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Civil Justice Reform Executive Order Signing 10/23/91 [OA 8330] [1]
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Civil Justice Reform Executive Order Signing 10/23/91 [OA 8330] [1]
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7
2
Clustria passpropid along to
OFFICE OF THE VICE PRESIDENT
WASHINGTON
when we do
October 1, 1991
reform will AA
NOTE TO ANDY CARD
DAVE DEMAREST
ROGER PORTER
DORRANCE SMITH
TONY SNOW
FROM:
BILL KRISTOL Bk/ke
Here's the Vice President's original speech on civil justice
reform, as well as his remarks today at the American Business
Conference. You might want occasionally to include a paragraph
or two in the President's domestic agenda remarks.
OFFICE OF THE VICE PRESIDENT
Embargoed until delivered -- August 13, 1991 -- 10:35 a.m. EST
PREPARED REMARKS BY THE VICE PRESIDENT
ANNUAL MEETING OF THE AMERICAN BAR ASSOCIATION
ATLANTA, GEORGIA
The ABA is the largest voluntary professional association in
the world. And you have many things NC proud of: from your
early leadership in reforming and unifying American law, to your
longstanding commitment to service through pro bono activities.
Through his "Points of Light" program, the President has tried to
reinvigorate the great American spirit of volunteerism. Many
members of the ABA have been points of light since the day this
organization was formed.
It is in the spirit of the early reformers in the ABA that I
join you here today. Our goal, as was theirs, is to improve the
administration of justice. Chief Justice Burger once termed this
"a task never finished, and that is especially so in a country
like ours. Madison's "vast and extended commercial Republic" is
now more complex, diverse, and mobile than he could have ever
imagined. But the ideals of the republic remain unchanged: the
rights of the individual are fundamental in America. We take
rights seriously.
So when we think about the command of our Constitution's
Preamble, to "establish Justice," we have to start at the doors
to the courthouse, and keep them open to every American. We owe
them a system in which they can resolve their conflicts promptly,
effectively, and fairly. And from the hundreds of county courts
throughout America, to the Supreme Court in Washington, we also
owe it to the people to maintain the independence and excellence
of the third branch of government.
That is why we view it as so important that the Senate
confirm President Bush's Supreme Court nominee, Judge Clarence
Thomas. The ABA knows Judge Thomas. In fact, you've already
considered his fitness to sit on the federal bench, and found him
qualified just last year. And the Senate has confirmed him no
less than four times for high positions in the federal
government.
As you know, there's been a bit of opposition to Judge
Thomas's confirmation from some interest groups. But in spite of
this ideological opposition, I'm confident that my former
colleagues in the Senate will consider this nomination fairly and
on the merits. I think the great majority of senators will end
up agreeing with the former national board chair of the NAACP,
2
Margaret Bush Wilson, who wrote last week that Judge Thomas's
"record will speak for itself and will impress those willing to
listen and look beyond misinformed rhetoric." Ladies and
gentlemen, Judge Clarence Thomas is an outstanding nominee. He
deserves to be confirmed, and I believe he will be.
Today I want to talk about our legal system's impact on the
American economy, on our ability to compete. Through the 1990s,
we're going to face many obstacles in the global marketplace.
Some will come from the outside; we're still seeing unfair
practices on the part of some trading partners -- subsidies,
nontariff trade barriers, and the like. But
are other
stumbling blocks that we can't make excuses for -- because
they're our own fault. And that's the way I think we should look
at litigation in America today. Our system of civil justice is,
at times, a self-inflicted competitive disadvantage.
Every year in America, individuals and businesses spend more
than 80 billion dollars on direct litigation costs and higher
insurance premiums. When you include the indirect costs, it may
add up to more than 300 billion.
This is just one part of the problem. Look at the sheer
number of disputes now flowing through our judicial system. One
of the most insightful studies of the system is aptly titled, The
Litigation Explosion. In 1989 alone, more than 18 million civil
suits were filed in this country -- one for every ten adults --
making us the most litigious society in the world. Once in
court, many litigants face excessive delays -- some caused by
overloaded court dockets, others by adversaries seeking tactical
advantage. In addition, many of the costs confronting our
citizens are enormous, and often wholly unnecessary. And in
resolving conflicts, Americans don't have enough access to
avenues other than the formal process of litigation.
Isn't our legal system in need of reform? Can't we improve
the delivery of justice to American citizens? With these
questions in mind, the President's Council on Competitiveness,
which I chair, assembled a Working Group on Civil Justice Reform.
I was pleased that the Solicitor General, Ken Starr, agreed to
serve as chairman, and he and his colleagues have done a
wonderful job. Their Report, which was endorsed unanimously by
the Council, puts forward solid reform proposals in a number of
areas. We have 50 recommendations in all; some ambitious, others
more narrow. But each will help reduce cost and delay in the
system, and make it easier for citizens to vindicate their legal
rights.
Many of the Working Group's deliberations centered on the
issue of Discovery under Rule 26. This reflects the view of many
that, as one corporate counsel told us, "discovery is 80 percent
of the problem." Anyone who has ever sued or been sued knows
3
that discovery too often becomes an instrument of delay and even
harassment. Unnecessary document requests and depositions can
disrupt or put on hold a company's entire research and
development program, and the very idea of limits on discovery is
outdated. I'm told of one judge who has said his policy is "just
to have the parties exchange filing cabinets.'
Worse yet, discovery can be a virtually cost-free weapon for
the requesting party. That is what we want to change. The
Council suggests the following reform. First, to require
disclosure of some basic, core information on both sides. Then,
to have the parties meet to formulate a discovery plan,
pre-
set quantitative limits, approved by the court and changeable
only with good cause. Discovery beyond the set limits is
permissible -- but only so long as the requesting party pays his
adversary's production costs. We serve no purpose by allowing
the extreme waste and expense of marginal and abusive discovery
under the federal rules. It is time that we bring it to an end.
It's also time to give people a greater right to choose
among methods of resolving disputes. We believe the system
should provide a "multidoor courthouse," where parties have
options other than formal litigation. This idea builds on much
of the ABA's important work on this subject. The Council's
recommendation is that before the machinery of litigation kicks
in, both sides sit down together -- with a mediator, or in a
conference where they tell their stories to an experienced lawyer
volunteering his or her time. The object would be to probe the
issues carefully but informally, and to weigh the chances for
concluding the matter as quickly as possible and without a trial.
In line with this procedure, alternative dispute resolution would
be made more widely available.
Now, this idea will, of course, empower people with
disputes, and it'll help unclog the courts. But it will also
help preserve relationships that might be destroyed by the
stresses of a courtroom fight, and this is something we should
all take very seriously. The great Judge Learned Hand once said
that he dreaded a lawsuit "beyond almost anything short of
sickness and death." A lot of Americans see things the same way.
They find the system bewildering, a little intimidating, and
frightfully expensive. That is why the Council advises that we
do our best to give the American people a multidoor courthouse.
After all, the system belongs to them, and it ought to respond to
their needs.
On the question of financing litigation, there's been a lot
of discussion on the relative merits of a "loser pays" rule.
From our law school days, we know it goes by the name, the
English Rule. But in fact, it's the rule in virtually every
other western country.
4
The English Rule is grounded in fairness -- in the equitable
principle that a party who suffers should be made whole. Where
the Rule operates, the parties are encouraged to look more
carefully at the merits of their cases. And there's no doubt
that it weeds out a lot of frivolous claims and specious
defenses.
On the other hand, to apply the rule too broadly could
discourage some suits with true merit -- in civil rights and the
environment, to name two areas. For that reason, we propose an
experiment: to apply the English Rule in federal diversity cases
where the plaintiff elects diversity.
There would be two important features to this experiment
with the English Rule. First, the amount to be paid by the
losing party would not exceed the amount he spent on his own
case. This will keep the other side from loading up expenses to
penalize the loser. Second, the rule won't be a guillotine;
there will be an element of judicial discretion in its
application.
Another item of great concern to the Council is punitive
damages. These damages, of course, become an issue only after an
injury is found and a compensatory sum is calculated. By
definition, punitives aren't essential to compensation; in fact,
some jurisdictions don't even have them. Most do, though,
because for centuries they've been viewed, I think properly, as
an effective punishment and deterrent for outrageous conduct.
The problem is that the method of assessing punitive damages
has developed over the years without any real structure or
limits. Even a casual observer knows that, in the last several
decades, punitive damages have grown dramatically in both
frequency and size. What began as a sanction only for the most
reprehensible conduct has now become almost routine. In
California, estimates are that one in every ten jury awards now
includes punitive damages, in amounts averaging more than $3
million. And as these awards become more common, so do the
instances of their arbitrary, even freakish application.
Now, as Justice Blackmun wrote in the Pacific Mutual case,
there are only modest due process limitations on punitive
damages. So the tough issues of reform are left to the political
branches. Here is the proposal agreed on by the Council. First,
to restore the quasi-criminal nature of punitive damages, they
should be awarded in a separate proceeding after the jury has
determined liability, and only where there is some element of
intent involved. Second, and most importantly, the trial judge
would set punitive damages at an amount not to exceed the amount
of the plaintiff's actual harm.
This reform will be good in every respect. For starters, it
5
will preserve the rights of plaintiffs to collect punitive
damages in egregious cases, and continue to serve the goals of
punishment and deterrence. But it will curtail the randomness of
the system -- and restore some measure of certainty to commercial
transactions. And, of course, it will leave unchanged the law of
compensation.
I've covered for you only some of the high points of the
Working Group's report. But the 50 recommendations touch quite a
few other aspects of the administration of justice. For example:
Changing the rules on expert evidence. We recommend
that expert testimony be admissible only as far as it
relates to a community of opinion or scientific
thought. We think it is time to reject the notion that
"junk science" is truly relevant evidence. We're also
recommending that contingency fees for experts be
eliminated. An expert witness should not be an
advocate.
Reforming summary judgment. Where it is appropriate to
grant summary judgment, it should also be mandatory.
Instituting greater flexibility in judicial assignments
- to ensure that we have the judges in the places we
need them.
A word now about implementation. The Working Group was
formed in response to a system we believe is in danger of
spinning out of control. For that reason, the Group worked
intensively these last eight months, and received input from
state and federal judges, scholars, practitioners, and laymen of
varying backgrounds. And for the same reason, we have a strong
plan for action on the recommendations.
Some of the proposals envision formal legislation, and we
will take that to the Congress. In the same vein, we'll be
making contact with appropriate officials at the state level, and
encouraging them to adopt reforms in their systems. In fact,
I'll be presenting some of our recommendations later today to the
National Conference of State Legislators. We'll also be
communicating with relevant policy groups, and proposed changes
in the federal rules will be taken through the proper channels.
And in the executive branch, we intend to take our own
advice. The President will soon be issuing an executive order
that will apply some of these proposals to the federal government
when it engages in litigation. Specifically: to follow the
recommendations on expert witnesses; to allow parties in disputes
with the government to elect the English rule; and to require a
policy-level review of discovery requests.
6
I'm personally optimistic -- and I know Judge Starr and his
colleagues share this view -- that many if not all of the
Council's ideas will be adopted. Our inspiration came from the
American people: they've seen the problems, they've told us to
act, and now they expect us to follow through.
After all, let's ask ourselves: Does America really need 70
percent of the world's lawyers? Is it healthy for our economy to
have 18 million new lawsuits coursing through the system
annually? Is it right that people with disputes come up against
staggering expense and delay?
The answer is no. We are serious about challenging the
status quo, and the proposals I've just outlined are offered to
inspire dialogue, discussion, and action. Should we succeed, the
American people will be the beneficiaries. And so, too, I
suggest, will be the legal profession.
This is no time to be timid. If we believe in progress, we
must not fear change. And on this bicentennial of the Bill of
Rights, we should remind ourselves of the memorable words of
Justice Robert Jackson: "Civil liberties had their origin, and
must find their ultimate guaranty, in the faith of the people."
Our job in government, and your job as leaders in the law, is to
strengthen the faith of the people -- in the resolute protection
of their rights, and in the effective delivery of justice.
#
#
#
PRESS RELEASE
THE VICE PRESIDENT
OFFICE OF THE PRESS SECRETARY
Embargoed until delivered -- October 1, 1991 -- 2:20 p.m. EDT
EXCERPTS FROM PREPARED REMARKS BY THE VICE PRESIDENT
AMERICAN BUSINESS CONFERENCE
WASHINGTON, D.C.
I'm here today to enlist your help in our newest project:
reform in the area of civil justice. In August I gave a speech
on this subject to the American Bar Association in Atlanta. I
thought it was time to address the legal system's impact on our
economy, and on our ability to compete. And make no mistake:
that impact is serious. One study found that foreign companies
often have product liability insurance costs that are 50, 80,
even 90 percent lower than their counterparts in the United
States. We also know that liability concerns have caused
dramatically higher prices for some everyday items, from
stepladders to medicines -- and some beneficial products simply
never reach the market at all.
Moreover, we're the most litigious society in the world.
We have 70 percent of the world's lawyers. The legal system now
costs Americans an estimated 300 billion dollars a year, and it
has far too many openings for abuse and delay.
All these factors have obvious implications in an age of
global markets, and there are things we can do to deal with them.
We can work together to fight new legislation that, though well-
intentioned, will only make the litigation explosion worse. We
can institute system-wide policy reforms, starting with issues
like product liability and medical malpractice, and we have sent
legislation to Congress in both of these areas. And we can move
ahead with the Council's 50 civil justice reform proposals, which
I outlined to the A.B.A.
These proposals include:
O
Discovery reform: to eliminate the use of discovery for
delay and harassment, by requiring the requesting party to pay
the compliance costs of discovery beyond pre-set limits.
O
Empowering people by making the courthouse a place of real
choice -- a "multi-door courthouse" -- where parties have greater
access to options other than formal litigation, and where
mandatory conferences reduce the number of cases that need to go
to trial.
o
Adopting our experimental "fairness rule" in selected types
of federal cases. The fairness rule is a simple, straightforward
concept: the loser pays the winner's legal fees. The idea is to
reduce the numbers of frivolous cases in the federal courts --
2
cases that have no business taking up the time and resources of
the system. The fairness rule will work because it's a simple
matter of incentives. People contemplating litigation may think
more carefully about it if they are confronted with the notion of
paying the other side's legal fees in a losing suit. This would
go a long way toward reducing frivolous and nuisance lawsuits.
Many would decide that it's better to settle, and many would
decide not to file at all.
It is a matter of fair play that the American people should
have some relief from lawsuits that harass and intimidate. Too
often today, we tend to sue at the drop of a hat. Through this
and other reform proposals, let us move toward a new American
ethic: Make litigation the last resort, not the first.
o
We also propose setting limits on punitive damages.
Punitive damages are an effective punishment and deterrent for
truly outrageous conduct. But the system has developed over
centuries without any real structure or limits. Punitives can
now be awarded in arbitrary, unpredictable, and
disproportionately huge amounts. In California alone, estimates
are that one in every ten jury awards now includes punitive
damages, in amounts averaging more than $3 million. What we want
to do is to curtail the randomness in the system, and restore
some measure of certainty to commercial transactions.
O
Another part of our reforms is to changing the rules on
expert evidence: first, to get rid of the kinds of "junk science"
that have no business in the courtroom; second, to eliminate
contingency fees for experts. It is simply wrong to give the
expert witness in a case a stake in the outcome. hired guns -
The reforms we've proposed are sensible and well-considered.
And I think the responses to our proposals are the best proof of
that. Since my remarks to the A.B.A., I've received letters by
the bushel from people across the spectrum: everyday workers,
managers, academics, judges, entrepreneurs, doctors, and, yes,
practicing lawyers. It won't surprise you that these letters
have run at about a hundred to one in favor of our proposals.
Huge numbers of Americans are saying, simply and directly: "we
like these ideas. Now, please follow up!"
Well, we are. Here's what we are doing. We're working
right now on federal legislation to implement some of the
reforms, and we hope to submit it to the Congress within a few
weeks. Among the items covered by the proposed legislation will
be the fairness rule, the multidoor courthouse, and other
provisions affecting federal courts. In addition, the President
is planning to issue an Executive Order to apply some of the
recommendations, when possible, to the federal government.
In areas like expert evidence and pretrial discovery, there
3
will need to be changes in the Federal Rules of Evidence and
Civil Procedure. This will ultimately require action by the
Supreme Court, after we go through a series of federal
committees.
Now, it's just as important to move our reforms forward at
the state level, because the states obviously have systems that
parallel the federal system. So we're asking state attorneys
general, district attorneys, and A.B.A. members around the
country to help us implement the parts of the package that fall
inside their areas of responsibility. And we're working on model
state statutes that will give guidance to the governors and the
state legislatures. I might add that I've already brought the
civil justice reform issue personally to the National Conference
of State Legislators.
The point is: We've gotten off to a good start, and I can
tell you this: I am committed, and so is the administration, to a
grass-roots campaign to finish the job. That's not to say it'll
be easy -- I'm told there have already been fundraisers scheduled
to stop us. But this is not a partisan issue, though some will
try to make it one. Americans of all stripes -- Democrats and
Republicans, lawyers and non-lawyers -- want to see changes in
the system.
Special interest groups -- and now, some partisans -- will
be out in full force. Already the Democratic Senatorial Campaign
Committee has attempted to raise money off of my challenge to the
status quo. Their fundraising letter gives an indication of the
battle that lies ahead. Let me read you part of it: "If you
understand politics, you will understand that the U.S. Senate
with its unique rules of procedure may well end up being the last
bastion for the protection of the justice system we cherish
against an attack spearheaded by the Vice President of the U.S.,
who clearly intends to try to make a campaign issue of 'greedy'
trial lawyers."
I am confident that citizens and legislators on both sides
of the aisle will resist the special interest and partisan
appeals, and join us in improving our system of civil justice.
The public doesn't view this as a partisan issue, and politicians
shouldn't either. And I know this about the American people.
They understand the issues. They're tired of the excuses; tired
of the complaints from those with a vested interest in the status
quo.
#
#
#
are
Tinance
510
Neville
Unin. of Texas
Table 8.1. Lawyers and physicians
Ratio of
Growth
Population
Ratio of
No. of
lawyers (1983)
in
(1980)
population to
physicians
to doctors
No. of lawyers
GDP
Country
GNP
(millions)
physicians
(1980)
(1980)
(1965)
(1983)
(1985)
Algeria
3.2
18.9
2,630
7,186
0.11
80
800
58,180
Argentina
2.2
27.7
430
64,419
0.78
12,000
50,000
65,920
Australia
2.7
14.5
560
25,893
0.27
7,068
162,490
Austria
4.1
7.5
400
18,750
0.12
200
2,200
66,050
Bangladesh
0.0
88.5
10,940
8,090
1.11
8,000
9,000
16,110
Belgium
3.8
9.8
400
24,500
0.5
5,600
12,300
79,080
Canada
3.3
23.9
550
43,455
0.92
14,100
40,000
346,030
Chile
1.6
11.1
1,930
5,751
2.14
5,000
12,300
16,000
Costa Rica
3.2
2.2
1,460
1,507
1.3
723
1,959
3,810
Denmark
3.3
5.1
480
10,625
0.28
2,250
3,000
57,840
Finland
4.0
4.9
530
9,245
0.97
4,475
9,000
54,030
France
3.9
53.5
580
92,241
0.3
14,900
27,215
510,320
Germany
3.3
60.9
450
135,333
0.32
24,300
43,100
624,970
Hong Kong
6.8
5.1
1,210
4,215
0.32
346
1,332
30,730
India
1.4
673.2
3,690
182,439
1.23
70,000
225,000
175,710
Ireland
3.1
3.3
780
4,231
0.59
1,300
2,500
18,430
Israel
3.8
3.9
370
10,541
0.71
3,500
7,500
20,270
Italy
3.6
56.9
340
167,353
0.28
39,400
46,600
358,670
Japan
7.1
116.8
780
149,744
0.09
8,800
14,000
1,327,900
Jordan
5.7
3.2
1,700
1,882
0.37
400
700
3,450
Malaysia
4.3
13.9
7,910
1,757
0.74
750
1,300
31,270
Nepal
0.2
14.5
30,060
482
2.07
1,000
2,340
Netherlands
3.2
14.1
540
26,111
0.15
2,270
4,000
124,970
Nigeria
4.1
84.7
12,500
6,776
0.3
2,000
75,300
Norway
3.5
4.1
520
7,885
0.27
1,650
2,100
57,910
Pakistan
2.8
82.2
3,480
23,621
0.93
11,000
22,000
28,240
Panama
3.3
1.8
980
1,837
0.49
900
4,880
Singapore
7.5
2.4
1,150
2,087
0.47
300
990
17,470
Spain
4.5
37.4
460
81,304
0.68
30,000
55,000
164,250
Switzerland
1.9
6.5
410
15,854
0.21
2,100
3,300
92,690
Turkey
3.6
44.9
1,630
27,546
0.65
10,000
18,000
48,820
U.K.
2.2
55.9
650
86,000
0.62
29,500
53,000
454,300
U.S.
2.3
227.7
520
437,885
1.29
355,000
565,000
3,946,600
Uruguay
0.7
7.4
6,580
1,125
0.27
200
300
4,530
Sources: For the lawyer data see Dunn (1983), International Bar Directory (1985), and Neville (1986). The remaining data come from the
World Bank (1982 and subsequent annual reports).
677,000 Rest of would
from
Black Hole Tinffs and Endengenousl?
Policy Theory
OFFICE OF THE VICE PRESIDENT
WASHINGTON
President's Council on Competitiveness
Fact Sheet on Product Liability Reform
July 24, 1991
"Product liability reform legislation is a top priority for this administration. Our
present system is unfair and is a burden on America's ability to compete. It puts a
drag on innovation and reduces incentives to develop new, safer products for the
consumer. The cost to business is 15 to 20 times higher in the U.S than in Europe
and Japan, which means fewer jobs for Americans. And, the system is unfair to
victims who receive less than 50% of the money spent on liability cases. Now is the
time for Congress to act to reform our product liability system."
Vice President Dan Quayle
July 24, 1991
"By reducing legal uncertainty, the enactment of balanced federal product
liability reform will enhance the international competitiveness of American businesses.
The legislative proposals now before the House and Senate are an excellent step in
that direction."
Secretary of Commerce Robert Mosbacher
July 24, 1991
An Administration Priority.
The Administration is committed to the goal of restoring basic
fairness and stability to the product liability laws in the
United States. Such reform is essential to business innovation,
U.S international competitiveness, and consumer safety and
welfare.
President Bush, in his State of the Union address, called
upon Congress to enact essential product liability reform
legislation.
Secretary of Commerce Robert Mosbacher testified before the
Senate Commerce Committee in 1990 in support of product
liability reform legislation.
On November 30, 1989 Vice President Quayle announced the
Administration's product liability reform initiative
developed by the Council on Competitiveness. The
Administration strongly supports the Fairness in Product
Liability Act of 1991 (S 640) and efforts to pass similar
legislation in the House of Representatives. The Vice
President has commended the efforts of Senators John
Danforth, Robert Kasten, Jay Rockefeller and Representatives
Roy Rowland, Norman Lent, Hamilton Fish, and John Dingell on
behalf of such legislation.
Restore Basic Principles of Fairness.
The administration's reform initiative will restore basic
principles of fairness to America's product liability system:
First, protection of an innocent person's legal right to
fair compensation for medical expenses, lost wages, property
damage, and other actual losses.
Second, elimination of "deep pocket" liability by making
each party responsible for non-economic damages attributable
to his or her own percentage of fault, so that a person who
creates harm to others will know that he or she will be held
accountable.
Third, cooperation and the prompt and fair settlement of
differences should be encouraged through alternatives to
costly and time-consuming litigation, which only reduces the
compenstation available to the injured party.
Strengthen U.S Competitiveness.
Our current product liability system -- with its excessive
litigation costs -- is a self-inflicted burden on America's
ability to compete. U.S product liability laws are more onerous
than those of other major industrial countires, such as Japan and
European nations. Product liability reform legislation can help
strengthen U.S competitiveness by requiring clear and convincing
evidence before punitive damages can be awarded.
The estimated cost of product liability suits in the U.S
--$80 billion per year -- equals the combined profits of the
nation's 200 largest corporations.
Total U.S liability insurance costs are estimated to be 15
times higher than Japan's and on average 20 times higher
than the European nations'. These costs are reflected in
higher prices for U.S goods and hamper our ability to
compete with foreign manufacturers.
Enhance Product Innovation.
Equally devastating is the chilling effect of the liability
system on product innovation. The fear of potential lawsuits
deters businesses, especially small and start-up businesses, from
introducing new and safer products.
Many products are no longer being produced for American
consumers -- single-engine aircraft, vaccines against deadly
Japanese encephalitis, and gymnastic equipment are but a few
examples.
Many companies decide against introducing new products. For
example, Monsanto will not market an inexpensive, safe
asbestos substitute and Genentech declined to go forward with
a new hepatitis vaccine developed through biotechnology
because of liability risks.
36% of American businessmen in a recent survey state that
they stopped some manufacturing as a result of product
liability risks. 15% laid off workers and 8% closed plants.
Reform Advances Consumer Welfare and Safety.
Safety and health considerations, the principle rationale for
continuing the current system, are undermined by the current
product liability regime. Consumers are not always offered new,
safer products (like vaccines and the Monsanto asbestos
substitute). Also, the costs of excessive liability risks are
reflected in higher prices for goods and services.
The cost of DPT vaccines rose from $2.80 per dose to $11.40
per dose to cover liability insurance costs.
In a February, 1990 Consumer News article, Bonnie Guiton,
Special Advisor to the President for Consumer Affairs states
"These are among the ways in which America's current product
liability system works against consumers
Done properly,
however, product liability reform can better consumers
=
A 1989 Rand Corporation study reveals that on average only
46% of total expenditures from tort lawsuits went to
compensate injured parties. In some product liability cases,
legal fees and expenses consume 70% of the total amount
spent.
For more information please contact: 456-6614
ML RODUCT LIABILITY ALLIANCE
1725 K Street, N.W., Suite 710
Julult
Washington, D.C. 20006
(202) 872-0885
TO:
The Product Liability Alliance
FROM: Victor E. Schwartz and Liberty Magarian
Crowell & Moring
Counsel to The Product Liability Alliance
DATE: October 4, 1991
RE:
Senate Commerce Committee Votes to
Favorably Report S. 640
At an executive markup session of the Senate Committee on
Commerce, Science and Transportation on Thursday, October 3, 1991,
the Committee voted 13-7 to report favorably S. 640 to the full
Senate. The vote, which is listed below, was identical to that
which occurred on S. 1400 in the 101st Congress.
During the discussion which occurred before the vote,
Chairman Hollings repeated his same arguments in opposition to the
bill -- that it is a "bad bill"; the federal Government had no
business taking product liability law away from the states; the
proponents have put forth no data to show that a need for the bill
exists; the bill creates uniformity only in favor of businesses.
Senator John B. Breaux (D-LA) called the bill the "Republican
big government legislation." He opposed the bill because nothing
in the record indicated that it would bring down insurance rates,
because the proponents' competitiveness argument makes no sense at
all, and because there is no compelling reason for the federal
- 2 -
Government to get involved in this area particularly because
insurance laws are all handled by the states.
Senator Gore complained that the bill only creates one way
uniformity in favor of defendants. He pointed out that the bill
contains restrictions on punitive damages but does not create a
right to punitive damages in states where they do not currently
exist. He expressed his concern about the FDA defense against
punitive damages. He noted a report that appeared in that
morning's newspaper about jaw implants, which were approved by the
FDA, and inserted in 26,000 people in the United States that break
down and cause bone degeneration. Gore was concerned that if the
manufacturer of these jaw implants were found "negligent," it
would be protected against punitive damages under S. 640.
Senator Ford opposed the bill for a variety of reasons. He
made a particular point of the fact that the bill creates federal
product liability law without creating jurisdiction in federal
courts. He also said that the National Federal of Independent
Businesses opposes S. 640 because the workers' compensation offset
provision increases workers' compensation costs on small
businesses. Ford said that the bill hurts small businesses and
only takes care of big businesses. In fact, NFIB supports S. 640,
but has specific concerns about the workers' compensation
provision which they have raised before.
Senator Hollings offered an amendment which would require
reporting to the federal government on the legislation's effect on
insurance rates. This same amendment was offered by Senator
Rockefeller in the 99th Congress and was incorporated into that
- 3 -
bill without opposition. Hollings cited to the record during the
99th Congress, pointing out that Rockefeller and Ford worked out
the amendment and that Stevens supported it. Rockefeller
responded that Hollings' description of the amendment's history is
correct. Rockefeller said that he would be willing to work with
Hollings in passing such legislation in some other form, for
example, as a stand alone bill, but opposed Hollings' amendment
because he suspects that Hollings was not offering it in order to
help pass S. 640. Rockefeller described it as a "death knell
amendment." Senator Ford interjected that although he had worked
with Rockefeller during the 99th Congress to resolve some of the
his concerns with the amendment, he never supported the provision.
In the vote on Hollings' insurance amendment, Ford initially
"passed," and then after all votes were recorded, changed his vote
to "yes" because he was upset that Kasten was pushing the bill
through the Committee without accepting any amendments. Hollings'
amendment was defeated by a tie vote of 10-10.
The votes on the insurance amendment and on S. 640's final
passage were as follows:
Senator
Insurance Amendment
Final Passage
Ernest F. Hollings (D-SC)
Yes
No
Daniel K. Inouye (D-HI)
Yes
Yes
Wendell H. Ford (D-KY)
Yes
No
J. James Exon (D-NE)
No
Yes
Al Gore (D-TN)
Yes
No
John D. Rockefeller, IV (D-WV)
No
Yes
Lloyd Bentsen (D-TX)
No
Yes
John F. Kerry (D-MA)
Yes
No
John D. Breaux (D-LA)
Yes
No
Richard H. Bryan (D-NV)
Yes
No
Charles S. Robb (D-VA)
No
Yes
John C. Danforth (R-MO)
No
Yes
Bob Packwood (R-OR)
Yes
No
- 4 -
Larry Pressler (R-SD)
No
Yes
Ted Stevens (R-AK)
Yes
Yes
Robert W. Kasten, Jr. (R-WI)
No
Yes
John McCain (R-AZ)
No
Yes
Conrad Burns (R-MT)
No
Yes
Slade Gorton (R-WA)
Yes
Yes
Trent Lott (R-MS)
No
Yes
The 13-7 vote was a significant victory. It shows that
support for the bill is solid. It was also significant that our
opponents sent their "heavy hitters" to attend the markup. Ralph
Nader and Joan Claybrook attended, as did Tommy Boggs who
represents the Association of Trial Lawyers of America. After the
markup, we had the opportunity to debate Ralph Nader on some of
the issues with the press outside the committee room. We learned
that Nader's principal arguments are these: (1) there is "no
crisis" or compelling need for the legislation, (2) S. 640 is
uniform only to the benefit of businesses, but not in creating
rights for consumers (e.g., punitive damages), (3) proponents
argue that the bill is "modest," but once it is passed, they will
come back with proposals for anti-consumer amendments, (4) U.S.
product liability laws have no effect on competitiveness because
manufacturers from foreign countries such as Japan are
increasingly bringing their businesses into the United States and
opening up plants here. Nader indicated that they will propose
amendments in the Judiciary Committee. He specifically mentioned
the issue of "secrecy agreements" (i.e., an amendment to prohibit
sealed settlements and protective orders).
S. 640 will receive a sequential referral to the Judiciary
Committee. The length of that referral is being negotiated at
this time. The Senate Small Business Committee, which does not
- 5 -
have jurisdiction over the bill, will hold hearings on the effect
of product liability on small business during the week of
November 11.
IM 7/24
THE PRODUCT LIABILITY ALLIANCE
1725 K Street, N.W. Suite 710
Washington, D.C. 20006
(202) 872-0885
MEMORANDUM
TO:
The Product Liability Alliance
FROM: Victor E. Schwartz and Liberty MagarianLM
Crowell & Moring
Counsel to The Product Liability Alliance
DATE: September 23, 1991
RE:
Senate Commerce Committee Hearings on S. 640
The Consumer Subcommittee of the Senate Committee on
Commerce, Science and Transportation held a second day of hearings
on S. 640 on Thursday, September 19, 1991. Consumer Subcommittee
Chairman Richard Bryan (D-NV) chaired the hearings which were
attended by Commerce Committee Chairman Ernest Hollings (D-SC) and
Senators Jay Rockefeller (D-WV), Lloyd Bentsen (D-TX), Robert
Kasten (R-WI), John McCain (R-AZ), Conrad Burns (R-MT), Larry
Pressler (R-SD), and Trent Lott (R-MS).
The hearings were divided into two parts, the first dealing
with the general aviation liability bill and the second dealing
with S. 640, the Product Liability Fairness Act. In opening
statements, Senator Bryan expressed pleasure that the hearings
have been going well and that the Committee was hearing from all
sides on the issues. Senators McCain and Burns expressed their
support for both bills. Senator Kasten thanked Bryan for holding
hearings even though he has not been supportive of the bills.
Kasten said that the process was going as it should and that he
expected S. 640 to be reported favorably by the Commerce Committee
by a vote of more than two to one in favor, and then a referral to
the Judiciary Committee. He said that unlike past efforts, there
would then be ample time to bring S. 640 to the Senate Floor.
Kasten said that some witnesses testifying in opposition to the
bill are talking about provisions in bills that were proposed five
years ago and that S. 640 is more moderate and balanced. Senator
Bentsen, who rarely appears at product liability hearings, said
that as a pilot, he has deep concern about what is happening to
the aviation industry. Senator Bentsen did not comment on S. 640.
During the first portion of the proceedings on the general
aviation liability bill, S. 645, there was an initial panel of two
- 2 -
congressional witnesses: Senator Nancy Kassebaum (R-KS) and
Congressman Dan Glickman (D-KS), both of whom are sponsors of the
aviation bill. A second panel included Don Bigler, the president
of Continental Motors, a major manufacturer of piston engines and
Mr. Robert Creamer, Executive Director of Citizen Action, a
national consumer "watch dog" group. Their testimonies focused on
whether the problems in the general aviation industry were related
to the product liability system or to general economic problems in
the marketplace. Mr. Creamer, during the question and answer
period, stated that he would support mandatory arbitration
procedures as a way to improve the system. This comment produced
an immediate response from Senator Hollings, whose principal
criticism of S. 640 at the prior hearings involved pressure that
would be put on plaintiffs to participate in arbitration
procedures because they could be subject to a penalty of attorneys
fees and costs if a refusal to arbitrate was "unreasonable or not
in good faith." Hollings asked Creamer if he wanted to amend the
Seventh Amendment to the U.S. Constitution, which guarantees a
right to trial by jury. Creamer did an about face from his
recommendation about mandatory arbitration procedures and
responded that he did not support any procedures at the federal
level and that voluntary arbitration procedures are much superior
to mandatory. He then said he was against mandatory.
The second portion of the hearings focused on S. 640. There
was a single panel of six witnesses, three in favor of S. 640 and
three opposed.
Professor Michael Rustad, Professor of Law,
Suffolk University Law School
Professor Rustad testified that there is no problem with
punitive damages in product liability cases and that there is no
need for federal intervention. He said that corporate fears about
punitive damages are unfounded because, according to his research,
sustained jury awards of punitive damages are very rare. He said
that in general, punitive damage awards are not higher than
compensatory damage awards and that they only exceed compensatory
damages in approximately one third of the cases. He said that his
data indicate that jury awards of punitive damages are overturned
in 50 percent of the cases. Most punitive damage awards are
reversed on appeal.
Professor Kathryn Kelly, Associate Professor of Law
The Catholic University of America
Professor Kelly testified in favor of S. 640 and spoke in
particular about the punitive damages provision. She discussed
the Supreme Court's decision in Pacific Mutual Life Ins. Co. V.
Haslip, in which the Supreme Court suggested that there are some
due process restrictions on the states' authority to allow
punitive damages. She said that all of the Supreme Court
justices, in their various opinions in the case, expressed great
concern about how punitive damages are awarded today. She
- 3 -
explained that the four areas in which S. 640 addressed punitive
damages (the standard of liability; the elevated burden of proof;
the issue of defendant's wealth as a factor affecting the amount
of punitive damages; and the necessity of specific factors for
courts to evaluate the legitimacy of punitive damage awards) are
either endorsed by the Supreme Court or spoken favorably about in
the Haslip opinion. Professor Kelly explained that when she was
in private practice for 12 years, her experience was that the
irrationality of punitive damages had a negative effect on
settlement. The manufacturers she represented did not factor
punitive damages into the value of their cases for settlement
because they viewed punitive damages as arbitrary, and this fact
made settlement less likely. Manufacturers also were less likely
to settle a case if they were accused of punitive damage conduct
because they were interested in going to trial to vindicate their
reputation. In closing, Professor Kelly urged the Commerce
Committee and Congress to respond to the Supreme Court's clear
invitation to create rationality in the area of punitive damages.
Professor Marc Galanter, Evjue-Bascom Professor of Law
University of Wisconsin Law School
Professor Galanter testified that his studies about product
liability litigation show that there has been no "litigation
explosion." His studies have focused only on data from the
federal courts. He acknowledged that no data specifically about
product liability cases are available from state courts.
Professor Galanter's studies separated asbestos cases and found
that in non-asbestos cases, product liability filings in the
federal courts have been shrinking steadily (40 percent decrease)
since 1985. He said that all of the increase in product liability
filings since 1985 has been attributable to asbestos cases.
Although he has no data about state court filings, where most
product liability cases occur, he said that "scattered evidence"
shows that product liability filings in the state courts are
moving in the same direction as in the federal courts.
Peter Huber, Manhattan Institute, Coeditor of
The Brookings Institution's The Liability Maze
Peter Huber appeared in order to provide information about
his recent book published by The Brookings Institution, The
Liability Maze, which has received substantial attention during
the product liability hearings this month. Nicholas A. Ashford of
MIT, who coauthored a chapter on the chemical industry, was a
witness at the September 12 hearings. Huber explained that the
experts who authored chapters in The Liability Maze generally
concurred that product liability is not a major factor in
promoting safety in most industries and that, rather, the major
factors are regulation, market forces, or media publicity. He
said that there is an emerging consensus, reflected by the
authors, that when product liability becomes arbitrary and
uncertain, it ceases to become a specific deterrent against bad
conduct or unsafe products and becomes a general deterrent that
- 4 -
slows down growth in an entire industry. In the international
context, he reported that there is a move within the European
Economic Community to have standards that are more similar to the
United States strict liability laws. He explained, however, that
there are major differences in our systems, for example, in
European countries there is no trial by jury, no contingency fees,
and "loser pays" rules. Huber acknowledged that Professor Ashford
concluded that there is under deterrence in the chemical industry.
Huber said that "Ashford is entitled to his views, but that those
views are based on a quite expansive and original concept of
social costs." Huber said that by using most conventional
concepts of losses associated with accidents, the other authors in
the report came to a different and more sound conclusion.
Mr. J. Kendell Few, Few & Few, P.A.
Mr. Few, a plaintiffs' attorney in South Carolina, testified
in opposition to the arbitration provision in S. 640. He said
that "S. 640 is nothing more and nothing less than a frontal
attack on the Seventh Amendment [right to trial by jury]. He
argued that, under S. 640, when a person injured by a defective
product exercises his "sacred right to a trial by jury" and that
is subsequently determined "by a glassy-eyed judge" to be an
unreasonable decision, it was unjust to force him to reimburse
manufacturers for "the legal fees of a small army of pin-striped
briefcase carriers." Mr. Few gave a very emotional and passionate
testimony. He may have displeased some senators, however, by his
rhetoric and by suggesting that they did not appear at hearings
unless television cameras were rolling. Senator Rockefeller said,
"We do not find your remarks entertaining." Mr. Few said that he
would not know how to respond to his grandchildren when they sat
at his feet and asked him "what was it like when we used to have a
Seventh Amendment." He appeared to be critical of arbitration
procedures in general calling arbitration "the rich man's court."
Professor James J. Henderson, Cornell Law School
Professor Henderson's oral testimony addressed two basic
issues: (1) There is an empirical factual basis for concluding
that there is a need to reform product liability, and (2) S. 640
is the appropriate response to this need. Professor Henderson,
who coauthored an article reporting the results of a study of
trends in product liability decisions by courts in the 1980s,
testified that there is a need to reform the system. In response
to Professor Rustad's testimony that there is a need for more
conclusive data about punitive damages, Professor Henderson said
"You will wait until hell freezes for conclusive proof.' He said
that the data regarding judicial decisions and plaintiffs' success
rates is enough of a basis for Congress to act.
He said that there has been some improvement since 1985
because since that time, statutes at the state level have
approached the problem on a piecemeal basis, and also courts have
changed their mood, which is reflected in a lowered number of
- 5 -
product liability filings. He currently is working on a follow-up
study using data from the last two years and reported that this
new data confirms his previous study.
Professor Henderson then addressed the content of S. 640. He
explained that it is not really a "one-way uniformity" bill. He
noted that several sections, the discovery rule statute of
limitations and the 25-year statute of repose for capital goods,
would benefit plaintiffs in a number of states. He said that
other sections, the settlement and alternative dispute resolution
provisions. the product sellers provision and the workers'
compensation offset provision, do not impact plaintiffs' rights.
He said that there were only three sections, the punitive damages
provision, joint and several liability provision, and alcohol and
drug defense, which do cut back on plaintiffs' rights. As to
these sections, he believes that the scales of justice have become
unbalanced in favor of plaintiffs and that the only way to address
that is through legislation that must be somewhat one-sided.
Questions
There was a brief period for questioning of these witnesses.
During this time, Senator Hollings reiterated his argument about
one-sided uniformity, focusing on a provision in the preemption
section which excludes commercial loss claims from coverage of the
bill (Hollings apparently feels that this benefits manufacturers
because their own disputes involving commercial loss will not be
subject to the limitations of the bill) and the alternative
dispute resolution procedure provision which imposes penalties on
plaintiffs who choose to exercise the right to a jury trial.
Hollings asked Professor Kelly why other areas of tort law,
including automobile accident cases, medical malpractice, and
insurance laws, should not be federalized. Professor Kelly
responded that there have been many efforts to enact federal
automobile no-fault laws, but such efforts have been unsuccessful.
(They have been strongly opposed by Hollings.) Hollings asked
Professor Kelly whether she thought that punitive damages would be
appropriate in a situation such as the recent crash of a New York
City subway killing five people, in which the operator was drunk.
Professor Kelly responded that punitive damages probably would be
appropriate in such a case because the subway operator had a
"conscious, flagrant indifference to safety," the very words
contained in S. 640. In response to Hollings' question about how
much she would award as punitive damages, Professor Kelly
responded that it would depend on many factors including the
financial condition of the defendant. Professor Kelly added that
Professor Rustad's data that 50 percent of punitive damage awards
are overturned by appellate courts indicate that juries are not
being given adequate guidelines when deciding punitive damage
awards and that this means there has been a breakdown in the
system.
- 6 -
Senator Rockefeller, during his period to ask questions, told
Professor Rustad that his testimony is "interesting," but the
Committee was not interested in the quantity of product liability
cases. Rockefeller said that the focus was on the predictability
of the product liability system. Rockefeller told Professor Kelly
that her point about appellate reversals of punitive damage
awards, as reflected in a recent General Accounting study, is very
important. Rockefeller asked Peter Huber to comment on Professor
Rustad's statements that American emphasis on safety gives us top
quality products so that we can compete internationally. Huber
responded that he found no demonstrable evidence that the U.S.
product liability system gives a competitive edge on safety.
Subcommittee Chairman Bryan asked Professor Kelly to comment
on the fact that S. 640 does not provide uniformity with regard to
punitive damages because it allows states to decide not to have
them at all. Professor Kelly responded that the Supreme Court's
Haslip opinion shows a very strong feeling among some of the
justices that punitive damages should be abandoned altogether
because they do not perform their intended function of deterrence.
She said that on the other side of the scale are those who believe
that punitive damages do perform their deterrence function. As a
result, the Supreme Court concluded that the due process clause
did not prohibit or require punitive damages, just that they
should be more rational. Therefore, it would be appropriate for
Congress to make punitive damages more rational without either
requiring or prohibiting them.
Conclusion
Overall, these hearings went very well for our side. Our
witnesses were extremely well prepared and articulate. The other
side seemed to be more filled with either rhetoric or data -- they
did not focus on what is actually in S. 640, with the exception of
the arbitration (ADR) provision.
We are preparing a memorandum which explains that the
arbitration provision in S. 640 does not interfere with the right
to a jury trial, particularly because in existing arbitration
programs any party who is unsatisfied with the results of
arbitration may reject the arbitration award and proceed to a jury
trial. This concludes the Senate Commerce Committee hearings on
S. 640. The bill will be brought up for markup at the Committee's
next Executive Session which tentatively is scheduled for Tuesday,
October 1, 1991.
PAGE B6 / SATURDAY, OCTOBER 5, 1991
The Washington Times
SATURD
MOVIES / Jeffrey Staggs
On and off screen,
abandoned disco. Christopher
Lloyd plays Charlie Wilcox, a
1/2
wimpy, bumbling architect, utterly
TITLE: "Suburban Commando"
lacking in self-confidence. Mr.
RATING: PG (mild violence)
Hulk knows his role
Lloyd adds to his repertoire of won-
CREDITS: Directed by Burt Kennedy.
derfully realized quirky characters
Screenplay by Frank Cappello
- Judge Doom in "Who Framed
RUNNING TIME: 85 minutes
Roger Rabbit?" the Klingon com-
MAXIMUM RATING: FOUR STARS
mander in "Star Trek II," Reverend
H
ulk Hogan should be com-
old Hollywood warhorse who di-
Jim on TV's "Taxi."
mended. He, perhaps
rected a bagful of them, including
they're going to beat him up, to
more so than any other
"Support Your Local Gunfighter,"
Charlie's wife, Jenny (Shelly
which the head roughneck re-
celebrity, understands
"The War Wagon" and "Welcome to
Duvall), converts his workshop into
sponds, shocked and disgusted,
his responsibility as a role model to
Hard Times."
an apartment - in one day! - to
This is the '90s - we're going to
children.
Mr. Kennedy's first foray into
bring in extra money. Charlie
sue you." The man then gives Shep
The World Wrestling Feder-
science fiction features Mr. Hogan
needs, and deserves, a raise. But he
a rundown of the legal torture he'll
ation's resident good guy seems to
as Shep Ramsey, an intergalactic
is too intimidated by his boss, the
go through.
relish this role, as his new movie,
warrior who takes refuge on Earth
deliciously sleazy Larry Miller, to
As Shep, Mr. Hogan doesn't do a
"Suburban Commando," demon-
to recharge his ship. His boss tells
ask for it.
whole lot of acting. He just goes
strates. A science fiction-action-
him to take six weeks off to relax -
Once Shep settles in, we are
with the maniacal persona that has
comedy (get all that?), it stresses
Shep is a little stressed from hav-
given 20 minutes or so of the oblig-
won him so much fame as a wres-
family, friendship and personal in-
ing just saved the universe, you see.
atory what-happens-when-cultures-
tler. He doesn't have to work very
tegrity. In the end, all the bad guys
In the opening scene, Shep
collide humor: See Shep try to kill
hard to come across as an alien, ei-
are vanquished, the good guys have
blows up the ship of Gen. Suitor, an
the mailman. See Shep try to ride a
ther. He is, after all, 6 feet 7 inches
come out on top, and the hero takes
evil warlord who wants to rule the
neighborhood boy's skateboard,
tall and weighs 302 pounds. You
off into the sunset with the girl.
universe. Shep's boss also tells him
only to fall on his tailbone.
wanna talk screen presence?
"Suburban Commando" some-
that Suitor has sent two bounty
And see Shep confront Charlie's
This is a children's movie, so the
how calls to mind the old Westerns
hunters to bump him off.
roughneck neighbors: These four
violence is tame, sometimes even
of John Ford. (Did I say that?) It
On Earth, Shep rents a room
men build dragsters. Shep moves
boring. Shep's Arnoldesque one-
should resemble a Sestern, having
from a suburban family while he
one of their cars, which is blocking
liners really should have been left
been directed by Burt Kennedy, an
works on his ship, hidden in an
Charlie's driveway. Shep asks if
Hulk Hogan offers Michael Faustino and Laura Mooney a lift.
out, but most references to other
movies is done SO knowingly.
Dear President Bosh,
at Vose Elementary School
Destrict 48 P.O. Bx. 200 Beaver-
ton, Oregon 97005. When
a of kid forgets cold lunch they
don't let you call home or when
you forget your ticket in the
class, or you forget your money
at home you don't get lunch.
Can they do that? write Back
atage amanda 1\
12020 Donovan Blakeney ct.
Beaver ton, OR 97005
ky
TAKE TIME FOR A LITTLE
BEACH THERAPY.
GARFIELD 1978 United Feature Syndicate, Inc.
LAWS
LAWS
T, Roofevelt
LEADERS
'o David Scull,
LAWS-VALUE OF. We need good laws
ance with our interests and our ideals. Outlook,
XXIV, 52;
just as a carpenter needs good instruments. If
July 9, 1910, P. 508.
he has not tools, the best carpenter alive can-
not do good work. But the best tools will not
LEADERS-DUTY OF. A council of war
also CAPITAL
make a good carpenter, any more than to give
never fights, and in a crisis the duty of a leader
JUSTICE; Ju-
a coward a rifle will make him a good soldier.
is to lead and not to take refuge behind the
PREME COURT.
(Outlook, March 25, 1911.) Mem. Ed. XIX,
generally timid wisdom of a multitude of coun-
148; Nat. Ed. XVII, 106.
cillors. (1913.) Mem. Ed. XXII, 623; Nat.
OF. Bad laws
Ed. XX, 535.
necessary; and
LAWS-VIOLATION OF. Every time a law
administration
is broken, every individual in the community
LEADERS-NEED FOR. In order to suc-
ary. (At Pan-
has the moral tone of his life lowered. (At
ceed we need leaders of inspired idealism,
Y., May 20,
Tuskegee Institute, Tuskegee, Ala., October 24,
leaders to whom are granted great visions, who
Ed. XIII, 449.
1905.) Mem. Ed. XVIII, 473; Nat. Ed.
dream greatly and strive to make their dreams
XVI, 352.
come true; who can kindle the people with the
It is a capital
fire from their own burning souls. The leader
vital need of
LAWS. See also ADMINISTRATION; LEGISLA-
for the time being, whoever he may be, is but
ror to believe
TION; PROSPERITY.
an instrument, to be used until broken and
nything unless
then to be cast aside; and if he is worth his
ff in him.
LAWYERS-CONTRIBUTION OF. A law-
salt he will care no more when he is broken
od laws neces-
yer is not like a doctor. No real good for
than a soldier cares when he is sent where his
en man's suc-
the community comes from the development
life is forfeit in order that the victory may be
n's own char-
of legalism, from the development of that kind
won. In the long fight for righteousness the
it I am in the
of ability shown by the great corporation law-
watchword for all of us is spend and be spent.
of these laws,
yers who lead our bar; whereas good does
It is of little matter whether any one man fails
The struggle
come from medical development. The high-
or succeeds; but the cause shall not fail, for it
development
priced lawyer means, when reduced to his sim-
is the cause of mankind. (At Carnegie Hall,
ndefinitely re-
plest expression, that justice tends to go to the
New York City, March 20, 1912.) Mem. Ed.
r by bad law.
man with the longest purse. (Letter to W. R.
XIX, 222; Nat. Ed. XVII, 170.
organized ef-
Nelson, July 1912.) Roosevelt in the Kansas
llective action
City Star, P. xxiii.
LEADERS-RESPONSIBILITY OF. Doing
V and private
our duty is, of course, incumbent on every one
is only by a
LAWYERS AS STATESMEN. There is not
of us alike; yet the heaviest blame for derelic-
ormation such
a greater delusion than the belief that a lawyer
tion should fall on the man who sins against
out that men
is, per se, also a statesman. On the contrary, the
the light, the man to whom much has been
struggle for a
mere lawyer is rather more unfit than, say, the
given, and from whom, therefore, we have a
.) Mem. Ed.
mere dentist, or mere bricklayer, or mere
right to expect much in return. We should hold
65.
banker, to be a public man. The ablest lawyer
to a peculiarly rigid accountability those men
often has had public experience of one type or
who in public life, or as editors of great papers,
only you and
another which makes him more apt than the
or as owners of vast fortunes, or as leaders and
emember that
ordinary business man to be able to excel in
hile it is nec-
moulders of opinion in the pulpit, or on the
public life; but it is not because he is a lawyer
platform, or at the bar, are guilty of wrong-
governmental
at all; it is because he has great ability and a
doing, no matter what form that wrong-doing
tant matter is
certain knowledge of public affairs. I could go
hind the law.
may take. (At Pan-American Exposition, Buf-
still further and say that to be a great lawyer
falo, N. Y., May 20, 1901.) Mem. Ed. XV,
per laws, but
is, while a good thing in a judge, very far from
313; Nat. Ed. XIII, 447.
an can devise
being the most important thing. (To H. C.
tate does not
Lodge, April II, 1910.) Lodge Letters II, 374.
LEADERS-RISE OF. If during the lifetime
he right kind
of a generation no crisis occurs sufficient to call
LAWYERS. See also JUSTICE; LAW; LEGAL-
d laws under
out in marked manner the energies of the
ISM.
strongest leader, then of course the world does
upright offi-
not and cannot know of the existence of such
ese are neces-
LEADERS-DEMANDS UPON. We, the
our national
a leader; and in consequence there are long
men who compose the great bulk of the com-
possession by
periods in the history of every nation during
munity, wish to govern ourselves. We welcome
kind of char-
which no man appears who leaves an indelible
leadership, but we wish our leaders to under-
1 Convention,
mark in history. If, on the other hand, the crisis
stand that they derive their strength from us,
, Mem. Ed.
is one so many-sided as to call for the develop-
and that, although we look to them for guid-
ment and exercise of many distinct attributes,
ance, we expect this guidance to be in accord-
it may be that more than one man will appear
303 ]
Grant/Simon
A:LAWYERS
Draft one
October 16, 1991
REMARKS: SIGNING OF EXECUTIVE ORDER
ON CIVIL JUSTICE REFORM
THE ROOSEVELT ROOM
WEDNESDAY, OCTOBER 23, 1991
TIME?
[Acknowledgements]
A little over two months ago, Vice President Quayle outlined
the Administration's agenda for civil justice reform before the
American Bar Association. ((That speech unleashed a national
debate // a flurry of mail here at the White House // and some
of the best lawyer jokes I've heard in years.))
im not
But I didn't come here today to make an easy hit on lawyers.
Frankly, I don't think the problem is the lawyers -- the problem
is a system spun out of control. The legal system now costs
Americans an estimated 300 billion dollars a year, and in 1989
alone, more than 18 million civil suits were filed in this
country -- one for every ten adults. Sadly, we are now the most
litigious society in the world.
In order to restore sanity to our civil justice system, a
working group of the Vice President's Competitiveness Council has
recommended concrete steps that we can take -- starting today --
to get our legal system back on track. These fifty
recommendations include:
O
Changes in the rules of discovery, to end unnecessary and
burdensome requests;
Adoption of the English rule, or "loser pays" rule, to weed
out frivolous lawsuits in certain areas;
2
Encouragement of alternative dispute resolution, so that
Americans have more choices than just formal litigation;
Caps on punitive damages, to end their arbitrary application
and outlandish awards;
And changes in the rules on expert evidence, to end the
practice of "hired guns" on the witness stand.
I've named only a few of our recommendations. Some of these
proposals require federal legislation, which we hope to transmit
already
to the Congress very soon. We're moving our reforms forward at
the state level too, with the help of state attorneys general,
district attorneys, and A.B.A. members around the country. Other
?
proposals require action by the Supreme Court and federal
committees. And still others can be implemented by today's
Executive Order. This Order will apply some of these
recommendations, when possible, to the federal government.
With all that said, let me get to the heart of the matter.
We could discuss compensatory and punitive damages, discovery
limits, and reforming summary judgements all day long. But
that's not really the point. What's actually at stake here is
much more important.
I'm talking about access to health care and quality of life
-- parents having a tough time finding an obstetrician in certain
states because of malpractice insurance. Many times, beneficial
new products simply never reach the marketplace at all because of
liability concerns.
3
This is also an issue of climbing unemployment and business
foreclosures we got a letter the other day from an architect
in California who wrote, "I have many friends who are going out
of business because of fear of lawsuits. "
Name,
It also affects inflation and consumer prices
the owner
of Zaun's Trustworthy Hardware in Iowa wrote to us: "As a
business owner myself, the liability insurance is getting out of
hand. The manufacturers could significantly lower their prices
both wholesale and retail, which would stimulate our economy. "
One study showed that foreign companies often have product
liability insurance costs that are 50, 80, even 90 percent lower
than their counterparts in the United States.
Maybe other countries don't have this problem because every
other Western democracy has the "loser pays" rule to discourage
lawsuits at the drop of a hat. Maybe it's because we have nearly
three-quarters of the world's lawyers here in America. Maybe
it's because the pop culture in this country encourages lawsuits.
( (For example, I don't know if you've seen Hulk Hogan's new
movie /// but at one point he asks the bad guys if they're going
to beat him up. // You know what they replied? "Hey, this is
the '90s -- we're going to sue you. " ))
The problem is pervasive in our society. Every parent who
has signed a boy up for football practice has seen it. Every
liability
small business owner who pays insurance has seen it. From the
hinderance of new medicines to local bans of fireworks displays
4
on the Fourth of July, fear of outlandish litigation is
strangling the American Dream.
Americans understand that civil justice reform means growth,
competitiveness, and jobs. People of all walks of life --
Republicans, Democrats, businessmen, factory workers, parents,
and yes -- lawyers -- want to see changes in our legal system.
That's why I feel so strongly about these recommendations by
the Vice President. It's not a partisan issue -- but I know that
already the special interest groups and the partisan appeals have
begun to fight us -- it's a matter of fighting the vested
interests and changing the status quo to ensure a better and more
prosperous life for all Americans.
Today we're taking the first step. And now it's my pleasure
to sign this Executive Order.
# # #
naraware
8-14-91
BRAD ZAUN
Owner
WORTHY
We're The Problem Solvers!
HARDWARE
6931 Douglas Ave.
Urbandale, lowa 50322
Bus: 515-276-2434
ent Quayle,
I appreciate your comments about
the numser of lawyers in this country,
it took guts to be so blundt.
The problem is that there are too
many mouths to Feed in their field.
As a business owner myself, the
liability insurance is getting out of
hand. The manufactures could significantly
lower their prices both wholesale and
retail, which would stimulate our
economy.
Business is great here in Des Mornes
thanks to you, and President Bush, keep up
the great work!
Sincerely,
Bral Raun
charles yaeger
box 942
big bear lake, calif. 92315
chitec
phone (714) 866-2472
Auo, 16,91
Demic V.P. OUAYCE
THANK You For YOUR 8TAND ON LEGAL
REFORM. I HAVE MANY FRIENDS WHO
ARE 601HG OUT OF BUSINESS BECAUSE
OF FEAR OF LAWBUITS.
our SMALL TOWN HAD ONE LAWYER,
IT NOW HAB ELEVEN & THEY ARE
ONCOURAGING LAWBUITS AT ENERY
CHAHCE,
THANK AGAIN
breeding! They must be
545 S. THRUSH DR. SUITE #3
PASCOE
PASCOE BUILDING SYSTEMS,INC.
JOHN B. GROT
PRESIDENT/CHAIRMAN OF THE BOARD
August 14, 1991
Vice President Dan Quayle
The White House
Washington, D.C. 20500
Dear Vice President Dan Quayle:
I would like to tell you how much I support your proposals for
revamping the legal system including strict limits on awards for
personal injury suits and the elimination of outrageous fees
lawyers are collecting allegedly in the name of justice, which is
costing all of us dearly.
Having been involved in such frivolous cases as a defendant and
having paid the outrageous legal fees to defend myself, I have
experienced both the pain and expense, which is virtually without
recourse.
The legal system is truly out of control and the lawyers that are
milking and bleeding the system and the economy must be stopped!
Sincerely,
John B. Grot
Chairman/President
JBG:cai
CC: President George Bush
Senator Sam Nunn
Senator Wyche Fowler
Congressman Richard Ray
FOR
MORE
THAN
40
MBMA
YEARS
1724 Northside Industrial Blvd.
P.O. Box 7186
Columbus, Georgia 31908
(404) 324-3562
Dear Vice Pres. Quayle,
august 13, 1991
life via the count system. It a
out about Norrors of american
Thank you for finally speaking
Sham! I see no end to the
blackmail provided by our Judicial
process. Please, continue to speak
out! America will back you !
Warm regards,
Susan Blais
ABA
World Federation of Women
ation of Women
Y. 214 St.
740 W. 214 ST., TORRANCE, CA 90502
alifornia 90502
(213) 320-5464
ELSA MCPHERSON-STUART
DIRECTOR
8/14/91.
Attn: V.P. Layle- -
AE: Admin. Calls For wide
Legal 1870rms
L.A. Times- 8/14/91
Good Show you're right
So don't Stop now
make'it Stick
E/SA Short
MBD
Lawn/Amat
R
August 16, 1991
Dear Vice President Quayle:
Re: The Legal System
I applaud your brave initiative as expressed in your speech
before the American Bar Association the other day. If possi-
ble I'd like to see the full text.
I almost went to law school 3 times and now own a small over-
regulated business. I'm also a CPA and was trained as an
economist. I've spent a fair amount of time in court and
consider myself a student of the legal system.
I hope that your initiative leads to a commission with a broad
mandate to evaluate the efficiency and productivity of our
legal system. I hope significant reforms ultimately result.
Among the areas that I feel should be analyzed are:
- Rules of evidence
- Limitations on witness testimony
- Economics based guidelines for compensatory
and punitive damages
- Assessment of legal and true court costs
- Contingency fees
- Concepts of strict liability
- Valuation of human life in a social context.
In an antitrust context, I wonder how legal fees can be so
high along with an oversupply of lawyers?
Sincerely yours,
Pand larth
David Sandler
f:\office\qual0891.doc
LAWN-A-MAT OF FAIR LAWN, INC.
151 FIFTH AVENUE
PATERSON, N.J. 07524
684-7999
Just ask yourself what that means for our country in the years
ahead --
for our ability to create wealth, to generate jobs, and to improve the
standard of living for the American people.
Here is one person's outlook, from a letter I received two weeks
ago:
As a businessman, I can tell you that the basic thrust of
the law of the 1980's and 1990's is to discourage enterprise,
keep new products off the market, [and impose] a general
attitude of "caution rather than creativity."
That letter is but one of the many I've received on this subject from
all over the country.
Now, I can't say that all of them have been friendly.
9
One lawyer from lowa wrote - I'm not kidding you --
"Dear Mr. Vice President I met you early this year. [A
photographer] took my picture with you.
My wife framed
[it].
I have just taken it down. 11
I would mail it back to you, but I don't want to incur the
expense." 11
And he goes on: "I shall search out the photographer who
took our picture and have him destroy the negative." III
After reading his letter I told my staff: "Put that guy down as
'undecided." III
10
5619
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
May 15, 1991
HEALTH CARE LIABILITY REFORM
FACT SHEET
As part of the Administration's continuing efforts to
improve the delivery of health care services throughout our
nation, the President today transmitted to Congress the Health
Care Liability Reform and Quality of Care Improvement Act of
1991. This new initiative will reduce the costs and increase the
availability of quality health care by addressing the problems of
medical malpractice. In part because of liability risks, too few
physicians -- especially obstetricians and gynecologists -- are
available to serve rural and low-income communities. The
Administration's medical professional liability reforms will
enable more physicians to serve these communities.
The Administration's proposal is built on three principles:
1.
Medical malpractice reform should seek both improved quality
and lower legal costs.
2.
Legal reforms should reduce the incentives for physicians to
practice unnecessary defensive medicine or to abandon
practice in certain inner city and rural areas.
3.
Incentives for states to act are preferable to Federal
preemption of state law.
Background
Malpractice costs -- the direct costs of insurance,
litigation, and settlements, and the indirect costs of defensive
medicine -- play a significant role in the rapid growth of health
care spending. The costs associated with medical liability have
increased more rapidly than any other component of physician
practice costs. During the mid-1980's, medical liability
insurance was the fastest growing component of a physician's
practice expense, rising at an average annual rate of 21.9
percent.
Nationally, between 70 and 80 percent of obstetricians have
been sued, and other medical specialties have also been
-more-
2
significantly affected. In Miami, Florida, for example, it was
recently reported that neurosurgeons with good records paid
$220,000 per year for liability insurance.
The rise in insurance premiums has forced many physicians to
close certain practices, leaving some areas of the country
without adequate medical services. The American Academy of
Family Physicians reported that, at the end of 1985, 23.3 percent
of its members had stopped practicing obstetrics because of
professional liability concerns.
The fear of lawsuits has also imposed enormous costs on
patients. Some doctors have begun practicing defensive medicine;
in which they order vast batteries of costly, and often
unnecessary, tests in order to protect themselves from the
possibility of lawsuits. Researchers shy away from potentially
promising products and techniques for fear of lawsuits.
Moreover, the specter of litigation weakens the doctor-patient
relationship, one that should be built on trust.
Legislative Proposal
The Health Care Liability Reform and Quality of Care
Improvement Act of 1991 is designed to create incentives for
states to implement tort and quality reforms and also address
claims arising under the Federal Tort Claims Act.
To encourage states to implement tort law and quality of
care reforms, a bonus pool of funds will be distributed to states
that have implemented these reforms. The incentive mechanism
would take effect in three years to give states time to respond.
Many states have already enacted tort reforms and are well on the
way to being able to comply with these reforms. The tort reforms
a state would be required to have in place to be eligible for the
incentive funds are:
A $250,000 cap on non-economic damages -- those damages
beyond economic expenses (e.g., for pain and suffering);
a waiver may be granted for good cause, for example, to a
state whose constitution does not permit a cap;
The elimination of joint and several liability for non-
economic damages (joint and several liability makes all
parties responsible for the entire amount owed to the
plaintiff);
The elimination of the collateral source rule to prohibit
double recovery by the plaintiff when compensation has been
received from other sources such as health insurance;
-more-
3
Allowing judgments for future costs, such as future medical
bills, to be paid in periodic payments rather than as a lump
sum; and
An alternative dispute resolution mechanism such as
mediation or pretrial screening panels.
In order to receive incentive payments, states would also be
required to institute reforms to improve the quality of health
care. These steps include:
Cooperation with federal efforts to learn the comparative
effectiveness of different medical treatments;
Improved performance in the oversight of physicians through
state medical boards; and
A requirement that physicians sanctioned by the medical
boards participate in continuing medical education in areas
where the board has found deficiencies.
States could pursue alternatives to those activities involving
medical boards if the alternatives were equally effective.
The incentive to implement tort law and quality of care
reforms would be increased payments to states and hospitals in
the qualifying states on a proportional basis. The incentive
pools would be created by withholding two percent from the amount
payable to states for Medicaid administrative costs and one
percent from the annual increase payable to hospitals for
operating costs through Medicare's prospective payment system.
In Medicaid, the pool would be divided among states that have
implemented the necessary tort reforms and quality assurance
mechanisms. In Medicare, the pool would be directed to increased
payments to hospitals in complying states.
Administrative Actions
The Administration will also take several administrative
actions to reduce medical malpractice problems. These include:
Gathering and disseminating scientific findings about the
effectiveness of varying types of treatment, including
clinical practice guidelines;
Shifting the approach of Medicare's Peer Review
Organizations (PROs) from after-the-fact review of hospital
records toward providing statistical data which will enable
hospitals to compare their performance;
-more-
4
Providing the public with comparisons of the operation of
state boards that license health care providers, along with
technical assistance for improvement;
Evaluating current risk management practices in health care
settings and establishing an interagency study group to
review malpractice cases against the federal government for
lessons applicable across the health care system; and
Expanding within the Federal Employees Health Benefits
Program the number of plans that offer an alternative
dispute resolution process instead of litigation.
# # #
DRAFT 10/08/91 A
EXECUTIVE ORDER
-
CIVIL JUSTICE REFORM
WHEREAS, the tremendous growth in civil litigation has
burdened the American court system, and has imposed high costs on
American individuals, small businesses, industry, professionals,
and government at all levels;
WHEREAS, several current litigation practices add to these
burdens and costs by prolonging the resolution of disputes, thus
delaying just compensation and encouraging wasteful litigation;
WHEREAS, the harmful consequences of these litigation
practices may be ameliorated hy encouraging voluntary dispute
resolution, limiting unnecessary discovery, restricting the use
of unqualified expert testimony, prudent use of sanctions,
improving the use of litigation resources, and, where
appropriate, modifying current fee arrangements;
WHEREAS, the United States does and should set a high
standard for the conduct of its own litigation and can continue
to do so without impairing the effectiveness of its litigation
efforts;
WHEREAS, improving the quality of legislation and regulation
to eliminate ambiguities in drafting would reduce uncertainty and
unnecessary litigation; and,
WHEREAS, improving the quality of administrative
adjudications would reduce the time and resources expended during
the administrative process.
NOW, THEREFORE, I, GEORGE BUSH, by the authority vested in
me as President by the Constitution and the laws of the United
States of America, including chapter 31 of title 28, United
States Code, and section 301 of title 3 of the United States
Code, and in order to facilitate just and efficient resolution of
civil claims involving the United States government, to encourage
the filing of meritorious civil claims, to improve legislative
and regulatory drafting to reduce needless litigation, to promote
fair and prompt adjudication before Administrative tribunals, and
to provide a model for similar reforms of litigation in the
private sector and in various states, hereby order as follows:
Section 1. Guidelines to Promote Just and Efficient
Government Civil Litigation. To promote just and efficient
resolution of civil claims, those federal agencies and litigation
counsel that conduct or otherwise participate in civil litigation
in federal court on behalf of the United States Government shall
respect and adhere to the following guidelines during the conduct
of such litigation:
(a) Pre-filing Notice of a Complaint. No litigation counsel
shall file a complaint initiating civil litigation without first
making a reasonable effort to notify all disputants about the
nature of the dispute and to attempt to achieve a settlement, or
confirm that the referring agency previously handling the dispute
- 2 -
has made a reasonable effort to notify the disputants and achieve
a settlement.
(b) Settlement Conferences. As soon as practicable after
ascertaining the nature of a dispute in litigation, and
throughout the litigation, litigation counsel shall evaluate
settlement possibilities and make every reasonable effort to
settle the litigation. Such efforts shall include offering to
convene a settlement conference or moving the court for a
conference pursuant to Rule 16 of the Federal Rules of Civil
Procedure in an attempt to resolve the dispute without additional
civil litigation.
(c) Alternative Methods of Resolving the Dispute in
Litigation. Litigation counsel shall make every reasonable
attempt to resolve a dispute expeditiously and properly before
proceeding to trial.
(1) Whenever feasible, claims should be resolved
through informal discussions, negotiations, and settlements
rather than through utilization of any formal or structured
Alternative Dispute Resolution (ADR) process or court proceeding.
At the same time, litigation counsel should be trained in dispute
resolution techniques and skills that can contribute to prompt,
fair and efficient resolution of claims. Where such benefits may
be derived, litigation counsel should suggest to the private
parties the use of an appropriate ADR technique.
(2) It is appropriate to resolve claims of and against
the United States or its agencies through the use of ADR
I. 3 -
techniques or processes after a determination by litigation
counsel that the use of a particular technique is warranted in
the context of a particular claim or claims, and that such use
will materially contribute to the prompt, fair, and efficient
resolution of the claims. ADR techniques shall not be selected
arbitrarily.
(3) Litigation counsel shall neither seek nor agree to
the use of binding arbitration or any other equivalent ADR
technique. A technique is equivalent to binding arbitration if
an agency is bound, without exercise of that agency's discretion,
to implement the determination arising from the ADR technique.
(d) Discovery. To the extent practicable, litigation
counsel shall make every reasonable effort to streamline and
expedite discovery in cases under that agency's supervision and
control.
(1) Disclosure of Core Information. Litigation counsel
shall, to the extent practicable, make reasonable efforts to
agree with other parties, and to stipulate for an order
memorializing such agreement, to mutually exchange a disclosure
statement, containing core information relevant to the dispute.
For purposes of this subsection, core information includes the
names and addresses of people having information that is relevant
to the proffered claims and defenses, and the location of
documents most relevant to the case. This guideline to disclose
core information shall not apply in cases while a dispositive
motion is pending.
- 4 -
(2) Review of Proposed Document Requests. Each agency
within the Executive Branch shall establish a coordinated
procedure for the conduct and review of document discovery
undertaken directly by that agency when that agency is litigation
counsel. The procedure shall include (but is not necessarily
limited to) review by a more senior lawyer prior to the request's
service or filing in litigation to determine that the request is
not cumulative or duplicative, unreasonable, oppressive, unduly
burdensome or expensive, taking into account the requirements of
the litigation, the amount in controversy, and the importance of
the issues at stake in the litigation and that the documents are
not obtainable from some other source that is more convenient,
less burdensome or less expensive.
(3) Discovery Motions. Before petitioning a court to
resolve a discovery motion, or petitioning a court to impose
sanctions for discovery abuses, litigation counsel shall attempt
to resolve the dispute with opposing counsel. If litigation
counsel makes a discovery motion concerning the dispute, he or
she shall represent in the motion that such attempt at resolution
was unsuccessful or impracticable under the circumstances.
(e) Expert Witnesses. Litigation counsel shall make every
reasonable effort to present only reliable expert testimony
before a court.
(1) Widely accepted theories. Litigation counsel shall
refrain from presenting expert testimony from experts who base
their conclusions on explanatory theories that are not widely
- 5 -
accepted. For purposes of this provision, a theory is widely
accepted if it is propounded by at least a substantial minority
of the experts in the relevant field.
(2) Expertise in the field. Litigation counsel shall
present expert testimony only from those experts whose knowledge,
background, research, or other expertise lies in the particular
field about which they are testifying.
(3) Expert disclosure. Litigation counsel shall offer
to engage in disclosure of expert witness information, provided
that the other parties agree to make the comparable disclosures.
(4) Ban on contingency fees. The amount of
compensation paid to an expert witness shall not be linked to a
successful outcome in the litigation.
(f) Sanctions. Litigation counsel shall take steps to seek
sanctions measures where appropriate.
(1) Litigation counsel shall evaluate filings made by
opposing parties and, where appropriate, shall petition the court
to impose sanctions against those responsible for abusive
practices.
(2) Prior to filing a motion for sanctions, the
litigation counsel shall submit its motion for review to the
sanctions officer within the litigation counsel's agency, or his
or her designee, who shall be a non-career appointee, equivalent
career official, or a senior supervising attorney within the
agency, provided such person are licensed to practice before a
state court. The sanctions officer or designee shall also review
- 6 -
motions for sanctions against litigation counsel, the United
States, its agencies or its officers.
(g) Improved Use of Litigation Resources. Litigation
counsel shall employ efficient case management techniques and
shall make reasonable efforts to expedite civil litigation in
cases under that counsel's supervision and control. This
includes but is not limited to:
(1) making reasonable efforts to negotiate with other
parties about, and stipulate to, facts that are not in dispute;
(2) reviewing and revising pleadings and other filings
to ensure that they are accurate and that they reflect a
narrowing of issues, if any, that has resulted from discovery;
(3) requesting early trial dates where practicable;
and,
(4) moving for summary judgment in every case where the
movant would be likely to prevail, or where the motion is likely
to narrow the issues to be tried.
(h) Fees and Expenses. To the extent permissible by law, in
civil litigation involving disputes over federal contracts
pursuant to 41 U.S.C. 601 et seq., or in any civil case initiated
by the United States, litigation counsel shall offer to enter
into an agreement with opposing parties to a dispute for two way
fee shifting arrangements, whereby the losing party would pay the
prevailing party's fees and costs subject to reasonable
limitations. The Attorney General shall review the legal
authority for entering into such agreements.
- 7 -
Sec. 2. Principles to Enact Legislation and Promulgate
Regulations Which Do Not Unduly Burden the Federal Court System.
(a) General Duty to Review Legislation and Regulations.
In promulgating new regulations, reviewing existing regulations,
developing legislative proposals concerning regulation, and
developing new legislation, all agencies, within current
budgetary constraints and existing executive branch coordination
mechanisms and procedures established in OMB Circular A-19,
regarding legislation, and Executive Order 12291, regarding
regulation, shall adhere to the following requirements:
(1) Legislation and regulations shall be reviewed to
eliminate drafting errors and needless ambiguity.
(2) Legislation and regulations shall be written to
minimize needless litigation.
(3) Legislation and regulations shall provide a clear
and specific legal standard for affected conduct rather than a
general standard, wherever practicable.
(b) Specific Issues for Review. In conducting the reviews
required by subsection (a), each agency reviewing proposed
legislation and regulations shall make every reasonable effort to
ensure that the legislation or regulation:
(1) Contains or is subject to a statute of limitations;
(2) Specifies in clear language the preemptive effect,
if any, to be given to the law;
(3) Specifies in clear language the effect on existing
federal law, including all provisions repealed or modified;
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(4) Provides a clear and specific legal standard for
affected conduct rather than a general standard, or explains and
enumerates those factors which underlie a general standard;
(5) Specifies whether private arbitration and other
private dispute resolution agreements are appropriate under
enforcement and relief provisions, subject to constitutional
requirements;
(6) Addresses the question of constitutional
severability;
(7) Specifies in clear language the retroactive effect,
if any, to be given to the law or regulation;
(8) Specifies in clear language the applicable burdens
of proof;
(9) Specifies in clear language whether it grants
private parties a right to sue and, if so, the relief available
and the conditions and terms for any authorized award of
attorney's fees, if any;
(10) Specifies whether State courts are to have
jurisdiction and, if so, whether an action would be removable to
Federal court;
(11) Requires formal administrative proceedings, and
the exhaustion of administrative remedies, before parties may
file suit in court;
(12) Sets forth the standards governing the assertion
of personal jurisdiction, if any;
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(13) Defines key statutory terms, either explicitly or
by reference to other statutes that explicitly define those
terms;
(14) Specifies whether the legislation or regulation
would apply to the federal government;
(15) Specifies whether the legislation or regulation
applies to territories, the District of Columbia, and the
Commonwealth of Puerto Rico; and,
(16) Addresses other important issues affecting clarity
and general draftsmanship of legislation or regulations set forth
by the Attorney General, with the concurrence of the Director of
the Office of Management and Budget, that are determined to be in
accordance with the purposes of this order.
(c) Certification of Compliance for Agency Legislation or
Regulations. When transmitting such draft legislation or
regulation to the Office of Management and Budget, the agency
must certify that (i) it has reviewed such draft legislation or
regulation in light of this section, and (ii) either that the
draft legislation or regulation meets the standards provided in
subsections (a) and (b) of this section, or that it is
unreasonable to require the particular piece of draft legislation
or regulation to meet one or more of those standards. Where the
standards are not met, the agency certification must include an
explanation of the reasons for the departure from the standards.
Recommendations and cost-benefit analyses under subsection (d) of
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this section shall be included in the agency certification
required by this subsection.
(d) One-Way Fee Provisions. Each agency shall review, and
shall perform a cost-benefit analysis on, all provisions of any
legislation or regulation that the agency proposes which provide
for an award of attorney's fees in favor of only one class of
parties, including those statutes which require the government to
pay a prevailing private party's attorney's fees. The agency
shall recommend against the enactment of the fee shifting
provisions of such legislation if the costs significantly
outweigh the benefits, or if the legislation does not define the
fees and costs covered by the statute, or detail when an award of
fees and costs would be appropriate. Such agency recommendations
shall be presented to OMB through the A-19 legislative
coordination and clearance process nd included in the agency
certification provided for in subsection (c) of this section.
Sec. 3. Principles to Promote J st and Efficient
Administrative Adjudications. In order to promote just and
efficient resolution of disputes, an agency that adjudicates
administrative claims shall, to the extent reasonable and
practicable, and when not in conflict with other sections of this
order, implement the recommendations of the Administrative
Conference of the United States, entitled "Case Management as a
Tool for Improving Agency Adjudication," as contained in 1 C.F.R.
§ 305.86-7 (1991).
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Sec. 4. Coordination by the Department of Justice.
(a) The Attorney General shall coordinate efforts by federal
agencies to implement sections 1 and 3 of this order.
(b) To implement the principles and purposes announced by
this order, the Attorney General is authorized to issue such
guidelines for the Department of Justice. Such guidelines shall
serve as models for internal guidelines which may be issued by
other agencies pursuant to this order.
Sec. 5. Definitions. For purposes of this order:
(a) The term "agency" shall be defined as that term is
defined in section 451 of title 28 of the United States Code,
except that it shall exclude all departments and establishments
in the legislative or judicial branches of the United States.
(b) The term "litigation counsel" shall mean the office in
which trial counsel is em oyed, which shall in most cases be the
United States Attorney's Office for the district in which the
litigation is or will be pe. ding, or the Department of Justice if
the case is handled directly by attorneys at the Department in
Washington. Special Assistant United States Attorneys are
included within this definition. Those agencies authorized by
law to represent themselves in court without assistance from the
United States Attorney's Office or the Department of Justice are
also included in this definition, as are private counsel hired by
any federal agency to conduct litigation on the agency's behalf.
Sec. 6. No Private Rights Created. This order is intended
only to improve the internal management of the Executive Branch
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in resolving disputes, conducting litigation in a reasonable and
just manner, and reviewing legislation and regulations. This
order shall not be construed as creating any right or benefit,
substantive or procedural, enforceable at law or equity by a
party against the United States, its agencies, its officers, or
any other person. This order shall not be construed to create
any right to judicial review involving the compliance or
noncompliance of the United States, its agencies, its officers,
or any other person with this order. Nothing in this order shall
be construed to obligate the United States to accept a particular
settlement or resolution of a dispute, to alter its standards for
accepting settlements, to forego seeking a consent decree or
other relief, or to alter the existing delegation of settlement
or litigating authority.
Sec. 7. Scane. This order is applicable to civil matters
only; it is not intended to affect criminal matters, including
enforcement of cr_minal fines or judgments of forfeiture.
Subsections (c) and (d) (1) of section 1 of this order shall not
apply (i) to any action to seize or forfeit assets subject to
forfeiture, or (ii) any debt collection case involving an amount
in controversy less than $100,000. Notice pursuant to subsection
(a) of section 1 is not required (i) in any action to seize or
forfeit assets subject to forfeiture or in any bankruptcy,
insolvency, or liquidation proceeding; (ii) where the assets or
defendants that are the subject of the action are subject to
flight; (iii) where exigent circumstances makes providing such
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notice impracticable or would otherwise defeat the purpose of the
litigation, such as in actions seeking temporary restraining
orders or preliminary injunctive relief; or (iv) in those limited
classes of cases where the Attorney General determines providing
such notice would defeat the purpose of the litigation. The
Attorney General shall have the authority to issue further
guidance as to the scope of this order, except section 2,
consistent with the purposes of this order.
Sec. 8. Conflicts with Other Rules.
Nothing in this
order shall be construed to require litigation counsel or any
agency to act in a manner contrary to the Federal Rules of Civil
Procedure, state or federal law, other court-imposed rules, or
court order.
Sec. 9. Privileged Information. Nothing in this order shall
compel or authorize the disclosure of privileged information,
sensitive law enforcement information, or information affecting
national security.
Sec. 10. Effective Date. This order shall become effective
90 days from the date of signature. This order shall not apply
to litigation commenced prior to the effective date.
THE WHITE HOUSE,
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