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120361007
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Product Liability
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120361007
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Product Liability
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Records of the Council on Environmental Quality (Clinton Administration)
Kathleen McGinty's Files
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FOIA Number: 2012-0769-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Council on Environmental Quality
Series/Staff Member:
Kathleen (Katie) McGinty
Subseries:
OA/ID Number:
2896
FolderID:
Folder Title:
Product Liability
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Shelf:
Position:
S
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To:
George Stephanopoulos
Mike Waldman
product
From:
Tamera Stanton and
Peter Kinzler
liability
Office of Senator Rockefeller
Re:
Senate consideration of S. 640,
The Product Liability Fairness Act
Background
As you are only too aware, President Bush and Vice-President Quayle
have stepped up their push for tort reform, focusing their attacks on the
trial bar in general and Bill Clinton's relationship with the trial bar in
particular. Clearly their lawyer bashing has struck a responsive chord. If
nothing else, it has made Dan Quayle look good!
On September 8th, the day the Congress reconvenes, the Senate will
start consideration of S. 640, the product liability bill. Senator Rockefeller
is a cosponsor of this bill, along with eight other Democrats -- including Joe
Lieberman and Chris Dodd -- and four other Democrats, including Lloyd
Bentsen, have already declared their support for the bill. In the House, the
chief sponsor of a similar bill is a Democrat and the bill's many supporters
include Congressmen Gephardt and Dingell.
The Democratic supporters believe the bill is a balanced one that will
make the system fairer for victims and manufacturers alike (it includes
provisions to encourage pre-trial settlements, with a strong
emphasis on the use of state alternative dispute resolution
mechanisms .. the concept strongly supported by Governor Clinton).
Given the Republican attacks on Governor Clinton's relationship with the
trial bar, you can expect Senate consideration of S. 640 to produce more
attacks and more stories. This memo outlines why Democratic supporters
think this is a good bill and how they think Governor Clinton might turn
the advantage. tables on President Bush and use the product liability debate to his
S. 640
The product liability debate started in 1979 and the early bills clearly
were little more than a manufacturers' wish list of changes to the tort
system that would benefit them -- and hurt victims. Early bills would have
rolled back tort law to the 1960's -- most prominently, by applying a
negligence standard in product cases (as opposed to strict liability). In
addition, various bills would have imposed caps on noneconomic and
punitive damages and limits on attorneys' fees. S. 640 contains none of
these onerous provisions.
09-03-92 07:11 PM FROM SENATE DANNING CMTE
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Senator Rockefeller opposed the early product liability bills -- voting
against them in the Commerce Committee in 1985 and 1986 -- because he
thought they were too favorable to businesses and too onerous for victims.
It is because of Senator Rockefeller's efforts and those of other Democrats
that the bill changed to what they believe is a balanced approach.
Overall, the tort system should not only discourage the manufacture of
unsafe products; it should also encourage the manufacture of safe and useful
products. One can be killed just as easily by the failure to introduce a new
product as by a defect in an unsafe product. Sometimes the lines aren't
even that clear. For example, the DTP vaccine has saved hundreds of
thousands of lives over the years but every once in a while it injures
someone severely. If we prohibited its use, we would eliminate the tragic
effects on a few people -- but we would also cause the loss of far more lives
by those not inoculated against diphtheria, typhoid and whooping cough.
In another compelling context today, two recent articles in Science
magazine have indicated that two pharmaceutical companies have delayed
or stopped promising tests on drugs to combat AIDS because of liability
concerns.
The bill addresses 9 specific areas. Let's discuss them by their goals.
First, it contains three provisions designed to increase incentives for safety.
One would revise existing workers' compensation offset provisions to hold
employers liable for their contributions to accidents, thereby creating an
incentive for employers to maintain safer workplaces.
A second provision would protect manufacturers from punitive
damages .. but not against suits for economic and noneconomic damages --
where the FDA or the FAA has approved a product, thereby giving
manufacturers an incentive to fully disclose information to these regulatory
agencies. While some have argued this would hurt consumers, to the
contrary, it should have exactly the opposite effect. Remember, it only
addresses whether a manufacturer that has complied with the long and
rigorous regulatory requirements in this area has the requisite intent of
"conscious, flagrant indifference to the safety of those who might be harmed
by a product."
Third, the bill would deny recovery to people whose use of alcohol or
illegal drugs is the predominant causes of their injuries.
A second goal of the bill is to eliminate some of the unfairness and
arbitrariness in the law. In this area, it would establish a national statute
of limitations of two years from the date a person discovers both the injury
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and its cause. This provision is a major step forward for victims,
particularly for those injured by toxic substances which don't manifest
themselves for years after a person is exposed to them.
It would also require plaintiffs to prove "by clear and convincing
evidence" that the harm resulted from the manufacturer's "conscious,
flagrant indifference to the safety of those who might be harmed by the
product." The American Bar Association and the American College of Trial
Lawyers support the higher standard of proof.
The bill contains other provisions that fit in the category of fairness.
One would limit joint liability to economic damages while holding a
manufacturer liable only for its proportionate share of noneconomic
damages. This provision is designed to strike a balance between assuring
compensation for a victim and not holding a minimally responsible
manufacturer liable for huge damages caused by others.
Second, the bill contains expedited settlement and alternative dispute
resolution provisions designed to reduce the long delays of the system.
While some have attacked them for imposing too heavy penalties on victims,
Senator Rockefeller believes most of those attacks misrepresent what are
fair and balanced provisions. For example, if a manufacturer refuses a
settlement offer, and fares worse in the subsequent lawsuit, it must pay the
plaintiff's reasonable attorneys' fees. On the other hand, the penalty for a
plaintiff is merely no double recovery -- loss of payments that would
duplicate collateral sources.
Some have represented that a plaintiff would risk paying defendant's
attorneys' fees if they sought to go to court instead of through a voluntary,
nonbinding state ADR proceeding. The provision would potentially apply
such a penalty only if the person "unreasonably" refused to go through an
ADR proceeding and then lost in court. If the person goes through ADR,
doesn't like the outcome, s/he can go to court without the threat of any
penalty whatsoever.
Finally, in this area, there is a provision that restricts product sellers'
liability to their negligence unless the manufacturer cannot be found or
lacks the resources to pay a judgment. In those situations, the seller stands
in the shoes of the manufacturer.
The product seller provision would also reduce unnecessary legal costs,
another goal of the bill, as would the expedited settlement and ADR
provisions.
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A summary of the bill is attached (the bill is 29 pages long; we will fax
it if you want to see it), as well as the first of three National Governors'
Association endorsements of federal product liability reform, although not in
favor of any specific bill.
Possible Courses of Action for Governor Clinton
We recognize that the consumer groups and the Association of Trial
Lawyers of America have taken a hard line against the bill. Despite
repeated efforts by Senator Rockefeller to negotiate, opponents of the bill
have refused to do SO. Frankly we think they are wrong and, if it would be
helpful to you, we would be delighted to debate the bill provision by
provision. However, we recognize the limits of your time and respectfully
suggest the following possible courses of action for Governor Clinton.
1. Continue to bash Bush but counter the charge of being in the trial
lawyers' pocket. Your statements in the Wall Street Journal attack Bush
for siding with manufacturers and insurers. This is a good line of attack
which can be buttressed by citing a Reagan Administration proposal to cap
all noneconomic damages, including punitives, at $200,000. However, it
doesn't answer the charge of being on the side of the lawyers. An expansion
of your present approach might be doubly effective. Governor Clinton could
come out for balanced tort reform -- reform that makes the system fairer for
both manufacturers and victims. Then he could say he would sign any tort
reform bill that helps both sides, without taking any position on this bill.
2. Say nothing more. If some version of option one is not followed,
saying nothing would permit Senate Democrats who believe the bill is fair
and are supporting it to point out the differences between the Bush-Quayle
approach and the vastly different bill they are supporting.
Two final notes. Senator Gore will have to face this issue in his
debate with Dan Quayle. Although Senator Gore is opposed to S. 640, he
can attack Quayle by pointing to Gore's vote for no-fault auto insurance in
the House Commerce Committee in 1978 and noting that the bill would
bill. have passed had not every single Republican on the Committee opposed the
Finally, we would appreciate it if you would keep this memo
confidential, given the differing views on the subject among Democratic
supporters of Governor Clinton.
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