule" (favored by 55%), and, "in environmental
cases, making awards based on the probability that the plaintiff's
disease was caused by exposure to toxic substances" (favored by
53%). The proposal least favored (by only 35%) is developing a scale
that sets dollar amounts for specific injuries when determining
damages.
ADR Mechanisms Under-Utilized
What do DRI survey respondents think about alternate
dispute resolution (ADR) mechanisms? Many believe they are used
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Page 13
too infrequently.
The ADR mechanism perceived to be most under-utilized (by
55%) is "requiring clients to attend settlement conferences."
Additionally, almost half (48%) say that "mini trials," "court-ordered
or annexed arbitration" (47%) and "non-binding arbitration" (47%)
are not used often enough.
Majority Support "Loser Should Pay" Concept
On a separate note, a solid majority (66%) of all respondents
- and a majority of those across all respondent groups, except
plaintiff attorneys - believes the idea of having losing plaintiffs pay
for the defense's discovery costs and other legal fees has some merit.
Comparable Views of State Vs. Federal Court Systems
A section of the DRI survey report compares respondents'
perceptions of the state civil court systems to perceptions of the
federal litigation system elicited in a 1989 survey of attorneys, federal
judges and corporate counsel sponsored by The Foundation for
Change. Based on this comparison, reactions to both systems appear
quite similar.
Respondents in each survey cite a moderate level of
satisfaction with each system, a growing tendency toward court
delays, and seriously escalating transaction costs, especially with
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DRI Survey
Page 14
regard to the discovery process. Moreover, respondents want
improvement at both the federal and state levels of civil justice and
prefer working within the current system - e.g. having attorneys
exercise more restraint and having judges exercise more judicial
discretion - to achieve needed improvements.
Among other DRI survey findings:
Asked to consider 10 different types of liability cases
and expected increases or decreases in case volume
over the next 10 years, 91% of respondents believe the
number of "hazardous waste" and "environmental
liability" cases will rise. Other areas of civil liability in
which most respondents anticipate increased case loads
are: "wrongful terminations" (cited by 81%) "mass toxic
torts" (cited by 68%) and "product liability" (cited by
62%).
o
Seventy percent (70%) of those queried find
transaction costs excessive in product liability cases;
65% find them excessive in medical malpractice cases;
60% find them excessive in environmental liability
cases; and 55% find them excessive in mass latent
injury torts such as asbestos.
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DRI Survey
Page 15
o
Judges are particularly supportive of passing on
discovery costs to the requesting party (94% favor
versus 75% of the total survey sample).
o
Judges do not use their sanctioning power often. On
average, the state civil court judges queried report
sanctioning attorneys (if their rules allow) twice in the
past five years. While nearly one in five (18%) say they
have not imposed sanctions, approximately one in 10
(11%) judges say they have imposed sanctions five or
more times in the past five years.
Accordingly, from the attorneys' perspective, their
median number of sanction-related experiences over
the last five years is also two per attorney interviewed.
While one-third (34%) have not worked in a situation
where sanctions were imposed, 17% were involved in
cases where five or more sanctions were imposed in the
last five years.
o
Compared to 55% of the total survey sample who favor
limiting discoverable information beyond that initially
exchanged to a standard of "substantial need," only 39%
of defense attorneys and 35% of plaintiff attorneys
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DRI Survey
Page 16
favor this option.
0
A majority (57%) of those surveyed believes that using
independent, court-appointed expert witnesses would
play a positive role in the civil litigation system.
- 30 =
Editors' Note: A complete copy of survey results is available on request.
A REPORT ON FOCUS GROUPS CONDUCTED ON STORYBOARDS
FOR THE
AMERICAN TORT REFORM ASSOCIATION
ADVERTISING CAMPAIGN ON LIABILITY ISSUES
PREPARED FOR
THE AMERICAN TORT REFORM ASSOCIATION
BY
ANDREW J. KELLY ASSOCIATES, INC.
FEBRUARY, 1992
SUMMARY OF FINDINGS
The campaign seemed effective in making the problem of
frivolous lawsuits and liability reform relevant to the
respondents. Following participation in the focus groups,
there was a significant increase in the number of people who
believed that they were very likely, somewhat likely or likely
to become a target of a frivolous, unnecessary lawsuit.
The campaign had the effect of motivating the targets to call
the 1-800 number. More than half of the respondents in
each focus group -- a high number given that focus group
participants are typically reluctant to commit themselves --
said they would call the 1-800 number to get more
information.
Usage of case histories created a personal awareness among
the focus group participants that they could be affected by
the lawsuit problem. However extreme the case histories,
respondents seemed, for the most part, to find them
ultimately credible. Some respondents said the message was
especially relevant to the small business owner.
Respondents wanted more information about the exact
nature of the remedy being offered to resolve the lawsuit
problem. Despite this uncertainty many of the participants
were still willing to call the 1-800 number to seek information
about solutions.
Many respondents did not know what the American Tort
Reform Association was, did not understand what a "tort"
was, and some seemed rather suspicious about the identity
and motives of the organization. When an alternative name
was used -- the Texas Center for Lawsuit Reform -- the
respondents seemed to feel more comfortable.
2
BACKGROUND
The American Tort Reform Association (ATRA) is developing a
campaign relating to civil justice reform. The purpose of the campaign is
to raise awareness of lawsuit abuse as a personal concern. The campaign is
also intended to identify and recruit supporters of reform proposals through
use of a 1-800 telephone number.
To assess the campaign's effectiveness in communicating the desired
message, and in order to further the development of the campaign
materials, four focus groups were conducted on February 13, 1992 in
Dallas, Texas. During the sessions, four video storyboards were shown. No
other campaign materials, e.g., fulfillment kit, print advertisements or direct
mail, were shown to the focus groups.
The four video storyboards used were: (i) "Louella Wilson," which
described an elderly woman aunt who was sued because she lent money to
her great nephew to purchase a car that was later involved in an accident;
(ii) "Exercise Equipment," which described a lawsuit where multiple people
were sued despite being irrelevant to the plaintiff's claim; (iii) "Iguana,"
which juxtaposed a frivolous suit beside a legitimate claim; and (iv)
"Sharks," which used footage of sharks to describe the aggressive behavior
of lawyers in pursuing frivolous cases and sizeable contingency fees.
METHOD
Four, one-hour focus groups were conducted. Each group consisted
of ten respondents. Respondents for the groups were men and women,
aged 30 to 65, who were at least high school graduates and whose annual
household income was at least $30,000. Each group had one Hispanic and
one black respondent. Two respondents in each group were from rural
areas. And, all of the participants claimed to be "activists" on social issues.
The screening questionnaire is attached.
Immediately before and after the focus group discussion,
respondents completed a self-administered questionnaire that rated the
likelihood of finding themselves in a number of problematic situations,
including "being the target of a frivolous, unnecessary lawsuit." The
questionnaire is attached.
After seeing the video storyboards, respondents shared their overall
thoughts and feelings, perceptions of the main message, likes and dislikes,
etc. They were also asked whether or not they. would call the 1-800
number featured in the advertising.
3
GROUP INSIGHTS
Overall, the advertising seemed to be effective in making the
problem of frivolous lawsuits and aggressive lawyering more relevant to the
target group and in motivating them to call the 1-800 number. The
effectiveness of the campaign is supported by the following evidence:
Heightening Awareness of the Issue
Results from the pre/post self-administered questionnaire showed
that before the group discussion, only six respondents (15 percent) said it
would be very likely that they would find themselves in this situation. After
the groups, the number tripled to 18 (45 percent). Given this 30
percentage point increase, the campaign appeared to make the problem
and concern over frivolous lawsuits a more relevant problem to the
participants.
As shown below, respondents also changed their views dramatically
regarding the concern about ever being the target of a frivolous lawsuit.
Before showing the advertisements, 15 thought being a target was very
unlikely. After the advertisements, only three respondents thought it very
unlikely.
"Being the target of a frivolous, unnecessary lawsuit."
Pre
Post
Change
Very likely
2
4
+2
Somewhat likely
1
7
+6
Likely
3
7
+4
Unlikely
8
11
+3
Somewhat unlikely
11
8
-3
Very unlikely
15
3
-12
4
Making the Issue a Personal Concern
The principal reason why more respondents after the discussion
believed that they could become the victims of a frivolous lawsuit seems to
have been the shock effect of the case histories shown in the campaign.
Respondents seemed to have been emotionally moved by the case histories
into an awareness that this could happen to them. However extreme the
cases may have seemed to some, at first, respondents ultimately accepted
them as credible indicators of the seriousness of the problem.
Respondents comments included:
"This instills fear," said one woman, "I feel pity for the people and
anger at the court.
"As bizarre as it may sound," said another woman, "we need to know
about the truth."
"Be alert," said one man, "prepare yourself. Every person is
vulnerable, from the poor to the rich."
"We need protection from predatory lawyers," said another man.
"It caught my attention as a business owner," said a small business
owner, "it could happen to me."
Translating Concern into Action
During the focus groups, respondents were asked whether or not
they would call the 1-800 number that was given in the advertising. About
half of the respondents of the four groups -- a fairly high number for focus
group situation, where people are typically reluctant to commit themselves
-- said they would call the 1-800 number to get more information. (In
three of the four focus groups, more than half of the participants said they
would call the 1-800 number.)
Many respondents said they would call the 1-800 number to get
more information about how to help reform the liability system, reduce the
number of lawsuits and avoid becoming involved in frivolous cases.
Respondents, however, seemed to want more information about the
solutions being offered by the 1-800 number. Typically, focus group
participants will wonder what will happen when they call, but in the present
case their desire to know more seemed especially strong, possibly because
finding a solution was felt to be so important.
5
POSSIBLE AREAS FOR IMPROVEMENT/CLARIFICATION
The focus groups identified a few areas of the advertisements where
by eliminating confusion or changing words or visuals, the commercials
could be strengthened.
Real Cases
The focus groups reaffirmed the need to emphasize the fact that the
cases used in the commercials actually happened. In the final version of
the advertising, the commercials should feature "supers" that clearly
indicate that the case history dramatizing the problem of frivolous lawsuits
is, in fact, a true case.
Nature of Solution
While the advertising seemed to be very effective in making the
problem of "lawsuit reform" meaningful and relevant to the targets and in
motivating them to take action, it seemed less effective in helping people
feel secure about the nature of the solution. To enhance communication
about policy remedies being offered, the focus group respondents seemed
to want more information about the 1-800 number, the information kit and
the sponsoring organization.
The 1-800 Number. The respondents seemed to want more
information about the solutions being offered once they called the 1-800
number. Despite their stated intention to call, many respondents did not
seem sure about exactly what would happen if they did so.
"There is someone out there," said one woman, "who wants to start
something to fight against this and I'd be interested in finding out
something more about it."
"It might have information on how to avoid getting in this
predicament."
"I'd be interested to find out what they're offering," said one man.
"The advertising presents a problem of too much litigation," said one
man, "and says there may be a solution to this problem, call the 1-
800 number."
"It's not clear whether you're going to get a sample letter to your
legislature or an insurance policy."
6
"If there was something in there," said a woman, that offered me
some hope that maybe something could be done, I would be more
likely to call."
A few respondents said they were suspicious about making the call:
"I have a real problem," said one woman, "with calling 800 numbers,
what you're opening yourself up to. I'd like to know who's behind it
and what they want you to do."
"Maybe they just want to get your name so they can bug you every
time you turn around."
The Information Kit. The information kit promised in the
advertising once the 1-800 number is called raised some questions. For the
most part, the questions related to the general interest in the remedies
being proposed and the overall purpose of the campaign. As one woman
put it: "What's in the packet?" These questions, however, generally did not
override the participant's interest in calling to request a packet. The
commercials probably should indicate more clearly what is contained in the
information kit.
Sponsoring Organization. Some respondents seemed to have
no trouble with the American Tort Reform Association as the sponsor of
the commercials and what its role would be in providing a solution to the
problem. For the most part, however, the participants wanted to know
what ATRA was and some seemed rather suspicious about the identity and
motives of the organization. ATRA was described by participants as a
lobbying group, a group of lawyers and a group of insurance companies.
Contributing to the uncertainty about ATRA's identity was the fact
that most respondents did not seem to know the meaning of the word
"tort." "Tort" was described as everything from a legal document to an
acronym. Only one participant among the four groups seemed to have any
idea about what the term meant.
Some comments heard included:
"Who's the American Tort Reform Association," asked one woman,
who's supporting it, who's paying for it?"
"I want to know what's behind it," said another woman, "I think
there are a lot of organizations that are nothing more than scams."
7
"Maybe it's an insurance company behind this," said one man, "I'm
guessing that maybe insurance companies are funding that particular
organization and maybe very legitimately."
"Texas Center for Lawsuit Reform" was presented to the
respondents as an alternative to ATRA and this was received significantly
better. "That's better," said one man, "It's common man's language." "That
makes a lot more sense," said one woman. "I like that better than the
other one," said another woman, "it's more descriptive, it deals with Texas
laws.
Tone of the Advertising. While respondents ultimately
grasped the campaign's message, there was at first some misunderstanding
among those who confused the storyboards with local television advertising
for litigating attorneys, particularly with the "Louella Wilson" commercial.
Since the groups expressed a strong distaste for these lawyer commercials,
any similarity could present an obstacle to clearly understanding the
message. It is important that the ATRA advertising be as distinctive in
tone and treatment as possible.
Specific Language. The advertising used the words "the
lawsuit racket" to designate the problems with the civil justice system.
Surprisingly few participants expressed any opinion about this term. When
it was commented on, the respondents were polarized in their reactions.
Some believed it was an accurate statement. Others thought it was too
negative. One man advised, "change 'stop the lawsuit racket' to 'stop
senseless lawsuits.' You'll never stop the racket."
Respondents also tended to differ from one another in their
reactions to the terminology "junk lawsuits." Some thought "frivolous" was
better and "junk" was too vague. Others thought "junk" was fine.
INDIVIDUAL COMMERCIALS: PARTICIPANT COMMENTS
"Louella Wilson"
This advertisement portrays an elderly woman who describes a
lawsuit involving her great-nephew who was in an automobile accident
several hundred miles from her home. The woman describes how she lent
money to her great-nephew to buy the car and because he did not have any
money, the plaintiff lawyers brought her into the case.
8
Hard to Believe But True. Many respondents seemed to
find the case history dramatized in "Louella" to be hard to
believe, even after they were told that it was, indeed, true. "I
didn't know they could sue somebody just for lending money,"
said one woman. "It doesn't look legal to me," said another.
However far-fetched the situation seemed, respondents
nevertheless were ready to accept it as true. "But is this
reality," said one woman, "and we just don't want to hear?"
"You could be not even vaguely familiar with something and
you could find yourself dragged into a lawsuit," commented
another woman: "It's far-fetched, but it could happen." "You
can get sued for everything in Texas," said another woman,
"this is very believable to me." "There are a lot of things that
can happen," said one man: "you never think of getting sued
because of something so remote."
Not Relevant in Texas. In every group, people pointed out
that the chances that someone would lose their home in
Texas were practically nil. "It's very hard in Texas to take
someone's home," said one woman, "because we have the
Homestead Act here." "In Texas," explained one man, "we
have the homestead laws. They can't take away your home."
An Emotional Approach. There seemed to be a feeling
among nearly all respondents that "Louella" took an
emotional approach to the problem of frivolous lawsuits.
Most seemed to feel that this was effective. "You feel sorry
for the little old lady," said one woman. "They're going for
your heartstrings," said one man. "A lot more people would
sympathize toward that approach," said another man.
"Exercise Equipment"
In this advertisement, several people are presented who were sued
in a lawsuit involving an accident with exercise equipment that injured
someone. Each of the people portrayed in the commercial describes how
they were sued despite having limited or no relationship to the health club
where the accident occurred.
Hard to Believe But True. Many respondents seemed
astonished that the situation depicted in "Exercise
Equipment" could actually happen. "The idea of suing all
these people!" said one woman. "Is this a fact that this
9
happened in Texas?" asked another, "it sounds made up."
"When you have multiple parties like that," said one man, "it
seems a little remote."
Nevertheless, respondents ultimately accepted the reality of
the situation. "There's so much crap in court," said one man,
"things like that happen." "Lawyers go after anyone they
possible can," said another man, "anyone that seemed to have
the money, even if they were somewhat remotely connected
to whatever the lawsuit was all about. I think these are valid
points. They appear to me to be very real and these things
could happen."
0
Heavy-Handed Treatment of the Lawyer. The treatment of
the lawyer in "Gym" seemed to some respondents to be
somewhat overdone. "You almost expect the lawyer to
cackle," commented one woman.
"Iguana"
This advertisement juxtaposes a frivolous case beside a legitimate
claim. The frivolous case involves a woman who sued her veterinarian for
pain and suffering following the doctor's treatment of a pet iguana. The
accident. legitimate case involved a woman who was injured in a slip and fall
o
Striking a Chord. Some respondents seemed to feel that
compared to "Louella" and "Exercise Equipment", "Iguana"
made a more effective communication. "This seems to be
more truthful," said one woman, "because the courts are
backed up for months and months and months. It's more
credible. It seemed more likely that someone is waiting."
"You continually hear about backups in courts," agreed
another woman. "I'd be more likely to respond positively to
that one," said one man, "because it's hitting at the system."
"Here was a person who needed her day in court," said
another man: "That would get me going."
Some seemed to like this approach because it offered a
clearer solution than "Louella and "Exercise Equipment". "It
showed a positive result," said one man, "it presents a
problem of too much litigation and says there may be a
solution to this problem, call the 1-800 number."
10
The Best Example? The one element in "Iguana" that
brought respondents up short was the iguana itself. "Get rid
of the iguana," advised one woman, "who's going to keep an
iguana?" "I don't like that one at all," said another woman,
"It's not realistic. How many people have pet iguanas."
"Sharks"
This commercial shows real footage of sharks as the voice over
describes several frivolous lawsuits where lawyers received almost forty
percent of the award.
Attention-Getting and Amusing, If Perhaps Too Graphic.
"The message was good," said one woman, "but they could do
without the sharks eating meat." "It's a shocker," said another
woman, "and it caught your attention." "Too much,"
commented another woman.
"It tells it like it is," said one man, "but it's a little too violent."
"It's too extreme," said another man, "and the visual image
overwhelms the text." "It's funny," said yet another man, "but
it's hard to take seriously."
R
The ROPER ORGANIZATION Inc.
205 East Forty-Second Street
New York, New York 10017
(212) 599-0700
Fax: (212)867-7008 or 687-2102
Date: 2/25/92
Job #:
To: Eric Anderson
Company: Office of the White House
Action Required:
Fax #: (202) 456-7044
URGENT - Notify recipient
From:
Holly Heline
Call to confirm receipt
Number of pages to follow:
4
Response requested
MESSAGE:
Mr. Eric Anderson
Office of the Vice President
(202) 456-7044
Dear Mr. Anderson:
Thank you for your recent inquiry into ROPER REPORTS data on liability
lawsuits. I am enclosing an August 1991 article from Roper's newsletter, The Public
Pulse, on that topic. Along with the article, I have included a data supplement with
the national findings cited in the article.
The poll, taken in March 1991, consists of 2000 face-to-face interviews
conducted with a representative sample of adults aged 18 and over.
Please contact me if you would like further information.
Sincerely,
Hory Hiline
P.S. Dur Roper Reports service offers these Findings
as well as numerous other questions, run by various
dem ographic If you do not groups, receive inc. all luding the pages party or cannot affiliation read and the copy, ideology
please contact The Roper Organization (212) 599-0700
BUSINESS AND LAW
To Sue Or Not To Sue? Public Backs Liability Reform
I
NHIS RECENT APPEARANC BEFORE the American Bar
Association, Vice President Dan Quayle presented a
Public Favors Limiting Monetary Awards
strong case for reforming the nation's civil justice system.
For Most Types Of Liability Claims
Armed with a lengthy list of proposals to temper a "litigation
oppose limits
favor limits
happy" America, as well as some pointed criticisms of the
nation's glut of lawyers, it is not surprising that his case fell flat
punitive damages
among fellow members of the legal profession.
Yet the jury of public opinion may come down on the side
of Quayle in the case for legal reform. Disgruntlement with
pain & suffering
the legal profession has grown markedly in recent years (See
The Public Pulse, April 1990). Escalating numbers of liability
lost income
lawsuits, coupled with extremely high jury awards in many
cases, have undoubtedly fueled the public's disaffection.
At the heart of Quayle's crusade is the notion that Ameri-
medical expenses
cans have placed themselves at a competitive disadvantage
with other countries by incessantly engaging in costly and
50%
30
10
0
10
30
50
70
time-consuming litigation. According to a recent report issued
by the President's Council on Economic Competitiveness, on
caps on compensation for pain and suffering, and half wou
which the Vice President based his address, overuse and abuse
limit amounts granted to cover lost income. The public is spl
of the legal system costs Americans an estimated $300 billion
however-47% to 47%-on the issue of whether to lin
annually. The report also argues that competitiveness is stifled
monetary compensation for medical expenses.
because the product liability insurance costs borne by Ameri-
Currently Americans are divided as to whether most li
can companies are frequently 20 to 50 times greater than those
bilility lawsuits are justified (43%) or unjustified (45%
shouldered by foreign competitors.
Hence, although public support exists for measures whi
Many Americans apparently share Mr. Quayle's frustra-
would lower the costs of lawsuits once they are in progress,
tions about our "litigious society": Nearly half believe them-
is unclear whether Americans would support one of the Vi
misk)
selves to be personally affected by large jury awards made in
President's proposals intended to discourage people fro
both product liability cases (46%) and medical malpractice
starting lawsuits in the first place. Quayle has proposed th
suits (also 46%). And many feel that the liability system has
losers in liability cases should pay all legal costs for bc
spiraled out of control. By a margin of nearly 3 to 1, more
parties, arguing that Americans would think twice before suir
Americans agree the number of liability lawsuits has gotten
if faced with the prospect of paying legal costs. But his criti
"way out of hand" because people are always looking for a
respond that even parties with reasonable claims would
culprit whenever something bad happens (62%), than say most
inhibited from enforcing their legal rights, resulting in mc
liability suits are necessary to protect consumers from the
uncompensated victims and fewer incentives for companies
"careless actions of powerful business corporations" (23%)
make safe products. According to this argument, the avera;
Moreover, when asked what the major effects of liability
American would sacrifice the unconditional right to sue-
lawsuits are, the public's sensitivity to costs is crystal clear. In
the advantage of big business.
their view, the number-one result of liability lawsuits is to
Already the public finds the liability system ineffective
enable lawyers and their firms to make more money than they
serving the ends it is supposed to: Fewer than half think th
deserve (70%). Majorities also think liability litigation results
litigation results in fair punishment for guilty parties (42%)
in higher taxes (61%) and higher prices for consumer products
just compensation to victims (40%). And only a slim majori
(65%) because government and manufacturers shift the burden
think the current system encourages companies and individ
of rising insurance rates onto the public.
als to act more responsibly in order to avoid being sued.
Consequently, it should come as little surprise that wide-
proposal thatcould make these ends even harder to achieve W
spread support exists for Quayle's proposal to place caps on
not likely receive the same widespread support as those th
monetary compensation for punitive damages in liability cases
would cut costs but preserve the basic right to sue.
that work their way up to the federal courts. 70% of Americans
Nonetheless, the Bush administration has clearly chos
favor placing limits on awards for punitive damages. Going
an issue that piques the public's interest and appeals to a stror
even further than the Vice President, two-thirds also support
desire to rein in the skyrocketing costs of liability litigation
Page Six
The Public Pulse
August 1
Feb. 25 '92 17:19
THE ROPER ORGANIZATION
FAX +212-867-7008
P. 4
27
ROPER REPORTS 91-3
questions
65. The number and size of liability lawsuits for such things as malpractice, personal injury, the
and product liability have increased in recent years. Do you think the increase in
number and size of awards in these cases are fully justified, mostly justified, mostly un-
justified, or totally unjustified?
Fully justified
5%
Mostly justified
38
Mostly unjustified
35
Totally unjustified
10
Don't know
12
ROPER REPORTS 91-3
31
questions
66. When a jury determines how much money to award a person who wins a lawsuit, the Jury
must do so by awarding money in four quite different categories. The first (second, third,
last) of these categories is (read Item). Do you think a jury should be allowed to award
whatever it thinks is appropriate, or do you think there should be some upper limit on
what a Jury can award for (read words in CAPS
What-
Don't
ever Limits know
a. Money to cover MEDICAL EXPENSES
47%
47
7
b. Money to cover LOST INCOME because the Injured person
can't work
42%
50
8
c. Money to compensate for the PAIN AND SUFFERING the
person experienced, which is separate from medical expenses
26%
65
8
d. Money for PUNITIVE DAMAGES-that is additional compen-
sation to the injured party in order to punish the individual
or company judged to be at fault
23%
68
10
rebies = 17:20
INC RUPER URGHNIZATION
+212-867-7006
P. 1
ROPER REPORTS 91-3
29
questions
68. Liability lawsuits can have a number of different effects on society-some good and some
bad. (Card shown respondent) Here is a list of some things that might be caused by
liability lawsults. For each one, please tell me if it is a maior effect of liability lawsuits,
or a minor effect. or not really an effect that liability lawsults have on society?
Major
Minor
Not an
Don't
effect
effect
effect
know
f. Lawyers and law firms make much more money
than they deserve from all the liability lawsuits
70%
17
5
8
d. Consumers end up paying more for products
since manufacturers pass the high costs of
liability Insurance on to their customers
65%
21
5
9
g. People often start frivolous lawsuits because
awards are so big and they have so little to
lose
63%
21
4
11
e. People end up paying higher taxes
because schools and government have
to pay high liability Insurance premiums
61%
23
6
10
c. Companies and individuals act more
responsibly to avoid being sued
51%
27
12
11
b. Guilty companies and individuals get fair
punishment for their harmful behavior
42%
33
15
11
a. Victims get fair compensation for what
they have suffered or lost
40%
35
14
11
trend
FEDERAL CIVIL JUSTICE REFORM
TALKING POINTS
1. General Talking Points
2.
General Background/Philosophy
3. "How This Helps the Average Litigant"
4. "Discovery"
5. "Expert Evidence Reform"
6. "Reform of Unlimited Punitive Damages"
7. "Modified English Rule for Attorney's Fees"
FEDERAL CIVIL JUSTICE REFORM
Background
o America is awash in a sea of litigation:
Federal court filings up 300% in the last 20 years;
With 5% of the world's population, the U.S. has
over 70% of the world's lawyers; and
Almost 50% of all businesses have taken products off
the market due to the threat of lawsuits
Working Group
Council established a Working Group chaired by Solicitor
General Ken Starr to address this "lawyer tax."
Instructed to recommend meaningful changes, not more studies:
Reduce costs and delay in the system;
Try to make the system more simple and final; and
Encourage people to resolve disputes without going to court.
No reform should limit access to the courthouse, but should
make parties evaluate their cases with care.
Council Recommendations
Council has endorsed 50 reforms.
Some of the recommendations introduce market-type incentives:
Loser Pays" or English Rule for attorney's fees;
Requiring parties to pay for excess discovery;
Limiting punitive damages; and
Requiring experts to use only "widely accepted" theories
(no junk science).
Implementation
Will require a combination of legislation and rules changes.
damages). Can be done at state level as well (especially punitive
recommendations to itself.
Federal Government will issue an Executive Order applying
GENERAL BACKGROUND AND PHILOSOPHY
Why did the Council look at Civil Litigation Reform?
1. Litigation costs too much
2. Too many frivolous suits keep meritorious suits from being
decided.
3. Needless Delay = Wasted Money
4. American companies are placed at a competitive disadvantage
What were the Council's objectives?
1. Reduce costs and delay
2. Open the courthouse doors
3. Insure people their day in court, not endless delay
4. Look at PROCEDURE: Do Not Alter Substantive Law
5. Look at the incentives for litigation
- apply market discipline
6. Give People greater CHOICE
Who worked on the Reform package?
1. Department of Justice
2. Department of Commerce
3. Council of Economic Advisers
4. White House Staff Offices
5. Office of the Vice President
HOW THIS HELPS THE AVERAGE LITIGANT
Disputes will be settled earlier -- injured party will receive
compensation with less costs and delay:
1.
Pre-suit notice provides opportunities to resolve
dispute prior to filing lawsuits.
2.
Reforms encourage settlement. Parties will be required
to attend settlement conferences, thereby overcoming
posturing by some lawyers.
3.
Other steps to reduce court backlogs will make the
courts more accessible to the litigants (case
management recommendations, etc.)
Parties will be given more choice in resolving their disputes:
1.
"Multi-door courthouses" will provide quicker and less-
costly alternatives to trials. Alternative Dispute
Resolution options, such as mediation, can achieve
effective results without the expense of trial.
2.
Participation in ADR will be voluntary, so those
wanting complete court proceedings will be able to go
to trial.
Litigation will be less costly:
1.
Each side will be required to provide basic information
up front. It will no longer be necessary to make a
formal request for names of witnesses, location of
documents, etc.
2.
Gamesmanship will be discouraged. The parties must
plan their discovery requests within pre-set numerical
limits. Unbridled discovery requests will be
discouraged, because either the court would have to
authorize additional inquiries not in the discovery
plan or the requesting party would have to pay the
opponent's "production costs."
Prevailing parties will be made "whole"
1.
Usually the winner doesn't really win, because he or
she still has to pay an attorney. Under the Council's
"Loser Pays" recommendation, in some instances the
loser will pay the winner's attorney's fees.
2.
This experiment is limited to federal court cases where
citizens of different states are suing each other, so
the parties can always go to state court. Also, the
loser will never pay more than what he spent on fees.
DISCOVERY
Recommendation: Reform the Pre-trial Discovery Process
1. Require Disclosure of "Core Information"
(Parties must disclose basic information, such as the
names and address of people with knowledge relevant to
the dispute and the location of documents. This would
make it easier for parties to plan their discovery need
and eliminate some gamesmanship.)
2. Presumptive Numerical Limits on Discovery/
Pay-as-you-go for Additional Discovery
(Parties must meet to plan their discovery needs
subject to pre-set ceilings on the amount of inquiry
allowed. Additional discovery would always be
permitted as long as the requesting party paid the
other side's "production costs." Judges would have
some discretion to adjust the limits and review the
costs.)
3. Penalize Abusive Discovery
(There should be greater penalties for discovery abuse,
or when a party withholds information. The penalties
should be uniform and mandatory.)
4. Loser Pays in Discovery Motions
(Parties should be encouraged to resolve their
discovery disputes without court intervention. If it
becomes necessary for the court to decide, the losing
party should be required to pay the winner's costs and
attorney's fees.)
5. Retain Protective Orders
(Trade secret and other confidential information
necessary for disposition of a lawsuit should not be
used outside the case. Lawsuits should not be a
vehicle for industrial espionage.)
MODIFIED ENGLISH RULE FOR ATTORNEY'S FEES
Recommendation: Adopt a "loser pays" rule for attorney's fees
in federal diversity cases.
1. Loser pays the Winner's Attorney's Fees
(This would encourage parties to evaluate their cases
with greater care. Plaintiffs would consider whether
they have a realistic chance of prevailing and thereby
be discouraged from bringing frivolous or harassment
suits. Defendants, too, would be encouraged to pay
meritorious claims, as maintaining unreasonable
defenses would result in paying the plaintiff's fees.)
(The rule also is fair. It makes the winner whole.)
2. Limitations:
a. Federal Diversity Cases Only
(The "experiment" would apply only in federal court,
and only when citizens of different states are
contesting issues of state law. This means that cases
brought under federal and state statutes, i.e. civil
rights, environment, etc., would not be discouraged.
It also means that the parties would have the option of
going to state court if they did not want the loser
pays rule.)
b. Limited to amount loser spends
(The most the loser would be required to pay is the
amount he has spent on his own case. This means that
if he spends $5,000 to bring a suit and the defendants
runs a $500,000 bill, the loser would be required to
pay the winner $5,000.)
C. Judicial Discretion
(The court would have the discretion to reduce the
loser's obligations for good cause shown.)
REFORM OF UNLIMITED PUNITIVE DAMAGES
Recommendation: Develop rational and consistent approach to
punitive damages.
1. Eliminate Prayers for Specific Dollar Amounts
(Plaintiffs currently make astronomical requests for
damages. These requests, which inflame the jury,
should be eliminated.)
2. Bifurcate Trials
(The jury would award punitive damages -- but in a
separate proceeding after liability has been
determined. This would insure that imposing punitive
damages is a measured decision, not one of passion.)
3. Require Higher Standards of Proof for Awards
(Because punitive damages are "quasi-criminal," an
award should be predicated on standards of proof
requiring some form of intent.)
4. Judges Award Amount of Punitive Damages
(After the jury finds that punitive damages are
appropriate, the judge would determine amount that
should be award. This would remove some prejudice from
the system.)
5. Tie Punitive Damages to Amount of Actual Damages
(Punitive damages would be capped at one times the
actual damages. An injured party would still be
entitled to full compensatory damages.)
EXPERT EVIDENCE REFORM
Recommendation: Reform the Rules Regarding Expert Witnesses
1. Require "Widely Accepted" Theories
(Theories must be "widely accepted" by others in the
field before a witness can testify as an expert. The
expert's "theory" need not represent the majority view,
but it must be independently corroborated. Independent
corroboration will lead to more "mainstream" science
because the parties will desire to avoid hiring
multiple expert witnesses.)
2. Ban Contingency Fees for Expert Witnesses
(Experts should be impartial aides in assisting the
court find facts. However, when an expert's
compensation is directly related to success at trial,
his objectivity must be called into question. Experts
should not become advocates.)
3. Require Courts to Find that Experts are Qualified
(Judges should be active in protecting their courtrooms
from spurious experts.)
4. Require Experts to Provide Credentials and Theories
(Currently, parties cannot take an expert's deposition
without leave of court. Experts should be subject to
the same types of discovery as other witnesses.)
5. Avoid Attempts to Require Court-Appointed Experts
(Some suggest that only the judge should be able to
seek expert testimony. It is important that the
parties retain the ability to call experts (subject to
the Council's restrictions). expert.
QUESTIONS AND ANSWERS
DISCOVERY REFORM
Is it "fair" to limit discovery?
80% of cost and time in a lawsuit is discovery
discovery is often used as a "weapon" not to find facts
the proposals allow for sufficient "free" discovery
Why are you making people pay for discovery?
provides incentives for thorough case evaluation
discourages discovery as a weapon
provision can be waived by court for "good cause"
How did you determine discovery limits?
we don't suggest specific numerical limits
many federal judges already set limits on interrogatories
How will disclosure solve discovery problems?
provides basic information needed to plan the case
eliminates unnecessary filings and delay
Why is discovery needed at all?
there is some benefit in "trial by truth" but it would
require more trials, and the system is already overloaded
discovery is useful for the parties to assess their cases
EXPERT EVIDENCE
What do you mean by "widely accepted" theories?
we would eliminate "junk science" that has no foundation
a consensus is not required, only corroboration in the
scientific community
Won't this limit "good" cases?
we aim at the "expert for hire" who changes opinions for the
highest bidder
if there is substantial scientific support, the expert can
still testify
ENGLISH RULE
Won't this limit access to the courts?
plaintiffs must choose to use the English Rule by bringing
their cases under federal court diversity jurisdiction
if plaintiffs don't want the English Rule, they can go to
state court
Isn't the English Rule unfair?
"loser pays" is similar to equitable "make whole" remedies
the prevailing party is restored to his original position
the English Rule will deter frivolous lawsuits, but because
it pays attorneys fees, it provides an incentive for
plaintiffs to pursue meritorious claims
(Critics almost always assume that the plaintiff is an indigent
victim who will lose the lawsuit. Ask them if the rule is unfair
when the indigent victim wins.)
Why is it only a test?
the proposal is a major change to the legal system
should make incremental changes
PUNITIVE DAMAGES
Isn't the proposed limitation on punitive damages unfair to
victims?
punitives are societal deterrents - not compensation
victims would still receive all compensatory damages
punitives still available, subject to 1x cap
Is the proposed reform workable?
proposal, unlike common law, is coherent and rational
several states have similar limitations
ADR
Would ADR really increase access to the courts?
ADR provides quicker and cheaper decisions
people have more choice for resolving disputes
Isn't ADR really just another bureaucratic layer standing between
litigants and a judge?
proposals only require parties to consider ADR -
actual use of ADR is purely voluntary
encourages parties to evaluate their cases
IMPLEMENTATION
What are your next steps?
the Justice Department is drafting legislation
we will be working with the Congress and the courts
also with lawyers who want to help change the system
How does this differ from existing legislative proposals?
we recommend action, not further study
we introduce "market-type" discipline into the procedural
system
Will the bill/rules changes pass?
we are optimistic
the time has come for change
MISCELLANEOUS
What are you saying about the professional prospects for aspiring
lawyers such as ourselves?
the law is a noble profession
don't forget professional obligations to client and to the
legal system
legal training should be used to resolve, not prolong,
disputes
there will always be a need for competent, hardworking, and
client-oreinted counsel
What about the ABA reaction? - Weren't you asking for a hostile
reception?
the ABA represents many of America's lawyers
most lawyers acknowledge there is a problem, and I heard
from many of them both in Atlanta, and afterwards
some disagreement is always expected
I think that when the ABA actually reads the report, they
will be of assistance
Why did you "lawyer bash" at the ABA?
I didn't lawyer bash
I told people the truth - that the legal system takes too
long and is too costly
I honestly believe that lawyers will be part of the solution
Where did you get your data/support?
the Justice Department did much of the work
the Solicitor General spearheaded the project
What is the true cost of the civil justice system?
we've asked several people what the system really costs
one estimate is $80 billion in direct costs and $300 billion
in indirect costs
difficult to calculate cost of time and lost opportunities
reported figures have the costs somewhere between what
America spends on cars and on food.
Are market incentives appropriate in the legal process?
people respond to market incentives
market discipline works in regulation, and will work here
What do outside experts think about these reforms?
we consulted many experts in preparing the reforms
most think that the package is solid and workable
more importantly, I've heard from the actual consumers of
legal services, and they are saying "this is needed, this
will help"
OF JUSTI PRO VILLISM
Office of the Attorney General
Washington, D. C. 20530
*
73
April 13, 1992
Robert H. Simon
Research Assistant
Office of Speechwriting
The White House
OEOB - Room 111 1/2
Washington, DC 20500
Dear Bob:
The compilation and article I mentioned are enclosed. If
you need more help, please give me a call.
Very truly yours,
Dew Sact
Eugene Scalia
Assistant to the Attorney General
BusinessWeek
DATE: 4-13-92
PAGE: 60
TOO MANY LAWYER:
GUI
LTY!
AND TOO MUCH
LITIGATION. HERE'S
A BETTER WAY
B
eing a lawyer at Motorola Inc. is
tough these days. While attor-
neys at other companies might
churn out lawsuits against customers or
suppliers with the push of a button,
Motorola's 100 in -house lawyers must
seek all possible alternatives to landing
in court: arbitration, mediation, even pri-)
vate judges who settle disputes for a
fee. After all this, Motorola lawyers who
still want to go to trial must fill out a
form estimating legal costs, likely dam-
ages, and chances of victory. "The form
is so onerous that they gladly work out
an alternative settlement rather than
screw around with that form," says Gen-
eral Counsel Richard H. Weise, the ar-
chitect of Motorola's resolution program.
If that sounds like an unproductive
use of an attorney's time, think again.
Since starting the program in 1984, alter-
native dispute-resolution techniques
have slashed Motorola's litigation costs
by as much as 75%. It's that dramatic
an impact," Weise says.
'LOST OPPORTUNITY.' Motorola's obses-
sion with finding new ways to settle dis-
putes isn't typical. But it is rapidly be-
coming so. After years of mounting
frustration, disdain for the U.S. legal
system is now so intense that corpora-
tions are taking the law into their own
hands From General Mills to General
Motors, companies are fighting their
battles privately, through such innova-
tive techniques as rent-a-judge services
and minitrials. Pacific Gas & Electric Co.
even pays for its opponents to sit down
with a mediator. "What's worse than the
money wasted on the court system is the
lost opportunity to find solutions," says
Howard V. Golub, PG&E's general coun-
sel. "Our energies should not be spent
on recreational litigation."
The legal revolt among corporations is
only one facet in an unprecedented re-
thinking of the U.S. civil justice system.
Every branch of government is pushing
some package of legal reform. Congress
is overseeing "advisory committees" in
every federal court to try to speed up
cases and cut costs. Judges are over-
hauling the federal rules of civil proce-
46
cont
companies spend on their own legal de-
dure. Even the White House is respond-
vidual liberties. "A broad statement that
partments-and what they must pay to
ing to the business backlash. Through
going to court is evil is very destructive
resolve suits. Since 1971, the number of
the President's Council on Competitive-
to our democratic process," says Pamela
attorneys has almost tripled, to
ness, the Bush Administration is promot-
Gilbert, legislative director for Ralph
780,000-far more per capita than in
ing an array of probusiness reforms, in-
Nader's Congress Watch. "We should
Britain or Japan (table). "The prime ben-
cluding such controversial measures as
take pride in our legal system."
eficiaries of the legal system are law-
forcing losers to pay the victors' legal
But even Gilbert agrees that parts of
yers, not victims and not society as a
bills. The debate has inflamed the
the system are breaking down. Ameri-
whole," says Ralph Warner, co-founder
passions of everyone from defense law-
ca's legal bills are
of Nolo Press Inc., a Berkeley (Calif.)
yer Alan Dershowitz to legal scholars
going through the
publisher of legal self-help books.
such as RAND researcher Deborah
courthouse roof.
The overloaded courts are only mak-
Hensler to lawyer
and best-selling au-
IS LOADED
Last year, law
ing matters worse. Since 1960, the num-
firms grossed
ber of civil suits in federal courts has
thor Scott Turow.
THE WITH LAWYERS.
more than $100
soared 300%, even after dropping from a
Even the tort sys-
billion, estimates
LAWYERS PER 100,000
peak in 1985. In the state courts, civil
tem, where injured
a
Commerce
suits have jumped by more than 4 mil-
parties sue for dam-
Dept. report.
lion in the past six years (table). And
ages, stands a better
U.S.
That doesn't
that's on top of an exploding backlog of
chance of being
102.7
include what
criminal actions that push business cases
reined in. Congress is
307.4
to the back of the line. "You can't di-
again mulling a uni-
JAPAN
vorce the civil courts from the criminal
form product-liability
law to replace the patch-
GERMANY
12.1
courts," says Sol Wachtler, chief judge
of the State of New York. "There are
work of state laws and
82*
delays because of the clog in criminal
make it tougher for plain-
cases."
tiffs to win damages. States
damages and pain-and-suffer-
CONTINUEIR TO RANKS
DRAINING. Executives fear the U.S. le-
are tightening up on punitive
gal system is crippling America's ability
to compete in the global marketplace. A
ing awards. And they' finding
LAWYERS SWELL
BUSINESS WEEK/Harris Poll of top exec-
faster and cheaper ways to resolve medi-
utives at corporations drawn from the
cal malpractice suits, such as by compen-
1971
BUSINESS WEEK 1000 (page 66) found
sating injured patients regardless of
355,242
1980
that 62% of those surveyed believe the
whether the doctor is at fault. "There's
a very strong popular revolt over exces-
542,205
U.S. civil justice system significantly
1990
hampers the ability of American compa-
sive lawyering, excessive delays, and
750,000
2000
nies to compete with Japanese and Euro-
excessive costs," says Martin F. Con-
pean rivals. A striking 83% of those
nor, president of the American Tort
7
"ESTIMATE
MILLION*
polled say the fear of lawsuits has more
Reform Assn. "When you add it all
impact on decision-making within their
up, it's impressive."
company today than it did 10 years ago.
OVERBALANCED SCALES? Yet many wor-
AND so DOES THE
"The American economy can no longer
ry that a headlong rush for legal reform
NUMBER OF LAWSUITS
afford this process," says Ronald L. Da-
could do more harm than good. Some of
vis, assistant general counsel at Dow
the proposals threaten the cornerstones
STATE COURT MILLIONS FILINGS
Chemical Co. "The system's inefficien-
of the U.S. legal system: an abundance
cies are eating away at our industrial
of individual rights and open access to
1984
1986
base." He says Dow Chemical spends
courts. Critics fear that by making it
"in excess" of $100 million a year on
tougher to sue, limiting access to evi-
14.1
15.5
legal services and liability insurance.
dence before trial, and even penalizing
Just how much litigation drains the
those who lose, reformers may be push-
1990
economy is a matter of fierce debate.
ing the pendulum too far in the other
1988
Vice-President Dan Quayle claims that
direction. The critical question is how to
16.6
18.4
Americans spend more than $80 billion a
make the legal system more efficient
year on direct litigation costs and
and less costly while safeguarding indi-
STATE
ASSM.
higher insurance premiums. Indirect
costs, including the expense of avoid-
ing liability, he says, reach $300 bil-
lion annually-about 1.8% of the na-
tion's $5.7 trillion gross domestic
product. But legal scholars such as
Marc S. Galanter, a professor at
the University of Wisconsin's
school of law, attack those fig-
ures as "the product of casual
speculation." Instead, he cites a
1986 study by RAND's Institute
for Civil Justice. It put the
cost of the U.S. tort sys-
tem-including court ex-
47
cont d
Cover Story
penses, legal fees, and the value of lost
sue" mentality. Dow Chemical gets hit
work-at between $51 billion and $58
with some 2,000 new product-liability
billion.
claims in the U.S. every year, but only]
Whatever the tab, America's compa-
about 20 such claims are filed against it?
nies are fed up with watching their legal
in the rest of the world, says Davis. He
bills erode profits. Some are locked in
notes that while many European coun-
unproductive court brawls with rivals.
tries have adopted broad U. S.-style
Four-year-old Cyrix Corp., a Richardson
product-liability laws, many lack such
(Tex.) semiconductor maker, has been
things as contingency fees, discovery,
battling Intel Corp. In December, 1990,
and jury trials. The Midland (Mich.)
Cyrix filed an antitrust suit accusing
chemical maker spends an average of
Intel of an anticompetitive campaign to
"If American usinesses
$250,000 just to get to trial. Says Davis:
keep Cyrix co-processors out of the mar-
"Even when we win, we don't win."
ket. A month later, Intel sued Cyrix for
are concerned about the
Many executives say they settle even
patent infringement. While the judge
frivolous suits to avoid the legal fees.
has yet to rule in that case, Intel just
burdens of legal expense,
Others settle, they say, to escape the
filed another patent-infringement suit
they could control their
long-shot risk of punitive damages. The
against Cyrix in response to reports that
claims are "used to extort money," says
Cyrix was about to introduce a chip that
Robert W. Pommerville, general counsel
mimics Intel's top-of-the-line 486
DEBORAH HENSLER
of Beverly Enterprises Inc., a leader in
microprocessor. The Cyrix chip was in-
RAND researcher
the nursing home industry. Pommerville
troduced on Mar. 30 (page 95).
studies civil litigation trends
says it takes "a real gutsy individual" to
SUE CITY. Other companies, meantime,
go to trial on punitive-damages claims,
are shunning domestic markets out of
because juries are so unpredictable.
fear of product-liability suits. Biomet
its own legal costs, regardless of the
But settling can bring its own head-
Inc. sells spinal implants for back prob-
outcome. But Britain and other countries
aches. In 1984, Alan F. Shugart, CEO of
lems virtually all over the world-with
force losers to pay the winners' fees as a
Seagate Technology, was accused in a
one glaring exception. "We don't feel
way to discourage frivolous suits. Amer-
class action of artificially inflating the
confident in the U.S. with such a prod-
ican companies spend as much as 80% of
stock price. Attorneys for the Scotts
uct," says Dane A. Miller, CEO of the
their legal bills on discovery, which lets
Valley (Calif.) disk-drive maker persuad-
Warsaw (Ind.) orthopedics company.
parties review an opponent's evidence
ed him to settle in 1991, for $9 million,
"Our legal system in America is totally
before trial. In Japan, discovery doesn't
he says. Two subsequent suits were
out of control."
exist (page 64).
filed in 1988 and 1991, which copied the
Countries such as Britain and Japan
The hallmarks of the U.S. legal sys-
class action verbatim-from the wording
hold down costs by making it more diffi-
tem-jury trials, contingency fees, and
of the charges to the misspellings. Both
cult to sue and harder to win. In the
punitive damages-encourage the "I'll
U.S., each side in a lawsuit usually pays
EARLY NEUTRAL
EVALUATION
COURT-ANNEXED
ARBITRATION
After o suit is filed,
a private attorney
THE COURTHOUSE
meets with the parties.
Parties must present
The attorney hears
their cases to experts
OF THE FUTURE
both sides and
or retired judges.
assesses the merits
The parties can
to promote fast
accept the decision
settlements
For seek
DO trial
Parties hire private
decision makers,
Parties headed
FREE
often refired judges,
Porties sem tip their
to court are now choosing
settle their cases.
cases before a judge
from an array of public and private
whe porties pay
jurors and others
alternatives for resolving disputes. By the year
The jurors give où
2000, parties may be greeted in court by a
hourly roles up to
clerk who directs them to the appropriate
350 The judge's
advisory verdict to
procedure. Here's a sampling of
decision may be
start settlement talls
2018 there no deal the
what's available
appealed
parties Ind
MIA CBITER FOR
PUSLIC RESOURCES BW
48
cont'
suits are still pending in the courts.
tives within the company on avoiding
counsel. "Our goal is to reduce the
Now, Shugart goes on the offensive at
conflicts by focusing on better contracts,
'dispute cycle'-the time between the
any hint of a lawsuit. Last year, for
improved product quality, and truthful
event that causes the dispute and the
example, the company laid off an undis-
salesmanship. The law department also
resolution."
closed number of employees. When a
follows Motorola's total quality manage-
There's more to Motorola's legal pro-
group of them joined with a coalition of
ment program to eliminate wasteful la-
gram than just staying out of court. The
labor unions and sued for insufficient
bor and expensive errors. "Cutting legal
company rides herd on its outside law-
notice, Seagate publicly threatened to
costs is like reducing the cycle time in
yers to deliver quality service at the low-
countersue, clearly stating it would fight
manufacturing," says Weise, the general
est possible cost. In a radical break with
to recover court costs as well as punitive
damages on the grounds that the labor
unions' suit was frivolous. The coalition
later withdrew the case.
COMING TO TERMS
HUGE SAVINGS. Rather than get caught
up in the system, corporations are drop-
-WITHOUT BRINGING IN THE LAWYERS
ping out. Already, some 600 top corpora-]
tions have signed a pledge drafted by
New York's Center for Public Re-2
L
awyers for Pacific Gas & Electric,
case, the typical JAMS case can be re-
Union Oil, and Thermal Power
solved in hours or days. "Alternative
sources, a nonprofit group that pro-
were preparing to fight one of the
dispute resolution is like the hula
motes alternatives to litigation. The
largest suits ever filed in Sonoma
hoop-why didn't someone else think
pledge states that the signers will con-
County (Calif.) Superior Court, when
of this before?" says JAMS CEO John K.
sider negotiation and other forms of "al-"
the three top executives decided that
Trotter, a retired state appellate judge.
ternative dispute resolution" before run-
there had to be a better way. Rather
Critics say problems arise when
ning to court against other signers. Last
than spend a year at trial, the execu-
JAMS judges go beyond simple media-
year, for the first time, law firms nation-
tives resolved most of the issues pri-
tion and render decisions that can be
wide made a similar pledge, and almost
vately-without their lawyers. To do
appealed in the courts. Such private
800 firms have signed on. The Center
the rest, they called in an outfit based
judging accounts for 1% of JAMS cases,
found that avoiding court saved 142
in Orange, Calif., known as Judicial Ar-
but this tactic could soar in California,
companies more than $100 million in le-
bitration & Mediation Services Inc.
where parties can leapfrog the long
gal costs for disputes concluded in 1990.
The JAMS mediator met
General Mills Inc. has long required a
often with the principals,
commitment to alternative dispute reso-
even going up in a helicop-
lution on all contracts it signs-cutting
ter to survey the field at
legal costs for contract disputes to a
the heart of their contract
bare minimum, says General Counsel
dispute. The case settled
Clifford L. Whitehill. Now, the Minne-
last month, with JAMS's bill
apolis food company is moving toward
less than six figures.
requiring a similar commitment from
Tapping into the fervor
employees. But the company's best sin-
to cut litigation costs, JAMS
gle experience with such techniques oc-
is a part of one of the fast-
curred in 1987. On the verge of going to
est-growing sectors of the
court with a supplier, Whitehill says,
law business: alternative
both sides agreed to argue their case
dispute resolution. Started
before the CEOs of both companies. Af-
in 1979, it's the U. S.'s lead-
ter six days of arguments, the parties
ing for-profit resolution
agreed that General Mills would get a
company. This year, it ex-
$45 million settlement.
pects to hear 14,000 cases
Other companies are devising formal
and see sales grow to $30
systems to settle routine disputes. In
million, up 25% from 1991.
mid-1990, General Motors Corp. "hired
JAMS has 18 offices in four
Endispute Inc., based in Washington,
states and a panel of 175
D. C., to set up systems in each of its
former judges. With $15
divisions for resolving dealer disputes.
million from E.M. War-
SALES AT TROTTER'S
RESOLUTION SERVICE
The systems range from nonbinding,
burg, Pincus & Co., JAMS
ARE SOARING
voluntary mediation at Cadillac to bind-
plans to keep expanding.
ing arbitration at Chevrolet, Pontiac,
It's not alone. Washington-based En-
court lines by getting a private ruling
Oldsmobile, and GMC Trucks, and were
dispute Inc. is also expanding its dis-
and then appealing it.
written into the dealers' five-year fran-
pute-resolution services. And Philadel-
To head off government regulation,
chise agreement. William Coulter of
phia-based Judicate Inc. boasts more
JAMS is developing guidelines for dis-
Phoenix' Coulter Cadillac just mediated
than 600 former judges offering arbi-
closing conflicts of interests, including
a dispute with GM auditors over a war-
tration and mediation. It's easy to see
prior contacts with parties. It's also de-
ranty issue. Both sides argued their case
the appeal. Alternative resolution tech-
vising a procedure for speedy handling
before a GM executive, a dealer, and an
niques save on discovery and provide
of complaints. Given the need for fast-
Endispute staffer. They settled in a day,
privacy and flexibility in scheduling.
er and cheaper alternatives to the grid-
at a cost of $3,000 to GM and about
But the driving force is the cost.
locked courts, JAMS may soon be look-
$1,500 to Coulter. Says Coulter: "The
JAMS charges between $300 and $350
ing more and more like the Federal
process was fair."
an hour-a far cry from the $300 an
Express of the dispute business.
For Motorola, the process of staying
hour a battery of lawyers might each
By Jane Birnbaum in Los Angeles,
out of court starts early. Its lawyers
charge litigants. And, unlike a litigated
with Morton D. Sosland in Philadelphia
worldwide learn how to counsel execu-
49
cont.
Cover Story
tradition, Motorola also refuses to pay
Many courts are offering alternatives
for lawyers' travel, meals, and other
to trials right in the courthouse or other
incidentals. Instead, the law firms must
neutral sites. The federal court for the
figure such expenses into their hourly
Northern District of California in San
billing rate. Motorola forces the lawyers
Francisco sends up to 300 cases a year
to follow a strict script that outlines a
through a settlement program known as
step-by-step procedure for resolving dis-
"early neutral evaluation." Under it, the
putes. "They really bristle, because
parties meet with a volunteer attorney
they're not used to that kind of partici-
who is an expert in the disputed subject
pation by a client," Weise says. "Some
matter. He sizes up the cases, gives his
outside counsel just can't do it."
opinion, and then asks whether the par-
Yet even companies that support such
Lawyers much.
ties want to work out a deal. An early
techniques remain skeptical that the new
study found up to 40% of these cases
uld and take
procedures will make a dent in the
settled on the spot. Such programs are
amount of litigation. Alternative dispute
of what lawyers
redefining the role of courts. "In the
resolution works only when both parties
future, instead of walking into a build-
agree to it, they say. A small company
and give that to elementary
ing called a courthouse, you might walk
may be muscled into court by a larger
school teachers, nurses,
into the Dispute Resolution Center,"
rival with more resources. Other compa-
says Scott H. Bice, Dean of the Universi-
nies insist on trials to achieve public vin-
health workers, people
ty of Southern California's Law Center.
dication. And individuals and their law-
LOSERS WEEPERS. The debate over legal
yers may be unwilling to step outside
really
reform in Washington can only speed up
the system. Abandoning a trial "would
these changes. Last year, President
do away with punitive and compensatory
Bush signed an executive order to rein
damages," says FMC Corp. General
LAN DE
in the vast swarm of government law-
Counsel Patrick J. Head. "That's where
Harvard
and
yers-the largest group of lawyers liti-
the big scores have been."
gating in the federal courts. And Vice-
It may not be that way for very much
President Quayle delivered a scathing,
longer. More than 1,200 courts across
be disciplined for breaching their ethical
widely publicized speech to the Ameri-
the country are offering various alterna-
duties. And in California, some over-
can Bar Assn., blasting lawyers for the
tives to trials. In Texas, a court can or-
worked judges refer cases to a private
nation's lack of competitiveness. In Feb-
der a case to mediation. In Colorado,
settlement company, Judicial Arbitration
ruary, the White House unveiled a bill
lawyers who fail to tell clients about
& Mediation Services Inc., based in Or-
that draws from Quayle's 50-point agen-
alternative dispute resolution now can
ange County (page 63).
da. The bill promotes such things as al-
THE JAPANESE SOLUTION: KILL ALL THE LAWSUITS
hen IBM sued Hitachi Ltd. for
tute. But the government-run school ad-
front fee to their lawyers of up to 8% of
W
industrial spying in 1982, the
mits 2% of its 35,000 applicants annually.
the damages sought in liability suits,
Japanese company got a
So Japan's exclusive legal club has just
plus a nonrefundable filing fee to the
shocking introduction to legal battles,
14,336 lawyers-and grows by only 400
courts of one-half of 1% of the damages.
American-style: Hitachi's first bill from
bengoshi per year. There are 780,000 law-
In 1991, a small Seattle-based log-home
its U.S. law firm exceeded its total pay-
yers in the U.S., which has twice Japan's
maker provided a Japanese customer
ments for legal services in Japan since
population.
with $240,000 worth of materials and la-
the company was founded in 1920.
COSTLY RECOURSE. Those who can find a
bor for which the company claims it was
No wonder legal reformers in the U.S.
lawyer to take their case encounter other
never paid. To file a $240,000 suit, it must
look wistfully at Japan. Its courts aren't
roadblocks. Critics of the U.S. legal sys-
pay its lawyers $20,204, including the fil-
cluttered with liability suits, and lawyers
tem complain that parties abuse discov-
ing fee of $1,200. "It's too expensive for
are about as scarce as American cars.
ery, which grants access before trial to
us to pursue that course," sighs a top
While the U.S. prides itself on individual
potential evidence held by an opponent.
manager at the company. "We've already
rights and equal access to the courts,
Japan is at the other extreme: It has no
lost a lot of money."
critics charge that the Japanese legal
discovery at all. And the difficulty of
Damage awards in Japan don't come
system discourages litigation. Perhaps.
obtaining evidence makes it especially
close to the estimated average of $1.5
But the culture's distaste for direct con-
tough for consumers to win product-li-
million per case paid last year in U.S.
frontation helps ensure that most legal
ability suits (BW-Mar. 9). "I have often
product-liability suits in state courts. On
disputes are resolved privately and more
said to clients that I am 100% certain
Feb. 7, the Tokyo District Court ordered
efficiently than in the U.S. "In Japan, a
that they would win their case-but
Chisso Corp., a chemical company re-
litigious person is not welcome," says To-
where's the evidence?" says Nishimu-
sponsible for one of Japan's best-known
shiro Nishimura, senior partner at Nishi-
ra. "You can't force the other side to
industrial poisoning cases, to compensate
mura & Sanada, a top international law
disclose."
42 victims. The award: $1.3 million, or
firm in Tokyo.
Plaintiffs also must have deep pockets.
$31,000 per victim.
Barriers to litigation in Japan start
Japan bars two key methods of sharing
When disputes arise between compa-
with legal education (table). To become a
the cost of litigation: class actions and
nies, attorneys often are the last to get
bengoshi, or lawyer, one must win a spot
contingency-fee arrangements. At the
involved. Salesmen and front-line manag-
in the Legal Training & Research Insti-
same time, plaintiffs must pay an up-
ers are the chief problem-solvers. In part,
50
cont.
ternatives to litigation and the English
dockets without also quickly filling judi-
Rule, which forces losers to pay the win-
cial vacancies. As of Mar. 31, there were
ners' legal fees.
120 vacant federal judgeships, or about
While the bar blasted Quayle's law-
14% of the federal bench.
yer-bashing rhetoric, it's taking his pro-
CHEAP AND DIRTY? Alternatives to trials
posals seriously. "We ought to be ex-
such as arbitration and mediation should
tremely grateful to Dan Quayle for just
help lighten the courts' burdens, but cer-
getting this issue on the table," says
tain safeguards are needed. Now, pro-
Talbot S. D'Alemberte, president of the
ceedings are held in private without re-
ABA. In February, it released a report
gard to whether a public interest or
supporting many of Quayle's proposals
important legal question is at stake. And
but criticizing him for ignoring the
the resolution business is largely unreg-
"broader and more significant problems
ulated: Anyone with a business card or
of our justice system"-judicial funding
stationery can set up shop.
and inadequate access for the poor.
Instead, standards must be estab-
Others have their own visions for the
lished so that mediators are qualified.
future. HALT, An Organization of Ameri-
The proceedings must also be open to
cans for Legal Reform, is pushing out-
the public-and the press. Alternative
of-court alternatives to tort litigation,
justice shouldn't become just another
such as no-fault auto insurance and
way to avoid disclosure of health and
workers' compensation. Its aim is to en-
safety dangers. And some disputes in-
sure fair and prompt compensation for
volving novel or constitutional issues
victims and more predictabilty for defen-
must remain in the public courts. Private
dants. Advisory committees in each of
dispute resolution can only follow the
the 94 federal courts, meantime, are ex-
law, not set new precedents.
perimenting with improving the litiga-
What's good in the legal system must
tion process, including making discovery
be protected. As lawmakers, attorneys,
voluntary. They're also forcing judges to
and executives wrestle with legal re-
be managers as well as decision-makers.
form, they must ensure that individual
"The greatest single forward step would
rights are not sacrificed in pursuit of
be to have district court judges set
fighting until the end. But that's only
swifter and more economical justice.
schedules and require lawyers to live up
the beginning. More attention must also
By Michele Galen in New York. with
to them," says former Supreme Court
be paid to state and federal courts so
Alice Cuneo in San Francisco, Darid
Justice Lewis F. Powell Jr.
that they can run more efficiently. And
Greising in Chicago, and bureau reports
Companies and judges are wise to put
Congress cannot continue to pass feder-
a premium on negotiation rather than on
al criminal laws that inundate court
BW/Harris Poll appears on page 66.
that's to avoid spoiling a long-term rela-
down. Most of Nissan's legal expenses
for example. Japan also has about 50.000
tionship. "We may lose $1 million," says
go not for pricey outside legal help but
licensed tax practitioners who offer ser-
NEC Corp. legal chief Satoshi Nakaichi,
for a modestly paid staff of a dozen tax
vices similar to those of U.S. tax law-
"but the idea is to coexist and win that
sleuths, 50 patent experts, and 30 legal
yers. About the same number of scriven-
money back on the future deals."
specialists. Lower bills free up cash for
ers draft court papers and give legal
'NEVER SUE.' Rarely do companies battle
research and other areas, and enable
advice, while 5,000 non-bengoshi patent
in court. Nissan Motor Co. is involved in
more competitive pricing than U.S. com-
specialists perform services similar to
10 cases in Japan, only one of which in-
panies can afford.
those of U.S. patent attorneys. Add
volves another company. The rest con-
Suits are few, but some experts argue
them all up, and Japan has more legal
cern labor and consumer disputes, which
that Japan has more legal practitioners
practitioners per capita than the U.S., or
make up most of the suits against com-
than the statistics reveal. Japan's corpo-
42 per 10,000 people vs. 29, says Ray-
panies in Japan. "We would never sue a
rate halls are stocked with non-bengoshi
mond August, assistant professor at
company like our own," says Nissan le-
legal experts. Sony Corp. employs 120,
Washington State University.
gal department manager Kenji
Some Japanese argue that
Toriumi. Only when a case
Japan should have more law-
seems headed for court will
yers and that certain laws
companies call in a bengoshi.
Limits the number of attorneys passing the bar exam to
should be rewritten to favor
:ut to keep matters quiet,
2% of 35,000 applicants
consumers. Critics also say it
ome companies may opt for
should be easier for the Japa-
arbitrated settlements, where
Forces would-be plaintiffs to pay an up-front fee to
nese to redress clear wrongdo-
three bengoshi arbitrators
their lawyers of up to 8% of damages sought
ing. Still, the bias against
weigh the case privately and is-
courtroom solutions remains
sue a binding decision. Nissan
Bars contingency fees, class actions, and other
strong. "I work in the legal de-
recently insisted on a 15% dis-
fee-sharing devices that make it easier to sue
partment," says Nissan's Tor-
count on faulty factory equip-
iumi, "but I would never ask a
ment supplied by an affiliate.
Lets judges, not juries, set damage awards, which rarely
lawyer to resolve a problem in
Rather than sue, Nissan settled
exceed $150,000, even when the victim has been killed
my own life." The belief that
for half that. "It was an amica-
disputes should be settled ami-
ble agreement," says Toriumi,
Bans discovery so that plaintiffs are denied access
cably is something American le-
"and it saved us time, money,
before trial to an opponent's potential evidence
gal reformers only now are be-
and the relationship."
ginning to embrace.
That attitude keeps costs
Nurtures a strong cultural attitude that confrontration is
By Ted Holden in Tokyo
to be avoided and looks down upon those who sue
DATA BW
51
cont'd
Cover Story
Business Week/Harris Executive Poll
THE VERDICT FROM THE CORNER OFFICE
orporate executives
contingency-fee system, and
c
think the high cost of
generous juries. They are
civil justice is a drag on
also quite firm about the so-
U.S. business and the econ-
lutions. An overwhelming
omy. Fully 83% say their
97% favor much more use
decisions are increasingly
of alternative methods to re-
affected by the fear of lawsuits, and a 62% majority say the
solve disputes, and 91% want judicial screening of cases. But
legal system significantly hampers U.S. competitiveness. Execu-
most oppose restrictions on expert witnesses and don't want to
tives know whom they blame for the problem: plaintiffs, the
see more government spending on the courts.
HIGH COURT COSTS
Requiring the loser in civil suits to
Here are some possible reasons for the high cost of litigation
routinely pay the winner's legal costs
83%
17%
0%
and civil justice. For each one, please say whether you think it is a
Restricting the pre-trial discovery
major reason, a minor reason, or not a reason for the high cost.
process
49%
43%
8%
Major
Minor
Not
a
Not
Restricting the use of expert witnesses
28%
66%
6%
reason reason reason sure
Increasing federal and state spending
The knowledge that major corpo-
on the courts
28%
69%
3%
rate defendants and their insur-
once companies have deep
LITIGATION'S IMPACT
pockets
92%
8%
0%
0%
In your company, would you say that the following have a major
Contingency fees that enable
impact, a minor impact, or almost no impact on your business?
people to sue without any finan-
Major
Minor
Almost
Not
cial risk
85%
13%
1%
1%
impact impact no impact sure
Juries that hand out awards that
The high cost of defending
are too high
79%
17%
3%
1%
and protecting the company
Laws or regulations that make it
from litigation
40%
49%
11%
0%
too easy to sue
64%
29%
6%
1%
Fear of litigation that hampers
Outside corporate lawyers who
the introduction of valuable
drog out cases to jack up their
new products or entry into
hourly fees
47%
45%
7%
1%
new markets
10%
47%
42%
1%
Large corporate litigants that
Legal issues that divert
drag the process out in on effort
valuable management time
to outlast opponents with fewer
and energy from running the
resources
34%
55%
9%
2%
business
44%
50%
6%
0%
Companies that compete in
the courtroom instead of in the
AND HOW IT'S GROWING
marketplace
13%
60%
26%
1%
Would you say that the fear of
More impact
83%
Companies that rush potentially
lawsuits has more or less impact
Less impact
5%
dangerous products to market,
on decision-making within your
No difference
11%
opening themselves to subse-
company today than it did 10
Not sure
1%
quent lawsuits
9%
70%
19%
2%
years ago?
POSSIBLE REFORMS
COMPETITIVE BURDEN
Here are several proposals now under consideration to rein in
Do you feel that the U.S. civil
Does hamper
62%
frivolous litigation and cut legal costs and delays in the civil justice
justice system significantly ham-
Does not
32%
system. Please tell me whether you favor or oppose each of the
pers the ability of U.S. compa-
Not sure
6%
following:
nies to compete with Japanese
Favor Oppose
Not
and European companies, or
sure
don't you feel that way?
Making much greater use of alternative
dispute resolution methods, such as ar-
Edited by Mark N. Vamos
bitration, mediation, and private judges
97%
2%
1%
The judicial screening of cases to elimi-
Survey of 400 senior executives at corporations drawn from the
note apparently frivolous or very weak
BUSINESS WEEK Top 1000. Interviews were conducted Jon. 27-Feb.
claims
91%
9%
0%
11, 1992, for BUSINESS WEEK by Louis Harris & Associates Inc.
52
BusinessWeek
DATE: 4-13-92
PAGE: 110
PRIVATE JUSTICE:
GOOD IDEA, NEEDS WORK
he U.S. legal system is guilty of costly inefficiencies
that hurt the competitiveness of American companies.
A BUSINESS WEEK/Harris Poll of senior executives
drawn from the BUSINESS WEEK 1000 found that 62% of
those surveyed believe that the American civil justice sys-
tem significantly hampers the ability of U.S. companies to
compete with Japanese and European rivals. And 83% of
those polled say that the fear of lawsuits inhibits their de-
cision-making more than it did 10 years ago.
Now, after years of mounting frustration with soaring
legal costs and lengthy court delays, companies are applying
logic to the problem. They're resolving their battles private-
ly, through mediation and arbitration, as well as such inno-
vative techniques as mini-trials and rent-a-judge services
(page 60). Some 600 top corporations have signed a pledge
drafted by New York's Center for Public Resources, a non-
profit group that promotes alternatives to litigation. Signers
pledge to consider negotiation and other forms of "alternative
dispute resolution" before heading to court against others
who have taken the pledge. Some companies go further.
Motorola Inc. makes its in-house lawyers seek all possible al-
ternatives to running to court. At the same time, its lawyers
counsel Motorola executives to forestall conflicts through bet-
ter contracts, improved product quality, and truthful sales-
manship.
Companies should be encouraged to settle their disputes,
but such alternative dispute techniques have dangers that
need addressing. Whether or not they embody a public
interest or novel legal question, they are held in private.
And the booming resolution business is largely unregulated.
Almost anyone can be a self-appointed mediator. At a min-
imum, standards must be set so that mediators are qualified.
Also, the proceedings must be open to the public. Alterna-
tive justice mustn't be used to avoid disclosure of potential-
ly damaging information, such as health and safety risks.
Congress and the Bush Administration are right to pro-
mote alternative dispute resolution to help lift the burdens
on the courts. But that should be just the beginning of ef-
forts to bring efficiency to the legal system.
53
THE CASE FOR CIVIL JUSTICE REFORM
SUPPORTING MATERIAL
Table of Contents
Overview of the Problem
1
Economic Effects
3
General
3
Effect on International Competitiveness
5
Effect on Health Care
6
Behavior/Costs
6
Drugs/Vaccines
8
Discontinued Products/Businesses
11
New Products/Innovation
12
Effect on Cities
13
Courts, Attorneys and Expenses
15
Legal Fees and Other Expenses
15
Awards and Compensation
17
Number of Attorneys
18
Case Management
19
Filings and Delays
19
Discovery
22
Expert Witnesses
24
Punitive Damages
25
Availability and Cost of Liability Insurance
28
Product Liability
29
Generally
29
Private Planes
32
Safety
34
Effect on Recreation and Sports
35
Mass torts
38
Asbestos
38
Other Torts
39
I.
Overview of the Problem
"In the past 30 years, our legal system has become
burdened with excessive costs and long delays. Many features of
the current legal system no longer serve to expedite justice or to
ensure fair results. Instead, overuse and abuse of the legal
system impose tremendous costs upon American society. "1
"[T]he tort system of the 1980s has come to resemble a
lottery, in which a few lucky litigants recover enormous windfalls
and others are not even compensated for out-of-pocket losses.
Increases in damage awards have far outstripped the inflation rate
and they rationally relate less and less to the injuries involved
and defendants' responsibility for those injuries. 112
Senator Biden has said "Too much money is wasted on a
system that serves no one well, except our economic competitors who
benefit by our squandering of resources on document production and
depositions instead of research and development. 3
"In recent years, the civil justice system has been
examined by such groups as the Federal Courts Study Committee, the
Rand Corporation, the Brookings Institution, the Senate Judiciary
Committee, and most recently the President's Council on
Competitiveness. While there are some differences in degree, all
of these groups have concluded that the present system is flawed
and in serious need of reform.
The American Bar Association (ABA) has not only examined
the civil justice system but has also released its own package of
reform proposals, entitled the "ABA Blueprint to Improve the Civil
Justice System.' " Moreover, according to ABA President Talbot
D'Alemberte, "[t]he ABA supports the majority of the [President's
Council on Competitiveness's] agenda.
1
President's Council on Competitiveness, Agenda for Civil
Justice Reform in America i (August 1991).
2
Alfred W. Cortese, Jr. & Yosef J. Riemer, Defining the
Agenda for Serious Tort Reform, 24 San Diego L. Rev. 903, 903
(1987)
3
The Civil Justice Reform Act of 1990 and the Judicial
Improvements Act of 1990 Before the Committee on the Judiciary of
the U.S. Senate, 101st Cong., 2d Sess. 2 (1990).
4
Gregory B. Butler & Brian D. Miller, Fiddling While Rome
Burns: A Response to Dr. Hensler, 75 Judicature 251, 253 (Feb.- -
Mar. 1992) (citations omitted).
5
Don J. DeBenedictis, ABA Releases Civil Justice Plan, ABA
J., Apr. 1992, at 30.
D'Alemberte commented, "We ought to be extremely grateful
to Dan Quayle for just getting this issue on the table. 116
"A survey of more than 2,000 Americans in 1987 showed
that 71 percent believe that the overall cost of lawsuits is too
high, and that 57 percent believe that the system fails to provide
resolution of disputes without delay.
The unfortunate fact is
that the civil justice system as we know it today is not fulfilling
its basic objective of providing the 'just, speedy and inexpensive'
resolution of disputes.
In a recent case a defendant spent $500,000 defending
himself against claims that were ultimately found to be completely
without merit.
5
"[A] New Jersey stable was sued by a rider whose horse
was stung by a bee. The horse reared and injured the rider. The
plaintiff claimed the stable was negligent and should have known
about particular swarms of bees on particular trails. And in
another case, were two Western wranglers responsible for a breach
of duty when a sudden thunderstorm caused a couple of horses to
spook and throw their riders? In both cases, the resorts were not
held liable. But both lawsuits were expensive to litigate and took
time to decide.
A recent poll of business executives conducted for
Business Week by Louis Harris found that 83 percent of executives
polled believe corporate decisionmaking is more affected by the
fear of litigation today than they were 10 years ago, and 62
percent believe that the U.S. civil justice system significantly
hampers the ability of U.S. companies to compete with Japanese and
European companies. 7 Fourty percent of respondents said that the
6
Michele Galen et al., Guilty! Too Many Lawyers and Too
Much Litigation, Bus. Wk., Apr. 13, 1992, at 65.
7
S. Rep. No. 416, 101st Cong., 2d Sess. 6, 7 (citing Louis
Harris and Associates, Inc., Public Attitudes Toward the Civil
Justice System and Tort Law Reform, 15, 19 (1987))
5
See Christic Inst. V. Hull, 112 S. Ct. 913 (1992)
(letting stand sanctions in excess of $1 million against the
plaintiffs and their attorneys for bringing a baseless action
alleging that bomb explosion in Nicaragua that injured plaintiffs
was the product of criminal enterprise among defendants in
violation of RICO).
6
Marcia Chambers, Whatever Happened to the Sandlot?, Nat'l
L. J., Apr. 22, 1991, at 15.
7
Michele Galen et al., Guilty! Too Many Lawyers and Too
Much Litigation, Bus. Wk., Apr. 13, 1992, at 61.
2
high cost of defending the company in litigation has a major impact
on the business, while only 11 percent of those who responded said
that the cost did not have even a minor impact on their company.
A full 97 percent of respondents favored much greater use of
alternative dispute resolution methods, and 91 percent favored
judicial screening of cases to eliminate apparently frivolous or
very weak claims.
II. Economic Effects
A. General
In his book Liability: The Legal Revolution and Its
Consequences 4 (1988), Peter Huber describes tort liability as a
tax that "directly costs American individuals, businesses,
municipalities, and other government bodies at least $80 billion a
year, a figure that equals the total profits of the country's top
200 corporations
The extent of [the] indirect costs [imposed
by the tort tax] can only be guessed at
" 9
A study by Tillinghast, an actuarial consulting firm,
found the gross cost of the U.S. tort system in 1987 to be $117
billion, almost three times the 1980 estimated gross cost of $40
billion. 10
Four out of ten companies responding to one survey said
that the product liability system has had a major adverse effect on
their direct costs. 11
"[T]he indirect costs -- the efforts of commercial and
governmental bodies to avoid litigation -- exceed insurance
premiums, which essentially reflect past litigation costs.
8
Michele Galen et al., Guilty! Too Many Lawyers and Too
Much Litigation, Bus. Wk., Apr. 13, 1992, at 66.
9
One critic of the $80 billion number, Joan Claybrook,
president of Public Citizen, argued that the actual direct cost of
torts to the U.S. economy is "just" $30 billion, citing a study
done by the Rand Corporation's Institute for Civil Justice. But
James Kakalik, coauthor of the Rand study cited by Claybrook,
contends that it is the Tillinghast $117 billion number (cited in
note 10), not Rand's $30 to $36 billion figure, that represents the
direct "tort tax" imposed on the U.S. economy. See Leslie Spencer,
The Tort Tax, Forbes, Feb. 17, 1992, at 40.
10
Robert W. Sturgis, Tort Cost Trends: An International
Perspective 1, 2 (Tillinghast Co. 1989).
11
E. Patrick McGuire, The Impact of Product Liability, The
Conference Board Research Report No. 908, at 9 (1988).
3
American business is now so sensitized to tort suits and expanding
concepts of liability in appellate court decisions that corporate
legal departments and product managers see a plaintiff attorney
behind every bush and post. 12
"American corporations spend more than $20 billion
annually on outside counsel defending lawsuits. The outside
counsel expenses for some Fortune 100 companies exceed $30 million
annually, and in one case exceed $100 million annually. 113
One 1989 study concluded that between 1950 and 1987, the
cost of injury litigation rose 138 percent (quadrupling every 12
years), while the size of the real U.S. economy rose only 33
percent. 14
"A substantial majority of more than 1,000 experienced
litigators and Federal trial judges said that the high cost of
litigation unreasonably impedes access to the courts by the
ordinary citizen. 15
Critics of the Competitiveness Council Report
nevertheless agree on the need for reform: "There is much to
criticize in the American civil justice system.
Legal
expenses eat up too much of the amount spent to compensate harms--
about half the total expenditures for tort litigation generally,
and as much as 60 percent of the expenditures for more complex
personal injury litigation[, such as that associated with
asbestos]. 16
"In 1984, London reinsurers labeled the U.S. liability
market 'uninsurable' and started a mass exodus. By 1985, Lloyd's,
the world's biggest reinsurer, was scrambling to get out
By
12
Robert V. Wills, Lawyers are Killing America, at 10
(1990).
13
S. Rep. No. 416, 101st Cong., 2d Sess. 7 (citing Dockser,
Companies Rein in Outside Legal Bills, Wall St. J., Nov. 9, 1988.)
14
Robert W. Sturgis, Tort Cost Trends: An International
Perspective 7 (Tillinghast Co., 1989) ; see also Walter K. Olson,
The Litigation Explosion 7 (1991).
15
S. Rep. No. 416, 101st Cong., 2d Sess. 7 (citing Louis
Harris and Associates, Inc., Procedural Reform of the Civil Justice
System, (March 1989))
16
Deborah R. Hensler, Taking Aim at the American Legal
System: The Council on Competitiveness's Agenda for Legal Reform,
75 Judicature 244, 250 (1992).
4
1985, ninety reinsurers -- almost one-third of the companies that
were doing business worldwide in 1983 -- were gone. 117
B.
Effect on International Competitiveness
A Tillinghast study found that the costs of the U.S. tort
system are far greater than for any of the twelve foreign economies
studied (Australia, Austria, Belgium, Canada, Denmark, France,
Italy, Japan, Spain, Switzerland, Great Britain, and West Germany),
ranging between three and eight times the relative cost of tort
systems in those countries.
18
In 1965, U.S. tort costs were slightly more than one
percent of GNP which was approximately double the average of other
economies. Since then, while the costs in other economies remained
stable, those in the U.S. have grown to 2.5 percent of GNP, or
almost five times the average of other countries. 19
A 1989 Tillinghast study found that America spends
between three and eight times as much as its major industrial
competitors on personal injury wrangling as a share of its economy,
and that the gap is widening rather than narrowing. 20
Several government agencies, numerous research
organizations, trade associations, academics and private business
persons believe current U.S. product liability laws not only force
manufacturers to increase the prices charged for their products to
cover costs stemming from the liability laws but also decrease
business innovation by making management unduly adverse to risk
taking.
21
A study commissioned by the U.S. Department of Commerce
17
Peter Huber, Liability: The Legal Revolution and Its
Consequences 141 (1988)
18
Robert W. Sturgis, Tort Cost Trends: An International
Perspective 12 (Tillinghast Co., 1989).
19
Robert W. Sturgis, Tort Cost Trends: An International
Perspective 13 (Tillinghast Co., 1989).
20
Robert W. Sturgis, Tort Cost Trends: An International
Perspective 12 (Tillinghast Co., 1989).
21
Alfred W. Cortese, Jr. & Kathleen L. Blaner, The Anti-
Competitive Impact of U.S. Product Liability Laws: Are Foreign
Businesses Beating Us at our Own Game, 9 J.L & Com. 167, 169 (1989)
(citing, inter alia, Committee for Economic Development, E.P.
McGuire, Conference Board Report, Project on Civil Justice Reform,
and Manhattan Institute for Policy Research).
5
found that the product liability insurance costs of foreign
competitors of U.S. machinery manufacturers are 20 to 100 times
lower than those of their U.S. competitors. In addition, foreign
competitors are not burdened with all of the other product
liability related costs. 22
C.
Effect on Health Care
1. Behavior/Costs
"New York officials have estimated payouts in suits
against doctors and hospitals in their state have risen 300-fold in
a generation -- not 300 percent, but 300-fold. By 1990 many New
York obstetricians with good records were paying liability
insurance rates of $100, 000 and more a year. Miami neurosurgeons
with good records paid $220,000.
A major National Institute
of Medicine study found that 'defensive medicine' -- the taking of
steps not considered clinically justified in order to fend off
charges that doctors had not done everything they could -- had
seriously compromised the quality of patient care, leading, for
example, to the performance of millions of unnecessary Caesarean
sections. One in five rural doctors had stopped delivering babies
in the past five years, with liability the overwhelming
23
concern.
"[B]etween 1965 and 1984, the frequency of Caesarean
sections increased fourfold. 1124
A Journal of the American Medical Association editorial
reports that 12 percent of obstetricians have stopped delivering
babies and 38 percent of surgeons avoid high-risk cases because of
liability concerns.
25
According to the American College of Obstetricians and
Gynecologists, as of 1990 of ob/gyns nationally:
-- 12.2% had given up obstetrics due to liability
concerns;
-- 77.6% have been sued at least once; in New York,
22
Randolph J. Stayin, The U.S. Product Liability System: A
Competitive Advantage to Foreign Manufacturers, 14 Can.-U.S. L.J.
193, 197 (1988).
23
Walter K. Olson, The Litigation Explosion 5-6 (1991).
24
Peter Huber, Liability: The Legal Revolution and Its
Consequences 175 (1988)
25
257 J. Am. Med. Ass'n 827 (1987).
6
the number is 83.4%;
-- on average, three suits have been filed against
each ob/gyn; the average in New York is almost
four; and
-- 24.2% had decreased the level of high-risk
obstetric care that they provided. 26
In some states the problem is worse than national figures
show:
-- in Idaho, 34% of Ob/Gyn's had stopped practicing
obstetrics by 1986;
-- a 1987 Oregon survey shows that the number of
physicians delivering babies has declined by 25%
since 1984;
-- a 1987 Iowa survey shows that of all physicians who
had provided obstetric services since 1981, 31% had
discontinued obstetrics; and
-- in addition, 50% of North Dakota physicians and
39.1% of Wyoming physicians planned to quit
obstetrics within the next year.
Large numbers of family physicians are being forced to
discontinue obstetrics as a result of the high cost of
obstetric liability insurance:
-- one-third of California's family physicians, almost
40% of Texas family physicians and approximately
one-half of Nevada rural family physicians have
also stopped practicing obstetrics;
-- three-hundred of 441 family physicians responding
to an Alabama survey have stopped delivering
babies;
-- more than half of Utah's general and family
physicians who were delivering babies in 1980 have
stopped practicing obstetrics; and
-- in Kansas, almost half of the family physicians
26
Medical Liability: Its Impact on Women's Health Care,
Fact Sheet provided by the American College of Obstetricians and
Gynecologists (Oct. 1991).
7
reported having given up obstetrics by 1987 27
"The American Medical Association estimates that the
average number of malpractice claims filed per 100 doctors rose
from five in 1975 to 16 in 1983. Forty thousand claims were filed
in 1983, triple the 1975 number.
The average settlement was
$5,000 in 1970, $26,000 in 1975, and is now $333,000-$650,000 in
California, where the plaintiff need not prove the defendant acted
negligently. (The California legislature has since put a cap on
the amount a lawyer can make in a contingency fee malpractice
suit. ) 1128
"By 1985
,
one out of four obstetrician-gynecologists
had been sued. Almost three-quarters won their cases, but it cost
the physician or insurer an average of $20,000 per claim to do
SO. 1129
"According to the director of the National Cancer
Institute many physicians refuse to prescribe potentially curative
doses of cancer chemotherapy for fear of litigation over side
effects, and thousands of patients may die needlessly each year as
a result of this kind of caution. ,30
2. Drugs/Vaccines
Lederle Laboratories, the only remaining manufacturer of
the DPT vaccine, increased the single dose cost of the vaccine
from $2.80 in 1986 to $11.40 in 1987, primarily to recoup increased
product liability costs. 31
The American Medical Association concluded that product
liability issues are having a profound negative effect on the
development and utilization of potentially life-saving medical
27
Medical Liability: Its Impact an Women's Health Care,
Fact sheet provided by American College of Obstetricians and
Gynecologists (Oct. 1991).
28
Gordon Crovitz, Lawyers on Trial: How to Take the Profit
Out of Suing, 35 Pol'y Rev. 72, 76 (1986).
29
Peter Huber, Liability: The Legal Revolution and Its
Consequences 111 (1988).
30
Peter Huber, Liability: The Legal Revolution and Its
Consequences 162 (1988).
31
E. Patrick McGuire, The Impact of Product Liability, The
Conference Board, Research Report No. 908, at 10 (1988).
8
technologies.
32
The National Academy of Sciences stated that "given the
extremely high cost of vaccine-related injuries, many manufacturers
may be unwilling to initiate or pursue the derivation or
distribution of a vaccine to prevent AIDS. 1133
The general counsel of Johnson & Johnson recently
indicated that, because of the substantial liability costs to which
the company would be exposed, he would urge his company to withhold
an AIDS vaccine until Congress passed protective legislation. 34
Union Carbide developed a suitcase-sized kidney dialysis
machine that could be used at home. Due to the company's analysis
of the potential liability from marketing the machine, Union
Carbide decided not to market the machine and sold it to a foreign
company. Union Carbide also decided not to develop a line of
medical devices related to intravenous treatment. 35
"Research expenditures by U.S. companies working on
contraceptives peaked in 1973 and plummeted 90 percent in the next
decade. Steroidal oral contraceptives in this country underwent no
significant changes after 1976, and no truly new contraceptive
chemical entities have been introduced since 1968. Clinical tests
of a contraceptive implant system called Capronor, developed by the
National Institutes of Health, were stalled for more than a year
for lack of liability insurance. The implanted contraceptive
Norplant, which releases a hormone for five years, was developed by
32
Richard J. Mahoney & Stephen E. Littlejohn, Innovation on
Trial: Punitive Damages versus New Products, Science, Dec. 15,
1989, at 1397.
33
Richard J. Mahoney & Stephen E. Littlejohn, Innovation on
Trial: Punitive Damages versus New Products, Science, Dec. 15,
1989, at 1397 (citing American Medical Ass'n, Impact of Product
Liability on the Development of New Medical Technologies,
Proceedings of House of Delegates, 137th Annual Meeting, June 18-
22, 1988, Chicago, Ill., at 86).
34
Testimony of W. Kip Viscusi, George G. Allen Professor
of Economics, Department of Economics, Duke University, Durham,
N.C., before the Subcommittee on Competitiveness and Economic
Opportunity of the Senate Committee on Small Business 4 (Nov. 7,
1991).
35
Richard J. Mahoney & Stephen E. Littlejohn, Innovation on
Trial: Punitive Damages versus New Products, Science, Dec. 15,
1989, at 1397 (citing a speech by Warren Anderson, at the Annual
Meeting of the National Association of Casualty and Surety
Executives (Oct. 7, 1986)).
9
the New York Population Council and as of 1986 was on the market in
five other countries. But no American firm dared to market it at
home. A new and effective IUD, the Copper-T 380A, won FDA
approval, but no major firm was willing to market it for several
years. In late 1987, one tiny company finally announced that it
would sell the product, at a price vastly above the cost of
manufacture, and without any liability insurance (which was, in any
event, unavailable), presumably on the assumption that if a wave of
lawsuits struck, bankruptcy would provide a quick and clean exit
from the market. So the United States, a leader in contraceptive
research and marketing well into the early 1960s, has today lost
its edge and its hunger for progress. Research on other aspects of
reproduction has suffered as well. 'Who in his right mind, the
president of a major pharmaceutical company asked in 1986, 'would
work on a product today that would be used by pregnant women? "36
The number of U.S. pharmaceutical companies producing
contraceptives has decreased from 13 in the early 1970s to two in
1988.
37
"Liability fears have helped drive U.S. firms out of
manufacturing vaccines -- DPT in particular -- explaining sharp
increases in vaccine costs. 1138
In 1986, a new claim was being filed against the
manufacturers of whooping cough vaccine every week; one former
manufacturer faced 100 suits demanding more than $2 billion in
compensation, or 200 times the total annual sale revenues -- of the
vaccine.
39
"Only a few hundred American children suffer from
cystinosis, a fatal kidney disease. About 2,000 adults suffer from
Charcot-Marie-Tooth disease, a rare nerve disorder (unrelated to
teeth) that severely impairs motor function. About 1,000 suffer
from leprosy and experience an extremely painful allergic reaction
on their skin. A tiny number suffer from a rare but incapacitating
36
Peter Huber, Liability: The Legal Revolution and Its
Consequences 155 (1988).
37
Alfred W. Cortese, Jr. & Kathleen L. Blaner, The Anti-
Competitive Impact of U.S. Product Liability Laws: Are Foreign
Businesses Beating Us at our Own Game, 9 J.L & Com. 167, 199 (1989)
38
Testimony of Robert E. Litan, Senior Fellow, The Brook-
ings Institution before the Subcommittee on Competitiveness and
Economic Opportunity of the Senate Committee on Small Business 6
(Nov. 7, 1991).
39
Peter Huber, Liability: The Legal Revolution and Its
Consequences 166-67 (1988).
10
disease characterized by uncontrollable twitching of the eye
muscles. There are some 5,000 other orphan diseases that shorten
lives or bring agonizing disability to tiny groups. Therapies are
available or under development for some 500 of them. But insurance
is often all but impossible to obtain. Chemie Grunenthal, for
example, a West German company that once supplied thalidomide to
American leprosy victims, announced in 1986 that it planned to
abandon the U.S. market to avoid the risk of liability that might
arise if, for example, the drug was used in excess or fell into the
wrong hands. Until recently, another West German chemical company
supplied Americans with botulinum, a paralytic poison that is just
right for controlling the eye-twitching disease, but the company
cut off supplies in 1986 for similar reasons. Orphan drugs are
condemned, in a sense, to be perennial newcomers to the commercial
world and are therefore forever uninsurable under the modern rules.
Business realities take care of the rest. ,40
Merck & Company continues to be the only U.S. producer of
a measles vaccine for American schoolchildren, continuing
production solely out of a sense of social responsibility. 41
D.
Discontinued Products/Businesses
WEPCO, Inc., a small business originally started to
develop driving aids for the handicapped, was forced to close its
doors because it was unable to secure product liability insurance,
despite the fact that the company was certified by the Veterans
Administration, and had never had a product liability suit filed
against it. 42
Dyneet Corporation stopped production of its helicopter
clutches, although it had not had any product liability claims
filed against it, because it could no longer afford to purchase
liability insurance for the clutch. 43
40
Peter Huber, Liability: The Legal Revolution and Its
Consequences 158-59 (1988).
41
Alfred W. Cortese, Jr. & Kathleen L. Blaner, The Anti-
Competitive Impact of U.S. Product Liability Laws: Are Foreign
Businesses Beating Us at Our Own Game? 9 J.L. Com. 167, 199-200
(1989)
42
E. Patrick McGuire, The Impact of Product Liability, The
Conference Board, Research Report No. 908, at 18 (1988).
43
Alfred W. Cortese, Jr. & Kathleen L. Blaner, The Anti-
Competitive Impact of U.S. Product Liability Laws: Are Foreign
Businesses Beating Us at Our Own Game? 9 J.L. Com. 167, 200
(1989).
11
Crawford Fitting Company has decided to eliminate hot air
balloon valves from its product line due to a 1,535 percent
increase in liability insurance. 44
The McJunkin Corporation of Charleston, West Virginia,
has decided to sell its coal-mining equipment division because the
company's product liability insurance increased by 500 percent in
1985. 45
E. New Products/Innovation
"The slowing of innovation is directly attributable to a
dramatic increase in product liability lawsuits caused not by more
unsafe products or injuries but by two legal developments: the
shift from negligence to strict liability and a continued increase
in punitive damage jury awards. 1146
U.S. auto manufacturers delayed and even fought the
introduction of airbags, in part out of fears of being sued when
the bags misfired. 47
Foster-Miller, Inc. has refused to accept contracts to
build equipment to produce football and hockey helmets, calling
these products "lawyers' dreams. 48
44
Alfred W. Cortese, Jr. & Kathleen L. Blaner, The Anti-
Competitive Impact of U.S. Product Liability Laws: Are Foreign
Businesses Beating Us at Our Own Game? 9 J.L. Com. 167, 200
(1989).
45
Alfred W. Cortese, Jr. & Kathleen L. Blaner, The Anti-
Competitive Impact of U.S. Product Liability Laws: Are Foreign
Businesses Beating Us at Our Own Game? 9 J.L. Com. 167, 200-01
(1989).
46
Richard J. Mahoney & Stephen E. Littlejohn, Innovation on
Trial: Punitive Damages versus New Products, Science, Dec. 15,
1989, at 1395 (citing P. Reuter, The Economic Consequences of
Expanded Corporate Liability: An Exploratory Study, 25-27 (Rand
1988)
47
Innovation and Competitiveness in the Small Business
Industry, 1991 Hearings Before the Subcommittee on Competitiveness
and Economic Opportunity of the Senate Committee on Small Business,
102d Cong., 1st Sess. 7 (Nov. 7, 1991) (statement by Robert Litan).
48
Innovation and Competitiveness in the Small Business
Industry, 1991 Hearings Before the Subcommittee on Competitiveness
and Economic Opportunity of the Senate Committee on Small Business,
102d Cong., 1st Sess. 3 (Nov. 7, 1991) (statement of Edward J.
Goldman).
12
Livermore Lab in California discovered that a particle
accelerator, developed for a weapon system, could be used instead
of harmful pesticides on newly harvested crops to kill insects,
larvae and parasites. Livermore decided that the technology was
too risky at least in part because of current product liability
laws so the potential new use was abandoned.
49
A research scientist at the Lawrence Livermore National
Laboratory in California who has worked on a number of new product
ventures claims that "There's clearly a chilling effect. Its
becoming difficult to get venture capital for new ideas. People
are afraid of potential liability. ,,50
The fear of litigation cuts back the motivation to
develop new products. 51
Industries for which liability costs (as reported to
their insurers) are not a major burden relative to their sales
actually increased their innovative activities (measured by R&D
expenditures and new products introduced) 52
F. Effect on Cities
"Cities, fearful of lawsuits from the family of a child
who takes a tumble from a jungle gym and winds up a quadriplegic,
have removed equipment or closed urban playgrounds entirely. City
pools from Los Angeles to Chicago to New York have taken their
diving boards off, leaving some to wonder where the deep end lies.
In small towns, warning signs abound: No running, no swimming, no
biking, no fishing, no camping. 1153
49
William Broad, Does Fear of Litigation Dampen the Drive
to Innovate? N.Y. Times, May 12, 1987, at C9.
50
Paul Proctor, Product Liability Costs Cited as Key Factor
in Delivery Slump, Aviation Week and Space Technology, July 27,
1987, at 55.
51
Alyson Pytte, Bush Gives Presidential Nod to New
Liability Standards, Cong. Q., Feb. 2, 1990, at 326 (quoting
Phyllis Eisen, Director of Risk Management for the National
Association of Manufacturers).
52
Testimony of Robert E. Litan Senior Fellow, The Brookings
Institution, before the Subcommittee on Competitiveness and
Economic Opportunity, Senate Committee on Small Business, Nov. 7,
1991, at 7.
53
Marcia Chambers, What Happened to the Sandlot?, Natl L.
J., Apr. 22, 1991, at 15.
13
"In Chicago, more than two-thirds of the area's riding
stables simply closed their doors between 1983 and 1987. If 54
"Los Angeles
paid nearly all of a $2.16 million
judgment on a 1979 traffic accident after a driver high on drugs
ran a stop sign. The city's fault? Inadequate trimming of certain
bushes that perhaps obstructed the drugged driver's vision. San
Diego paid $1.6 million to a car passenger on the scenic Torrey
Pines Road who was left a quadriplegic when a speeding drunk driver
crossed the center lane on a curve and smashed into his car. The
drunk offered his insurance policy limit of $25,000; the city was
then sued for faulty road design. 1155
"Between 1978 and 1985, New York City's liability
payments jumped from $23 million to $118 million.
[T]he city
of Hartford, Connecticut, was charged $1.8 million for $4 million
of coverage (a premium-to-coverage ratio of 0.45). "56 "[T]he
insurance deductible for the city of Baton Rouge, Louisiana, was
raised from $100,000 in 1985 to $500,000 in 1986. 1157
"The city of Boston went without liability insurance
between 1984 and 1986 when a policy was canceled by an insurer that
had decided to abandon the municipal liability business entirely.
Wilmington, Delaware, dropped its liability policies in January
1986. Fort Lauderdale, Florida, could not find a general liability
policy to cover accidents on the sidewalks of the Intracoastal
Waterway. In early 1986, thirty California cities were operating
without any insurance at all. 1158
"One survey found the damage claims against cities
doubled between 1982 and 1986.
Average verdicts against
cities rose almost tenfold, to $2 million. The first jury verdict
exceeding $1 million came in 1962; in 1975 there were fewer than
54
Marcia Chambers, What Happened to the Sandlot?, Natl L.
J., Apr. 22, 1991, at 15.
55
Peter Huber, Liability: The Legal Revolution and Its
Consequences 79 (1988).
56
Peter Huber, Liability: The Legal Revolution and Its
Consequences 140 (1988)
57
Peter Huber, Liability: The Legal Revolution and Its
Consequences 141 (1988)
58
Peter Huber, Liability: The Legal Revolution and Its
Consequences 138-39 (1988).
14
twenty; by 1988 there were over 400 a year. 1159
"A man mutilated after he deliberately jumped in front of
a subway train sued New York City, claiming that the driver should
have stopped faster, and walked off with $650,000. The father of
a thirteen-year-old who committed suicide at home sued school
officials, several of the boy's teachers, and the local police,
claiming they should have known of the boy's troubles and prevented
the harm. 60
"Even slightly risky activities, like law students
running the annual five-mile Race Judicata at Yale Law School, have
been scrapped because a financially beleaguered city can no longer
provide traffic protection at intersections. " 61
III. Courts, Attorneys and Expenses
A.
Legal Fees and Other Expenses
"For the middle class of this country
the
courthouse door is rapidly being slammed shut. Access to courts,
once available to everyone, has become for middle-class Americans
a luxury that only others can afford. 162
"A report from the Federal Trade Commission showed that
97 percent of lawyers took injury cases only on contingency,
refusing to consider hourly rates, however generous. 63
In 1989, Forbes magazine reported that each of 63 trial
lawyers earned more than $2 million a year and that 19 plaintiffs'
attorneys collected fees in excess of $5 million in single
64
cases.
59
Peter W. Huber, Liability: The Legal Revolution and Its
Consequences, 9-10 (1988).
60
Peter Huber, Liability: The Legal Revolution and Its
Consequences 78 (1988).
61
Marcia Chambers, Whatever Happened to the Sandlot?, Natl
L. J. Apr. 22, 1991, at 15.
62
The Civil Justice Reform Act of 1990 and the Judicial
Improvements Act of 1990: Hearings on S. 2027 Before the Committee
on the Judiciary, 101st Cong., 2d Sess. 1 (1990) (statement of Sen.
Biden).
63
Walter K. Olson, The Litigation Explosion 47 (1991).
64
Peter Brimelow & Leslie Spencer, The Plaintiff Attorneys'
Great Honey Rush, Forbes, Oct. 16, 1989, at 197.
15
"[A] federal judge awarded one of New York's biggest law
firms $62,000 for getting their 'pro bono' client an award of
$2,500. The plaintiff said the New York City police had used
excessive force in arresting him after a high-speed chase. 1165
"The total price tag for processing all the various types
of civil cases is estimated at $2 billion [for 1982], including
$1.7 billion in state courts and $0.3 billion in the federal
courts--all of which is on top of what the litigants themselves
1166
pay.
According to the Administrative Office of the U.S.
Courts, the total daily cost of a civil jury trial is $2,549. This
figure includes the salaries of judge and staff, facilities,
security, jurors' expenses and administrative office cost. It does
not include attorneys' fees. 67
A study done by the Institute for Civil Justice estimates
that the total amount spent by defendants on legal fees and
expenses for all tort cases in state and federal courts of general
jurisdiction during 1985 was $4.7 to $5.7 billion or $5,400 to
$6,600 per lawsuit. 68
Estimated budget authority for the federal district
courts is just over $1 billion for fiscal year 1992. Litigants
filing in the district courts pay a filing fee of $120. Using the
caseload figures for 1990, the most recent published figures, if
these filing fees were paid in 186,000 civil cases (not including
cases filed by the United States as plaintiff), the fees would
amount to $22.3 million or roughly 2.2 percent of the federal
judicial budget at the trial level. 69
"[S]ome states run
65
Gordon Crovitz, Lawyers on Trial: How to Take the Profit
Out of Suing, 35 Pol'y Rev. 72, 74 (1986).
66
Institute for Civil Justice, Rand Corporation, Annual
Report April 1, 1991 - March 31, 1992 50 (1991) (citing James S.
Kakalik & Randy L. Ross, Costs of the Civil Justice System: Court
Expenditures for Various Types of Civil Cases).
67
Administrative Office of the U.S. Courts, Budget Branch,
Daily Cost of a Civil Jury Trial, Feb. 19, 1991.
68
James S. Kakalik & Nicholas M. Pace, Institute for Civil
Justice, Rand Corporation, Costs and Compensation Paid in Tort
Litigation 58 (1986).
69
Filing fees are established at 28 U.S.C. §§ 1913 note and
1914. Caseload figures are taken from the Annual Report of the
Director of the Administrative Office of the United States Courts
(1990), Tables B-6 and C-2, the most recent figures available.
16
surpluses by charging user fees meant to cover the full costs of
the system. Not surprisingly, these states do not have the case
backlogs of states that charge only nominal fees. 1170
"Sixty cents of every dollar spent on malpractice
liability insurance are absorbed by administrative and legal costs.
The corresponding figures are 60 cents on the dollar for products
liability and 50 cents for traffic-accident liability. These
numbers do not account for the tax-payers' direct support of
judges, law clerks, secretaries, and the rest of a swelling,
increasingly bureaucratic judicial system. 1171
B. Awards and Compensation
"[In 1985], the system spent $16-19 billion in
transaction costs to deliver $14-$16 billion to plaintiffs in net
compensation. of all the money paid in compensation and legal fees
and expenses, the successful plaintiff received about 56 percent in
net compensation, with the system consuming the rest. Adding the
value of time spent by the litigants makes the costs even higher;
injured parties' net compensation is reduced to 46 percent of the
total cost."
"Plaintiffs' net compensation as a percentage of total
expenditures was 52 percent for auto torts and 43 percent for all
other torts, reflecting higher defendants' litigation costs for
nonauto torts. Defense legal fees and expenses for nonauto tort
cases were 28 percent of total compensation paid, compared with 16
percent for auto tort cases. However, litigation costs paid by
plaintiffs as a percentage of total compensation were essentially
the same for auto tort (31 percent) and nonauto tort cases (30
percent) 1172
Budget figures are taken from Budget of the United States Govern-
ment, Fiscal Year 1993, Appendix One at 193. The budget documents
do not segregate costs between civil and criminal cases. Although
the budget figure for the district courts includes expenses for
criminal as well as civil cases, it does not include other costs
partially attributable to civil cases such as fees of jurors, court
security, and judicial automation.
70
Gordon Crovitz, Lawyers on Trial: How to Take the Profit
Out of Suing, 35 Pol'y Rev. 72, 74 (1986).
71
Peter W. Huber, Liability: The Legal Revolution and Its
Consequences, 151 (1988).
72
Institute for Civil Justice, Rand Corporation, Annual
Report April 1, 1991 - March 31, 1992 52 (1991) (citing James S.
Kakalik & Nicholas M. Pace, Institute for Civil Justice, Rand
Corporation, Costs and Compensation Paid in Tort Litigation).
17
"Over the past five years [from 1981 to 1985], the
average annual growth rate in average compensation paid per
liability claim has been about 12 percent for auto claims and 17
percent for other tort claims. During the same period, the
consumer price index grew an average of 7 percent. 73
Professor Jeffrey O' Connell of the University of Virginia
has estimated that when all costs are counted, only approximately
15 percent of the cost of injury litigation actually compensates
claimants. 74
"Almost half of all monetary awards in personal injury
cases go to two percent of the claimants, who win $1 million or
more. 1175
C.
Number of Attorneys
The American Bar Association estimates that by the year
2000, there will be one million lawyers available in the United
States, which represents a 34 percent increase over the 748,028 in
1990. 76
"The legal profession grew by 90% in the 1970s and an
additional 48% from 1980 to 1988. During the years of fastest
growth--from the mid-1970s to the early 1980s--the lawyer
population increased by more than 25,000 persons per year, or
almost as much as it grew during the entire generation from 1940 to
1960. By 1988, the ratio of lawyers to the general population was
far more than twice its historic average. 177
Great Britain's Cambridge Law Journal reported that the
United States has twenty times the number of lawyers as Japan per
73
Institute for Civil Justice, Rand Corporation, Annual
Report April 1, 1991 - March 31, 1992 52 (1991).
74
Walter K. Olson, The Litigation Explosion 10 (1991).
75
Peter Huber, Liability: The Legal Revolution and Its
Consequences 150 (1988)
76
One Million Lawyers, Wall St. J., Jan. 21, 1992, at B-1;
see also Michele Galen et al., Guilty! Too Many Lawyers and Too
Much Litigation, Bus. Wk., Apr. 13, 1992, at 61.
77
Richard H. Sander & E. Douglass Williams, Why Are There
So Many Lawyers? Perspectives on a Turbulent Market, 14 Law & Soc.
Inq., 431, 432 (1989).
18
100,000 population. 78
"[T]he recent spectacular growth in the number of lawyers
in America has been a source of renewed concern.
Today
approximately one U.S. citizen in every 364 is a lawyer. Our
nation has about twenty times more lawyers per 1,000 people than
Japan; each year we graduate more than twice as many lawyers as
there are in that entire society. Likewise, our society has three
times as many lawyers as Germany and ten times as many as
Sweden. 1179
"The United States now has nearly three times as many
lawyers per capita as any other advanced industrial society. 80
According to the National Association of Manufacturers,
companies are expanding their legal departments faster than their
research and development departments.⁸¹
D. Case Management
1. Filings and Delays
"The Federal Courts are suffering today under the scourge
of two related and worsening plagues. First, the costs of civil
litigation, and delays that contribute to those costs, are high and
are increasing; they limit access to the courts to only those who
can afford to pay the rising expenses; and they undermine the
ability of American corporations to compete both domestically and
abroad. Second, the Federal courts have a scarcity of
78
W. John Moore, Knocking the System, 47 Nat'l J. 2844,
2847 (1991) ; see also Michele Galen et al., Guilty! Too Many
Lawyers and Too Much Litigation, Bus. Wk., Apr. 13, 1992, at 61
(noting that the United States has 307.4 lawyers per 100,000 versus
102.7 for Great Britain, 82 for Germany and 12.1 for Japan).
79
Eve Spangler, Lawyers for Hire, Salaried Professionals at
Work 2 (1986) (citations omitted).
80
Richard H. Sander & E. Douglass Williams, Why Are There
So Many Lawyers? Perspectives on a Turbulent Market, 14 Law & Soc.
Inq., 431, 432 (1989) (citing Marc Galanter, Adjudication,
Litigation, and Related Phenomena, Law & Soc. Sci. 166 (1987)
81
Alyson Pytte, Bush Gives Presidential Nod to New
Liability Standards, Cong. Q., Feb. 3, 1990, at 326 (quoting
Phyllis Eisen, Director of risk management for the National
Association for Manufacturers).
19
resources. 82
The Federal Courts Study Committee found that from 1958
to 1988 the caseload in the federal district courts more than
trebled. Similarly, the caseload in the federal courts of appeals
increased tenfold. 83
Private civil case filings in the federal district courts
increased as follows: 32,000 in 1950, 64,000 in 1970, and over
161,000 in 1986. 84
Between 1950 and 1986, aggregate filings in the federal
district courts increased 197 percent, most of which increase
derived from civil suits. Civil filings increased 367 percent,
while the criminal caseload increased 7 percent. 85
"The percentage growth for both U.S. [cases involving the
United States as plaintiff or defendant] and private civil cases
[during the period 1950 to 1986] was substantial--309 percent and
406 percent, respectively. However, private civil litigation has
been moving steadily ahead of civil actions involving the United
States, and by 1986 private suits represented a greater proportion
of all civil suits (64 percent) than at any previous time in the
history of the federal court system. 86
The average caseload in the federal appellate courts
increased by more than 350 percent from 1945 to 1985. 87
82
Senate Comm. on the Judiciary, The Judicial Improvements
Act, S. Rep. No. 416, 101st Cong., 2d Sess. 1-2, reprinted in 1990
U.S.C.C.A.N. 6802, 6804 (1990) (committee report).
83
Federal Courts Study Committee, Report of the Federal
Courts Study Committee, Apr. 2, 1990, at 5.
84
Terrence Dungworth & Nicholas M. Pace, Institute for
Civil Justice, Rand Corporation, Statistical Overview of Civil
Litigation in the Federal Courts vi-vii (1990).
85
Terrence Dungworth & Nicholas M. Pace, Institute for
Civil Justice, Rand Corporation, Statistical Overview of Civil
Litigation in the Federal Courts 5 (1990).
86
Terrence Dungworth & Nicholas M. Pace, Institute for
Civil Justice, Rand Corporation, Statistical Overview of Civil
Litigation in the Federal Courts 5 (1990).
87
Terrence Dungworth & Nicholas M. Pace, Institute for
Civil Justice, Rand Corporation, Statistical Overview of Civil
Litigation in the Federal Courts 2 (1990).
20
3
According to the National Center for State Courts, from
1984 to 1989 the number of tort cases filed increased 33.7 percent,
the number of real property cases filed increased 26.0 percent and
the number of contract cases filed increased 21.6 percent. During
the same period, the resident population of the United States
increased 5 percent. 88
In 1986, the time to disposition in almost 40 percent of
private civil cases filed in the federal district courts was more
than one year. Approximately 61 percent of all private civil cases
reached disposition within 1 year of filing, compared with 23
percent within two years 9 percent within three years, and 7
percent later than that. 89
In the pharmaceutical area "[f]or non-Dalkon Shield and
non-Bendectin defendants between 1981 and 1986, the annual number
of lawsuits filed doubled and the number of different defendants
nearly doubled. 90
In 1989, the General Accounting Office (GAO) studied
product liability cases in five states (North Dakota,
Massachusetts, South Carolina, Arizona and Missouri). The GAO
reported that in these five states, product liability cases took an
average of 2 1/2 years from the filing of the complaint to the
beginning of the trial. The average trial lasted an additional 12
days while on average an appeal extended the process 10 months. 91
The American Insurance Association and the Alliance of
American Insurers studied large products liability cases in 1985
and found that fewer than 7 percent were closed within one year.
Over one half were terminated within three years, but 31 percent
88
National Center for State Courts, State Court Caseload
Statistics 1984-1989.
89
Terrence Dungworth & Nicholas M. Pace, Institute for
Civil Justice, Rand Corporation, Statistical Overview of Civil
Litigation in the Federal Courts viii, 21 (1990).
90
Richard J. Mahoney & Stephen E. Littlejohn, Innovation on
Trial: Punitive Damages versus New Products, Science, Dec. 15,
1989, at 1397.
91
U.S. General Accounting Office, Report to the Chairman,
Subcommittee on Commerce, Consumer Protection, and Competitiveness
of the Committee on Energy and Commerce, House of Representatives:
Product Liability, Verdicts and Case Resolution in Five States,
H.R. Doc. No. 89-99, Sept. 1989, at 4.
21
took four years or more to be resolved. 92
"The problem of civil trial delay in the Los Angeles
Superior court worsened in the 1980s and is now nearing crisis
proportions. The time from filing to jury trial has reached five
years--far longer than the two-year period generally accepted as
ideal for civil cases. The percentage of civil cases in Los
Angeles in which a jury trial is held has shrunk in recent years,
suggesting that long delays may discourage some litigants from
waiting for trial. As more litigants opt for settlement in the
face of the five-year delay, concerns have been raised about
citizens' access to justice. 93
"[T]he current system is cruelly slow. Last year the
backlog of personal-injury, product-liability and other civil
damage suits in the Law Division of the Cook County Circuit Court
reached 67,776 cases, 20 percent of them 5 years old or older.
Delays of 6 to 10 years between filing and trial are common. 1194
2. Discovery
"The discovery process has become, for both sides, a
litigation weapon to discourage and prevent prosecution of claims,
to force a settlement or merely to wear down an adversary.
Counsel, regrettably, often look upon discovery as a meal ticket or
annuity rather than as a quick and inexpensive quest for evidence.
These were obviously not the intentions of the draftsmen of the
Federal Rules of Civil Procedure, and should not be permitted to
thwart the right of litigants to their day in court. "95
"Although both judges and lawyers identify the failure to
comply with discovery requests as a frequently encountered abuse of
discovery, the present sanctioning system does not effectively
deter such abuse principally because judges are unwilling to impose
sanctions after-the-fact to punish most transgressors, preferring
92
American Bar Ass'n Judicial Admin. Div., Action Comm'n to
Reduce Court Cost and Delay, Attacking Litigation Costs and Delay
(1984), cited in Thomas C. Fischer, Toward Legal Gridlock?, 24 New
Eng. L. Rev. 697, 707 (1990).
93
Institute for Civil Justice, Rand Corporation, Annual
Report April 1, 1991 - March 31, 1992 16 (1990).
94
John McCarron, Too Many Lawsuits Spoil Torts, Courts,
Chi. Trib., May 19, 1991, at 3.
95
Martin I. Kaminsky, Proposed Federal Discovery Rules for
Complex Civil Litigation, 48 Fordham L. Rev. 907, 922 (1980)
(citations omitted).
22
instead to give the offending party a second chance to comply. 1196
"Discovery, like pleading, is too easily abused, the
consequences of such abuse in terms of delay, expense and public
resentment are too serious, and the federal judiciary is too busy
to continue the present reliance on protective and sanction orders
as the principal weapon against abuse. While those powers must be
retained and firmly exercised, we are persuaded that the effort to
state and enforce proper standards of professional conduct for
attorneys offers a significant opportunity to deter excessive
discovery and other abuse. 1197
In a 1988 poll of 200 federal and 800 state judges,
discovery abuse was cited more often than any other factor as the
cause of court delay. Approximately 80 percent of the judges
polled said they have at least some problems with the discovery
98
process.
Precedent exists for both a mandatory disclosure
requirement and limits on discovery:
*
Rule 6 of the Rules of Court, Central District of
California, "Early Meeting of Counsel--Report to Court--
Status On Conference," requires counsel (1) to exchange all
documents then "reasonably available to a party which are then
contemplated to be used in support of the allegations of the
pleading filed by the party"; (2) to exchange "any other
evidence reasonably available to the party to obviate the
filing of unnecessary discovery motions"; and (3) to exchange
a "list of witnesses then known to have knowledge of the facts
supporting the material allegations of the pleading filed by
the party. See also S.D. Fla. Ct. R. 14 (A).
*
The rules of the U.S. Tax Court require parties "to
attain the objectives of discovery through informal
consultation or communication before utilizing the discovery
procedures provided in these Rules.' U.S. Tax Ct. R. of Prac.
96
American Bar Ass'n, Section of Litigation, Second Report
of the Special Committee for the Study of Discovery Abuse, 5 Litig.
News 9, 10 (1980) (quoting Ellington, A Study of Sanctions for
Discovery Abuse 42-43, 56 (1979))
97
American Bar Ass'n, Section of Litigation, Second Report
of the Special Committee for the Study of Discovery Abuse, 5 Litig.
News 9, 11 (1980).
98
Louis Harris and Assocs., Inc., Judges Opinions of
Procedural Issues: A Survey of State and Federal Trial Judges Who
Spend at Least Half Their Time on General Civil Cases, 69 B.U.L.
Rev. 731, 733 (1989).
23
and Proc. 70.
*
In 1987, the Supreme Court of Nevada adopted a rule,
providing that, within 30 days after the service of the
answer, the attorneys for the parties must meet to request and
exchange discoverable documents and lists of people having
knowledge of the relevant facts. Nev. Ct. R. Anno. R. 21.
*
The American Bar Association has twice proposed (in
1977 and 1980) making limits on discovery part of the Federal
Rules of Civil Procedure. 99
*
A 1986 Federal Judicial Center survey of 12
districts with a local rule limiting the number of
interrogatories found a majority of the 271 responding
attorneys approved of the rule, with 73 percent reporting that
the limitation controlled certain abusive, excessive or
pointless discovery. 100
*
At least one federal district court has a local rule
imposing quantitative restrictions on the taking of
depositions. See E.D. Va.
E.
Expert Witnesses
"There is no 'bright-line' test to distinguish real
science from junk science, but there are some clear signals
[J]unk science is often espoused by an 'expert' who is not really
an expert (someone you would trust if your health and well-being
depended on it.) The expert
typically has not published in
the field, has not been a member of any relevant professional
society, is not familiar with the relevant literature, and does not
understand key principles of the relevant science. The expert is
often a journeyman witness who makes a living in the courtroom, not
the laboratory. 101
"A curious group of expert witnesses has emerged in the
sympathetic sort of case where neighbors charge that pollution from
a chemical factory or dump has made them ill. Lawyers for the
neighbors can usually show that the defendants released at least
99
See American Bar Ass'n, Report of the Special Committee
for the Study of Discovery Abuse 18, 20 (1970) (limiting parties to
30 questions as of right) ; American Bar Ass'n, Second Report of the
Special Committee for the Study of Discovery Abuse (1980).
100
J. Shepard & C. Seron, Federal Judicial Ctr. Staff Paper,
Attorneys' Views of Local Rules Limiting Interrogatories (1986).
101 Barry Epstein & Marc Klein, Keeping "Junk Science" Out of
the Courtroom, N.J.L.J., Sept. 19, 1991, at 7.
24
minute quantities of hazardous substances into the local air,
water, or soil. The experts then come along to testify that even
very low-level exposure to chemicals can ravage people's immune
systems -- the dramatically effective catch-phrase is 'chemical
AIDS.
The experts do their own battery of tests on the
complainants and come up with immune system abnormalities that
tests by other scientists fail to reveal.'
"The 'chemical AIDS' idea has been emphatically rejected by
leading medical authorities as without foundation. But a Missouri
court awarded $49 million after claims of this sort -- later
remanded for retrial -- and complainants from Tennessee to
California have been winning verdicts ranging up to $13 million,
although many get thrown out on post-trial motions or appeal. 102
"[T]he issue should not be considered in 'pro-plaintiff'
or 'pro-defendant' terms. A defendant could use junk science to
defeat a plaintiff's legitimate claims for compensation every bit
as well as a plaintiff could use junk science to prevail on an
unjust claim.
Aside from yielding unjust results, [junk
science] can compromise the integrity of our judicial system,
undermine the public's perception of it, and drive vital products
from the marketplace. 103
"Why would you, the diligent lawyer, settle for a
scientist who will say that PCBs may in some circumstances affect
health, though how and at what concentrations is most unclear, if
you can find one who will swear that they are one of the most
lethal substances known to man, that they subvert the immune
system, and they undoubtedly were to blame for this plaintiff's
migraine headaches?
...
The middle of the road, in law even more
so than in politics, belongs to the yellow stripes and the dead
armadillos
It is the strength of the expert's support for
your position that comes first. 104
IV. Punitive Damages
One commentator has opined: "[P]unitive damages are out
of control. Certainly recent awards are unprecedented in both
incidence and amount. Moreover, the explosion in punitive
judgments has not been accompanied by a reform of the terms of
their imposition. Punitive damages may be inflicted without
adequate procedural safeguards, in the absence of meaningful
102 Walter K. Olson, The Litigation Explosion 162-63 (1991).
103 Barry Epstein & Marc Klein, Keeping "Junk Science" Out of
the Courtroom, N.J.L.J., Sept. 19, 1991, at 11.
104 Peter W. Huber, Galileo's Revenge, Junk Science in the
Courtroom (1991)
25
substantive standards, and in virtually unlimited amounts. 105
In cases stemming from allegedly defective product design or
manufacture, he questioned the fairness of punishing a defendant
"ten or twenty or a hundred times over, in cumulations so
extravagant and destructive as to defy any rational justification
and threaten the civil extinction of major business entities. 106
From 1984 to 1988, the number of punitive awards in all
pharmaceutical product liability cases was fifteen times greater
than the number of awards in the entire decade of the 70s. 107
According to a study by Stephen Daniels and Joanne Martin
of the American Bar Foundation published in the Minnesota Law
Review in 1990, punitive damages were awarded in 9 percent of the
product liability cases won by plaintiffs from 1981 to 1985. 108
A study released by the Roscoe Pound Foundation in early
1992 reported that in the cases in which punitive damages were
awarded in the past 25 years:
*
punitive damages exceeded $1 million in 36 percent
of the cases;
*
punitive damages exceeded compensatory damages in 59
percent of the cases; and
*
the amount of the punitive damages was more than
twice the amount of the compensatory damages in 38 percent of
105 John Calvin Jeffries, Jr., A Comment on the
Constitutionality of Punitive Damages, 72 Va. L. Rev. 139, 139
(1986)
106 John Calvin Jeffries, Jr., A Comment on the
Constitutionality of Punitive Damages, 72 Va. L. Rev. 139, 146
(1986)
107 Richard J. Mahoney & Stephen E. Littlejohn, Innovation on
Trial: Punitive Damages versus New Products, Science, Dec. 15,
1989, at 1397 (citing Amicus Curiae Brief of the Pharmaceutical
Manufacturers Ass'n and the American Medical Ass'n to the U.S.
Supreme Court in Browning Ferris Industries V. Kelco Disposal,
Inc., No. 88-556, at 12 n. 28).
108 Stephen Daniels & Joanne Martin, Myth and Reality in
Punitive Damages, 75 Minn. L. Rev. 1, 37-38 (1990) ; see also John
Moore, Knocking the System, 47 Nat'l J. 2844, 2849 (1991).
26
the cases. 109
A study undertaken by the Justice Department's Tort
Policy Working Group in 1987 indicated that uncertainties in the
punitive damages system "serve as a significant obstacle to the
settlement process by giving the plaintiff unrealistic expectations
of the value of his case even where the defendant has made a
generous settlement offer. 110 The study noted: "It is close to
impossible to negotiate sensibly with a plaintiff who believes that
he can shoot for the moon. 111
The plaintiff in Layman V. Xerox Corp. 112 sued under
state tort law and federal age discrimination law and recovered
$145,000 in back pay, $140,000 in compensatory damages and $8.8
million in punitive damages.
"In Georgia in 1987, a jury awarded a construction
company $5 million in punitive damages for $53,000 of property
damage to a bulldozer where the bulldozer merely hit a petroleum
line that was not buried deep enough. 113
In Aetna Life Insurance Co. V. Lavoie, 114 an Alabama
109 Michael Rustad, Demystifying Punitive Damages in Products
Liability Cases: A Survey of a Quarter Century of Trial Verdicts
29 (1991) It is important to note that the conclusion of
Professor Rustad's study is that punitive damages are rarely
awarded, even more rarely paid and frequently reduced after trial.
According to Professor Rustad, his study demonstrates that
"companies have nothing to worry about in punitive damages as long
as they act responsibly. " Milo Geyelin, Product Suits Yield Few
Punitive Awards, Wall St. J., Jan. 6, 1992, at B-1.
110 R. Willard & R. Willmore, An Update on the Liability
Crisis: Tort Policy Working Group 51 (1987).
111 R. Willard & R. Willmore, An Update on the Liability
Crisis: Tort Policy Working Group, 51 (quoting Twerski, A Moderate
and Restrained Federal Product Liability Bill: Targeting the
Crisis Areas for Resolution, 18 U. Mich. J.L. Ref. 575, 612
(1985))
112
(N.D. Tex. 1990), reported in Martha Brannigan & Karen
Blumenthal, Who Will Lead Prosecution of Noriega, Wall St. J., Jan.
11, 1990, at B-8.
113 Griffin B. Bell & Perry E. Pearce, Punitive Damages and
The Tort System, 22 U. Rich. L. Rev. 1, 2 (1987).
114
470 So. 2d 1066 (Ala. 1984), vacated, 475 U.S. 813
(1986).
27
jury awarded $3.5 million dollars in punitive damages against an
insurance company for its bad faith refusal to pay a $1,650.22
hospital bill. Although some jurisdictions require a reasonable
relationship between the actual and punitive damages, the Alabama
courts do not require such a correlation. 115
V.
Availability and Cost of Liability Insurance
Many companies are finding it increasingly difficult to
obtain the services of qualified persons to serve on their boards
of directors because of the increasing threat of liability and
soaring insurance costs. The number of claims against directors
has gone up 257 percent since 1974, and the average total cost per
claim has risen 84 percent.
116
"More than a dozen Pennsylvania fireworks celebrations
have been called off, including one at the state capital in
Harrisburg. Officials in Prairie Village, Kansas, canceled their
annual display after they could not find an insurance company to
provide $1 million in coverage.
"And here in Detroit, where a 45-minute fireworks display
is planned for the annual Canadian-American festival Wednesday,
officials say their liability insurance premiums have doubled since
last year
Canonsburg, Pa. dropped plans for its fireworks
show. It could get liability insurance for the stadium but only if
there were no fireworks. There will be the regular parade, but the
co-chairman of the festival, Stephen Zemencik, said the high point
of the show that has annually brought thousands of people to his
little town 23 miles from Pittsburgh would not be seen.
"The dimming of fireworks is only the latest installment
in the liability insurance problem that is pinching many forms of
summer fun. A variety of facilities and business, from water
slides at carnivals to horseback riding in national parks are
affected.
"Recreation industry officials say that if coverage can
be obtained, premiums are double or triple last year's.
"[Akron, Ohio's] Fourth of July ethnic festival
was
for a while in danger of cancellation for lack of insurance. The
premium on the policy that was finally obtained is the same as last
year, but the coverage is only $500,000, not the $1 million it was
last year.
115
Griffin B. Bell & Perry E. Pearce, Punitive Damages and
The Tort System, 22 U. Rich. L. Rev. 1, 6 (1987).
116 Tamar Lewin, Director Insurance Drying Up, N.Y. Times,
March 7, 1986, at D-1.
28
"On Mount McKinley
guides are leading tours on only
limited sections of the highest peak in North America because of
new restrictions in their insurance policies. ,117
In 1987, half of all ice skating rinks reported they
could not obtain liability coverage and were threatened with
closure. 118
By 1986, most of the country's 400 largest consulting
engineering firms were unable to buy pollution liability insurance
in any amount, or at any price, and were refusing to handle toxic
waste sites unless their clients assumed all liability. 119
VI. Product Liability
A.
Generally
"Insurance brokers in Europe say some small companies
have decided to forgo the American market rather than pay the large
product liability premiums. 120
A comprehensive analysis of jury verdicts in the United
States prepared by the Rand Institute for Civil Justice shows that
the growth in the average award in product liability suits "has
been truly explosive, reflecting increases ranging from 200 to more
than 1000 percent" from the period 1960-1964 to 1980-1984. 121
In 1974, the average product liability award was
$345,000; by 1985, it averaged more than $1 million. 122
117 James Barron, Liability Costs Dampen Summer Fun, N.Y.
Times, July 2, 1986, at A-12.
118 R. Willard & R. Willmore, An Update on the Liability
Crisis: Tort Policy Working Group 18 (1987).
119
Peter W. Huber, Liability: The Legal Revolution and Its
Consequences 140 (1988).
120 Jacques Neher, Liability Insurance Costs Discourage
European Exports to U.S., Wash. Post, Dec. 28, 1986, at K-5.
121 D. Hensler, et al., Trends In Tort Litigation: The Story
Behind the Statistics 18 (1987).
122 Dee, Chairman of the National Ass'n of Manufacturers,
Blood Bath, 10 Enterprise 3 (Mar/Apr 1986), cited in Marc Galanter,
The Day After the Litigation Explosion, 46 Md. L. Rev. 3, 4 (1986) ;
see- also Time, Mar. 24, 1986, at 20.
29
In California, a man was injured when a drunk driver lost
control of his car, veered into a parking lot, and crashed into a
telephone booth where the man was standing. The man sued the
companies that had designed, installed, and maintained the booth.
In 1983, Chief Justice Rose Bird of the California Supreme Court
held that these companies could be held liable for the
injuries. 123
The American product liability system inflates insurance
costs, creates uncertainties for business, stifles corporate
research and development, and ultimately increases consumer costs.
Fear of litigation also undermines research and development of new,
beneficial products, and costs American workers jobs. 124
[L] iability premiums tripled in a three-year period from
1984-1986.
125
"A textile machine manufacturer that had been in
business since 1830 was forced to shut down after defending against
36 product liability claims. One of these claims involved a
machine that left the plant in 1895. 126
"Consulting engineers report that they systematically
favor old products over new ones in their design specifications
fearing (quite correctly) that newer design options carry a greater
risk of liability, whatever real decrease in risk they might
actually represent. 127
"Liability-conscious universities decline to license
patents to small companies despite the fertile environment they
123
Gordon Crovitz, How to Take the Profit Out of Suing, 35
Pol'y Rev 72, 72 (1986).
124
Product Liability, Senate Panel Hears Testimony on Reform
Bill; Effect on Insurance Debated, Daily Rep. For Executives, (BNA)
Apr. 6, 1990, DER No. 67, at A-6.
125
Testimony of W. Kip Viscusi, George G. Allen Professor of
Economics, Department of Economics, Duke University Durham, N.C.
before the Subcommittee on Competitiveness and Economic Opportunity
of the U.S. Senate Committee on Small Business, at 15 (Nov. 7,
1991).
126
Alfred W. Cortese, Jr. and Kathleen L. Blaner, The Anti-
Competitive Impact of U.S. Product Liability Laws: Are Foreign
Businesses Beating Us at Our Own Game? 9 J.L. & Com. 167, 198
(1989).
127
Peter W. Huber, Liability: The Legal Revolution and Its
Consequences 156 (1988).
30
offer for innovation, fearing that anyone suing over a
patent-related product would be sure to go for the university's
deep pocket as well. 128
A 1988 survey of 500 company chief executive officers
conducted by the American Tort Reform Association found the product
liability system nationwide harms the ability of companies to plan
for the future. Survey results showed that some companies were
forced to close their operations or lay off workers, and others to
cancel plans for new products.
The survey also found that CEOs believe product liability
laws in this country have made the United States less competitive
in world markets.
For example, the National Machine Tool Builders'
Association has reported that 23 percent of its members have no
product liability insurance, and for those that do have coverage,
premiums have risen by 55 percent from 1986 to 1988. 129
The costs associated with product liability suits have a
disproportionate effect on small firms. Unlike some large firms,
small businesses are unable to pass the increased costs of
insurance and litigation onto the consumer and remain
competitive.
130
"Under the current product liability system, everyone is
hurt -- the manufacturer; the injured claimants, who may be left
uncompensated if all the manufacturers' resources are depleted due
to the lack of available, affordable insurance; and the public, who
are denied access to products. 131
"The median company in the machine tool industry is
forced to spend seven times more on product liability costs than it
128 Peter W. Huber, Liability: The Legal Revolution and Its
Consequences 156 (1988)
129
Susan Wollner, Business Groups Back Product Liability
Reform, 5 Bus. First - Buffalo, May 22, 1989, at 13.
130 R. Wendell Moore, Acting Chief Counsel for Advocacy, U.S.
Small Business Administration, statement before the Subcommittee on
Competitiveness and Economic Opportunity of the Senate Committee on
Small Business (Nov. 7, 1991).
131 Edward J. Goldman, (on behalf of NMTBA - the Association
for Manufacturing Technology), statement before the Subcommittee on
Competitiveness and Economic Opportunity of the Senate Committee on
Small Business, at 2 (Nov. 7, 1991).
31
is able to spend on new product research and development. 132
The American machine tool industry is about three
quarters what it was a decade ago. Overseas competitors have
filled many of the gaps. One of the impediments in competing
against foreign companies is product liability costs. 133
B. Private Planes
Both Beech Aircraft and Piper Aircraft suspended
production of light single- and twin-engine aircraft. 134
"In 1977
for example, small-plane manufacturers
paid a total of $24 million in liability claims. By 1985, their
payout was $210 million. Companies like Beech, Cessna, and Piper
curtailed or suspended production; they quickly discovered that the
new-model planes, carrying a 50 percent surcharge for liability
insurance, could no longer compete with used planes already on the
market. Aircraft technology, however, had been advancing steadily,
so the new models kept off the market were notably safer than the
old ones people went on using instead. Worse still, small-plane
development has traditionally been the richest source of
aerodynamic research and innovation for the aircraft industry in
general, so what private pilots and hobbyists lose today, the
public will likely lose a decade or two later in commercial
aviation. 135
"The U.S. private aircraft industry has also been hard
hit. Whereas American firms produced over 17,000 private planes in
1979, by 1987 their production had dropped to 1,085. The high
132
Edward J. Goldman, (on behalf of NMTBA -- The Association
for Manufacturing Technology) statement before the Subcommittee on
Competitiveness and Economic Opportunity of the Senate Committee on
Small Business, at 3 (Nov. 7, 1991).
133 Hearings on Product Liability Reform, Before the Subcomm.
On Commerce, Consumer Protection, and Competitiveness of the House
Comm. on Energy, 100th Cong., 1st Sess. at 75, 77 (statement of
John B. Curcio, CEO of Mack Trucks, on behalf of the National Assn
of Manufacturers) (Mar. 24, 1987).
134 Penny Pagano, Liability Costs Cut into Airplane Sales,
Los Angeles Times, June 30, 1986, Part IV, at 1.
135 Peter W. Huber, Liability: The Legal Revolution and Its
Consequences 161 (1988).
32
liability costs average $100,000 per plane. 136
"Piper Aircraft Corp., in the midst of its second
bankruptcy, is currently attempting to move its operations outside
of the country, most likely to Canada. The main reason is to get
out from under the product liability laws of this country, which
can reach back 50 years to an aircraft's manufacturer and sue a
company and force them to pay for damages even though the accident
is due to pilot negligence. 137
Senator Jake Garn (Utah), who is restoring a private
plane he bought in 1969 for $5,000, observed that the cost of
liability has dramatically driven up the cost of replacement parts
for airplanes. He was required to pay $5,300 for two fuel tanks
and $72 for an oil dipstick. 138
"Burt Rutan, the pioneering designer of the Voyager,
didn't have the resources to compete with larger manufacturers, but
he had a cheaper way of getting his products out into the
marketplace. He sold construction plans for novel airplanes to do-
it-yourselfers who built the planes in their garages. But in 1985,
fearful of the lawsuits that would follow if a home-built plane
based on his designs crashed, he stopped selling the plans. 139
The President of Unison Industries, Inc., said his firm
is withholding from the market a new and advanced electronic
ignition system for light aircraft because of the liability risk
that might result from its release and use. 140
The President and CEO of Will-Burt Co. said that he gave
up making aircraft parts in 1985 "because the attorneys told me to
136 Testimony of W. Kip Viscusi, George G. Allen Professor
of Economics, Department of Economics, Duke University, Durham,
N.C. before the Subcommittee on Competitiveness and Economic
Opportunity of the U.S. Senate Committee on Small Business, at 4
(Nov. 7, 1991).
137
Cong. Rec. S-4682 (daily ed., Apr. 2, 1992) (Senator Jake
Garn).
138 Cong. Rec. S 4682-83 (daily ed., Apr. 2, 1992).
139 Peter W. Huber, Liability: The Legal Revolution and Its
Consequences 156 (1988).
140 Hearings Before the Subcommittee on Transportation,
Aviation and Materials of the House Comm. on Science and
Technology, statement of Frederick B. Sontag, President, Unison
Industries, at 75 (Oct. 22, 1985).
33
stop doing it"; this meant laying off 80 people. 141
"The average cost per airplane for product liability
insurance alone ranges between $60,000-$70,000, and this does not
include accident investigation, defense and engineering costs. In
some cases these total liability costs exceed the cost of the
aircraft itself. 142
C.
Safety
"There's little evidence that specific liability verdicts
have led to the development of safer products. To be sure, tort
suits have encouraged manufacturers to change or expand their
warnings, but there also is little concrete evidence that the
redesigned warnings have resulted in fewer deaths and
injuries. ,143
"[W]hen it comes to actual product design
the far
more important impulses for safety come from outside the liability
system, principally from safety regulation. " 144
"Professor John Graham of Harvard found no statistical
evidence that the expansion of liability doctrines and case filings
has been a significant cause of passenger safety improvements since
World War II. 11145
"Professor Graham suggests that the decision by
141
Hearings on S. 1400, The Product Liability Reform Act of
1989 before the Senate Consumer Subcommittee of the Senate Commerce
Comm., Statement of Harry Featherstone, at 274 (Apr. 5, 1990).
142
Hearings of the Subcommittee on Transportation, Aviation
and Materials of the House Comm. on Science and Technology,
statement of Edward W. Stimpson, President, General Aviation
Manufacturers Ass'n, at 58 (Oct. 22, 1985).
143 Testimony of Robert E. Litan, Senior Fellow, the
Brookings Institution before the Subcommittee on Competitiveness
and Economic Opportunity, Senate Committee on Small Business, Nov.
7, 1991, at 3.
144 Testimony of Robert E. Litan, Senior Fellow, The
Brookings Institution before the Subcommittee on Competitiveness
and Economic Opportunity, Senate Committee on Small Business, Nov.
7, 1991, at 4.
145 Testimony of Robert E. Litan, Senior Fellow, the
Brookings Institution before the Subcommittee on Competitiveness
and Economic Opportunity, Senate Committee on Small Business, Nov.
7, 1991, at 4.
34
manufacturers to phase out tension relievers in seat belts,
motivated largely by liability fears, led to the replacement
'slack' belts, which are less safe than their predecessor. ,146
"[I]t is striking that European auto companies who
operate in a less aggressive liability climate than U.S. companies
have generally been more aggressive in introducing safety
improvements in their cars -- more crash-worthy structures,
pretensioned seat belts, and antisubmarining seats -- than their
U.S. competitors. 1147
"U.S. auto manufacturers delayed and even fought
introduction of the airbag, in part, out of fears of being sued
when the airbags misfired -- suits which are now beginning to make
their way to the courts since airbags have become available.
[Murray MacKay, professor and director of the Accident Research
Unit at the University of Birmingham in England, also suggests
that U.S. companies have been reluctant to install child restraint
seats out of fear of adverse liability rulings. #148
"[T]he threat of liability may have discouraged both
safety and innovation. Dr. Stanley Reiser of the University of
Texas suggests that the spate of medical malpractice suits has
eroded trust between patients and doctors that is essential for
quality care. Fears of liability verdicts have discouraged doctors
from admitting error, a process that is essential to improving
medical practices over time. 149
D.
Effect on Recreation and Sports
"Youth sports activities are slowly becoming extinct --
146
Testimony of Robert E. Litan, Senior Fellow, The
Brookings Institution before the Subcommittee on Competitiveness
and Economic Opportunity, Senate Committee on Small Business, Nov.
7, 1991, at 5.
147 Testimony of Robert E. Litan, Senior Fellow, the
Brookings Institution before the Subcommittee on Competitiveness
and Economic Opportunity, Senate Committee on Small Business, Nov.
7, 1991, at 6.
148 Testimony of Robert E. Litan, Senior Fellow, the
Brookings Institution before the Subcommittee on Competitiveness
and Economic Opportunity, Senate Committee on Small Business, Nov.
7, 1991, at 7.
149 Robert E. Litan, Senior Fellow, the Brookings Insti-
tution, testimony before the Subcommittee on Competitiveness and
Economic Opportunity of the Senate Committee on Small Business, at
4-5 (Nov. 7, 1991).
35
from fear of lawsuits. From expanded liability theories that win
judicial approval. From soaring insurance costs. Americans are now
finding their choices, their freedoms, restricted, whether it be a
scuba diving vacation, a mountain climbing adventure or a flip from
a diving board at a public pool.
Group sports are in deep
trouble. Girls' and boys' clubs, fishing and hiking clubs, and
roadrunners have curtailed or eliminated activities because of high
insurance premiums or the inability to find insurance or the fear
of lawsuits, which these days, may be brought for any conceivable
reason. 150
Product liability costs for American sporting goods
manufacturers in 1982 were 4.2 percent of total sales compared to
0.5 percent of sales for their Japanese competitors. 151
In the last ten years, the number of companies that
manufacture football helmets dropped from 11 to 2. Recently, one
of the last two companies announced its plan to sell that business
because of the liability exposure and cost. In 1985, insurance and
legal costs were higher than all production costs combined. 152
Only two makers of lacrosse equipment remain in the U.S.
and both are experiencing difficulty obtaining liability
insurance. 153
150 Marcia Chambers, Whatever Happened to the Sandlot?, Natl
L. J. Apr. 22, 1991, at 15.
151 Randolph J. Stayin, partner in Taft, Stettinius &
Hollister, Testimony, Mar. 24, 1987.
152 Hearings on Product Liability, Before the Subcommittee on
Consumers of the Senate Comm. on Commerce, Science and Transport.,
99th Cong., 2d Sess. at 69 (1986) ; see also R. Willard & R.
Willmore, An Update on the Liability Crisis: Tort Policy Working
Group 19 (1987) ; Alfred W. Cortese, Jr. & Kathleen L. Blaner, The
Anti-Competitive Impact of U.S. Product Liability Laws: Are
Foreign Businesses Beating Us at Our Own Game? 9 J.L. & Com. 167,
199 n.197 (1989) and accompanying text ("The number of football
manufacturers decreased from 18 in 1976 to 3 in 1986.").
153 Hearings on Product Liability, Before the Subcomm. on
Consumers of the Senate Commerce, Science and Transp., 99th Cong.,
2d Sess. at 69 (1986) (statement of Larry McClain, Vice President,
Rawlings Sporting Goods Co, on behalf of the Sporting Goods
Manufacturers Assn.), cited in Alfred W. Cortese, Jr. & Kathleen L.
Blaner, The Anti-Competitive Impact of U.S. Product Liability Laws:
Are Foreign Businesses Beating Us at Our Own Game? 9 J.L. & Com.
167, 199 (1989) ; see also Brown, Insurance Costs, Lawsuits Injure
U.S. Sports, J. Com., July 13, 1988, at A-1, A-5.
36
Spaulding, a major sporting goods manufacturer, has
withdrawn from production of protective sporting equipment entirely
because of increased insurance costs and increases in the number of
associated product liability suits. 154
Uvex Winter Optical in Rhode Island has stopped
manufacturing and distributing motorcycle and ski racing helmets
because of liability costs. 155
U.S. sporting goods manufacturers have stopped making
hockey equipment, which now comes primarily from Czechoslovakia,
Sweden, and Canada, and trampolines, which must also be obtained
from foreign sources. 156
Some amusement park rides have been closed, including the
temporary closing of the Cyclone ride at the Coney Island Amusement
Park, Astroland. 157
154 Malott, Commentary: Product-Liability System Hampers
Competitiveness, Financier, Jan. 1988, at 30; Alfred W. Cortese,
Jr. & Kathleen L. Blaner, The Anti-Competitive Impact of U.S.
Product Liability Laws: Are Foreign Businesses Beating Us at Our
Own Game? 9 J.L. & Com. 167, 199 (1989) ; R. Willard & R. Willmore,
An Update on the Liability Crisis: Tort Policy Working Group 19
(1987)
155
Hearings on Product Liability Reform, Before the Subcomm.
On Commerce, Consumer Protection, and Competitiveness of the House
Comm. on Energy, 100th Cong., 1st Sess. at 77 (statement of John B.
Curcio, CEO of Mack Trucks, on behalf of the National Ass'n of
Manufacturers) (Mar. 24, 1987), based on a letter from Douglas
Wilson, President of Uvex Winter Optical; see also Alfred W.
Cortese, Jr. & Kathleen L. Blaner, The Anti-Competitive Impact of
U.S. Product Liability Laws: Are Foreign Businesses Beating Us at
Our Own Game? 9 J.L. & Com. 167, 200 n. 211 (1989).
156
Hearings on Product Liability, Before the Subcomm. on
Consumers of the Senate Comm. on Commerce, Science and Transp.
99th Cong., 2d Sess. at 69 (1986) (statement of Larry McClain, Vice
President, Rawlings Sporting Goods Co., on behalf of the Sporting
Goods Manufacturers Ass'n) ; cited in Alfred W. Cortese, Jr. &
Kathleen L. Blaner, The Anti-Competitive Impact of U.S. Product
Liability Laws: Are Foreign Businesses Beating Us at Our Own Game?
9 J.L. & Com. 167, 199 (1989) ; see also Richard W. Stevenson,
Athletic Supplies: Stakes are High, N.Y. Times, June 10, 1986, at
B-9.
157
Testimony of W. Kip Viscusi, George G. Allen Professor of
Economics, Department of Economics, Duke University, Durham, N.C.
before the Subcommittee on Competitiveness and Economic Opportunity
of the U.S. Senate Committee on Small Business, at 4 (Nov. 7,
37
"A seven-figure jury verdict against a Holiday Inn years
ago sounded the death knell for diving boards at all but large,
supervised pools. 158
"Forty percent of the rafting companies in Colorado have
closed or been sold in the last three years, largely due to rising
liability costs. The Sierra Club discontinued its mountaineering
activities in 1988 because climbing insurance had soared to
$350,000, more than double the premium for the rest of its
activities. 1,159
Part of the reason ski lift ticket prices have soared
from $5 a day in the 1960s to $38 to $40 a day now in Southern
Vermont is that the defense of assumption of risk has been narrowed
considerably in the courts, so the cost of insurance and litigation
in recent years has been borne by the skier. 160
VII. Mass torts
A.
Asbestos
"Legal expenses eat up too much of the amount spent to
compensate harms--about half the total expenditures for tort
litigation generally, and as much as 60 percent of the expenditures
for more complex personal injury litigation[, such as that
associated with asbestos]. 161
"Nearly two new asbestos cases are filed for every one
completed.
"
"While one case was pending in court, 488 of the original
plaintiffs died, a result many jurists say is routine."
"For every $1 recovered by an asbestos victim, almost $2
1991).
158 Robert V. Wills, Lawyers are Killing America 22 (1990).
159
Marcia Chambers, Whatever Happened to the Sandlot?, Natl
L. J. Apr. 22, 1991, at 15.
160 Marcia Chambers, Whatever Happened to the Sandlot?, Natl
L. J. Apr. 22, 1991, at 15.
161
Deborah R. Hensler, Taking Aim at the American Legal
System: The Council on Competitiveness's Agenda for Legal Reform,
75 Judicature 244, 250 (1992).
38
goes to litigation costs -- mainly to the attorneys on both
sides. 162
B. Other Torts
"The same legal forces that knocked the Dalkon Shield off
the market also dispatched two other kinds of IUD. The Dalkon
Shield without question deserved to go; the next two, however, were
the safest effective alternatives available to many women.
Leftover IUDs are still used by over 2 million Americans; when the
time comes for these devices to be replaced, it has been estimated
that there will be 160,000 unintended pregnancies caused by the
lack of equally acceptable and effective replacements. These will
result in 72,000 live births and 88,000 induced abortions -- which
collectively pose a far greater risk than any IUD would ever have
created.
"The demise of Bendectin marked progress of a similar
kind. Here pregnant women lost their only certifiably safe relief
from sometimes debilitating morning sickness. Obstetricians and
gynecologists have retreated too. Many of their services have
become wholly unavailable in rural and less affluent communities.
So women and children won their expanded right to sue, but lost
services essential to their health and safety. The complication
that develops in the back seat of the car heading to the delivery
room at a distant hospital is not likely to yield a munificent tort
award, even though it is more likely to end in a tragedy. If the
child is delivered uneventfully, the tort system will continue its
assault on her welfare in later years. 163
"[I]n the early 1970s, Bendectin claims burgeoned. In
one early case, a jury decided that the child's injuries were not
caused by the drug but tried to award $20,000 for medical expenses
anyway. Merrell-Dow won almost all the early cases, but each trial
stimulated a flood of new claims. Eleven hundred claims were
consolidated in a single class action. Faced with the staggering
legal costs of taking such a case to trial, Merrell-Dow offered to
settle for $120 million. Plaintiffs' lawyers foolishly torpedoed
the offer. The case was then tried, and Merrell-Dow won again.
But hundreds of other claimants had opted out of the class action,
and their cases were still pending. In 1987 a jury awarded $2
million to a six-year-old boy born with club feet. Another jury
awarded $95 million for another birth defect. As of July, 1987,
seventeen juries had considered the Bendectin birth defect link.
Merrell-Dow won twelve times, plaintiffs five. Throughout, the
162 Steve France, Asbestos Solution Proposed, ABA Journal,
June 1991, at 16.
163 Peter W. Huber, Liability: The Legal Revolution and Its
Consequences 162 (1988).
39
overwhelming scientific consensus, in the FDA and in all
respectable scientific circles, had not moved an inch: Bendectin
does not, in fact, cause birth defects. 'With Bendectin,' a New
York Times editorial commenting on the original class action
concluded, 'the law has made a devastation and called it a
settlement. I In 1985, under the mounting pressure of litigation,
the drug was pulled from the market. 11164
"Five Bendectin cases produced no award at all; a sixth
netted the plaintiff a $95 million verdict. 165
164
Peter W. Huber, Liability: The Legal Revolution and Its
Consequences 102 (1988).
165 Peter W. Huber, Liability: The Legal Revolution and Its
Consequences 110 (1988)
40