H. Rept. 108-682 - 108th Congress (2003-2004)
September 13, 2004, As Reported by the Judiciary Committee

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House Report 108-682 - LAWSUIT ABUSE REDUCTION ACT OF 2004




[House Report 108-682]
[From the U.S. Government Printing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     108-682

======================================================================
 
                  LAWSUIT ABUSE REDUCTION ACT OF 2004

                                _______
                                

 September 13, 2004.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4571]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 4571) to amend Rule 11 of the Federal Rules of Civil 
Procedure to improve attorney accountability, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     3
Background and Need for the Legislation..........................     5
Hearings.........................................................    36
Committee Consideration..........................................    37
Vote of the Committee............................................    37
Committee Oversight Findings.....................................    39
New Budget Authority and Tax Expenditures........................    39
Congressional Budget Office Cost Estimate........................    39
Performance Goals and Objectives.................................    40
Constitutional Authority Statement...............................    40
Section-by-Section Analysis and Discussion.......................    40
Changes in Existing Law Made by the Bill, as Reported............    41
Agency Views.....................................................    44
Markup Transcript................................................    48
Dissenting Views.................................................    95

                             The Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Lawsuit Abuse Reduction Act of 
2004''.

SEC. 2. ATTORNEY ACCOUNTABILITY.

    Rule 11 of the Federal Rules of Civil Procedure is amended--
            (1) in subdivision (c)--
                    (A) by amending the first sentence to read as 
                follows: ``If a pleading, motion, or other paper is 
                signed in violation of this rule, the court, upon 
                motion or upon its own initiative, shall impose upon 
                the attorney, law firm, or parties that have violated 
                this subdivision or are responsible for the violation, 
                an appropriate sanction, which may include an order to 
                the other party or parties to pay for the reasonable 
                expenses incurred as a direct result of the filing of 
                the pleading, motion, or other paper, that is the 
                subject of the violation, including a reasonable 
                attorney's fee.'';
                    (B) in paragraph (1)(A)--
                            (i) by striking ``Rule 5'' and all that 
                        follows through ``corrected.'' and inserting 
                        ``Rule 5.''; and
                            (ii) by striking ``the court may award'' 
                        and inserting ``the court shall award''; and
                    (C) in paragraph (2), by striking ``shall be 
                limited to what is sufficient'' and all that follows 
                through the end of the paragraph (including 
                subparagraphs (A) and (B)) and inserting ``shall be 
                sufficient to deter repetition of such conduct or 
                comparable conduct by others similarly situated, and to 
                compensate the parties that were injured by such 
                conduct. The sanction may consist of an order to pay to 
                the party or parties the amount of the reasonable 
                expenses incurred as a direct result of the filing of 
                the pleading, motion, or other paper that is the 
                subject of the violation, including a reasonable 
                attorney's fee.''; and
            (2) by striking subdivision (d).

SEC. 3. APPLICABILITY OF RULE 11 TO STATE CASES AFFECTING INTERSTATE 
                    COMMERCE.

    In any civil action in State court, the court, upon motion, shall 
determine within 30 days after the filing of such motion whether the 
action affects interstate commerce. Such court shall make such 
determination based on an assessment of the costs to the interstate 
economy, including the loss of jobs, were the relief requested granted. 
If the court determines such action affects interstate commerce, the 
provisions of Rule 11 of the Federal Rules of Civil Procedure shall 
apply to such action.

SEC. 4. PREVENTION OF FORUM-SHOPPING.

    (a) In General.--Subject to subsection (b), a personal injury claim 
filed in State or Federal court may be filed only in the State and, 
within that State, in the county (or Federal district) in which--
            (1) the person bringing the claim, including an estate in 
        the case of a decedent and a parent or guardian in the case of 
        a minor or incompetent--
                    (A) resides at the time of filing; or
                    (B) resided at the time of the alleged injury; or
            (2) the alleged injury or circumstances giving rise to the 
        personal injury claim allegedly occurred; or
            (3) the defendant's principal place of business is located.
    (b) Determination of Most Appropriate Forum.--If a person alleges 
that the injury or circumstances giving rise to the personal injury 
claim occurred in more than one county (or Federal district), the trial 
court shall determine which State and county (or Federal district) is 
the most appropriate forum for the claim. If the court determines that 
another forum would be the most appropriate forum for a claim, the 
court shall dismiss the claim. Any otherwise applicable statute of 
limitations shall be tolled beginning on the date the claim was filed 
and ending on the date the claim is dismissed under this subsection.
    (c) Definitions.--In this section:
            (1) The term ``personal injury claim''--
                    (A) means a civil action brought under State law by 
                any person to recover for a person's personal injury, 
                illness, disease, death, mental or emotional injury, 
                risk of disease, or other injury, or the costs of 
                medical monitoring or surveillance (to the extent such 
                claims are recognized under State law), including any 
                derivative action brought on behalf of any person on 
                whose injury or risk of injury the action is based by 
                any representative party, including a spouse, parent, 
                child, or other relative of such person, a guardian, or 
                an estate; and
                    (B) does not include a claim brought as a class 
                action.
            (2) The term ``person'' means any individual, corporation, 
        company, association, firm, partnership, society, joint stock 
        company, or any other entity, but not any governmental entity.
            (3) The term ``State'' includes the District of Columbia, 
        the Commonwealth of Puerto Rico, the United States Virgin 
        Islands, Guam, and any other territory or possession of the 
        United States.
    (d) Applicability.--This section applies to any personal injury 
claim filed in Federal or State court on or after the date of the 
enactment of this Act.

SEC. 5. RULE OF CONSTRUCTION.

    Nothing in section 3 or in the amendments made by section 2 shall 
be construed to bar or impede the assertion or development of new 
claims or remedies under Federal, State, or local civil rights law.

SEC. 6. THREE-STRIKES RULE FOR SUSPENDING ATTORNEYS WHO COMMIT MULTIPLE 
                    RULE 11 VIOLATIONS.

    (a) Mandatory Suspension.--Whenever a Federal district court 
determines that an attorney has violated Rule 11 of the Federal Rules 
of Civil Procedure, the court shall determine the number of times that 
the attorney has violated that rule in that Federal district court 
during that attorney's career. If the court determines that the number 
is 3 or more, the Federal district court--
            (1) shall suspend that attorney from the practice of law in 
        that Federal district court for 1 year; and
            (2) may suspend that attorney from the practice of law in 
        that Federal district court for any additional period that the 
        court considers appropriate.
    (b) Appeal; Stay.--An attorney has the right to appeal a suspension 
under subsection (a). While such an appeal is pending, the suspension 
shall be stayed.
    (c) Reinstatement.--To be reinstated to the practice of law in a 
Federal district court after completion of a suspension under 
subsection (a), the attorney must first petition the court for 
reinstatement under such procedures and conditions as the court may 
prescribe.

SEC. 7. ENHANCED SANCTIONS FOR DOCUMENT DESTRUCTION.

    (a) In General.--Whoever willfully and intentionally influences, 
obstructs, or impedes, or attempts to influence, obstruct, or impede, a 
pending court proceeding through the willful and intentional 
destruction of documents sought in, and highly relevant to, that 
proceeding shall be punished with mandatory civil sanctions of a degree 
commensurate with the civil sanctions available under Rule 37 of the 
Federal Rules of Civil Procedure, in addition to any other civil 
sanctions that otherwise apply.
    (b) Applicability.--This section applies to any court proceeding in 
any Federal or State court.

                          Purpose and Summary

    The Lawsuit Abuse Reduction Act of 2004 (``LARA''), H.R. 
4571, was introduced by Rep. Lamar Smith. H.R. 4571 will 
restore the teeth that Federal Rule of Civil Procedure 11 once 
had to deter frivolous Federal lawsuits. It would also extend 
Rule 11's protections to prevent frivolous lawsuits in state 
courts when state judges determine that a case would have 
national economic consequences that affect interstate commerce. 
The bill would also prevent forum shopping, the harmful 
practice by which personal injury attorneys bring lawsuits in 
courts that notoriously and consistently hand down astronomical 
awards even when the case has little or no connection to the 
court's jurisdiction. H.R. 4571 would prevent forum shopping by 
requiring that personal injury cases be brought only where the 
plaintiff resides, where the plaintiff was allegedly injured, 
or where the defendant's principal place of business is 
located.
    LARA would: (1) restore mandatory sanctions for filing 
frivolous lawsuits in violation of Rule 11, (2) remove Rule 
11's ``safe harbor'' provision that currently allows parties 
and their attorneys to avoid sanctions for making frivolous 
claims by withdrawing frivolous claims after a motion for 
sanctions has been filed, (3) allow monetary sanctions, 
including attorneys' fees and compensatory costs, against any 
party making a frivolous claim, (4) allow sanctions for abuses 
of the discovery process (the process by which lawyers on each 
side request information from the other side prior to trial), 
(5) apply Rule 11's provisions to state cases that a state 
judge finds affect interstate commerce, (6) require that 
personal injury cases be brought only where the plaintiff 
resides, where the plaintiff was allegedly injured, or where 
the defendant's principal place of business is located; (7) 
apply a ``three strikes and you're out'' rule to attorneys who 
commit Rule 11 violations in Federal district court; and (8) 
impose mandatory civil sanctions for willful and intentional 
document destruction intended to obstruct a pending court 
proceeding.
    H.R. 4571 applies to cases brought by individuals as well 
as businesses (both big and small), including business claims 
filed to harass competitors and illicitly gain market share. 
The bill also applies to both plaintiffs and defendants.\1\
---------------------------------------------------------------------------
    \1\ Under the pre-1993 Rule 11, sanctions were imposed on 
defendants for having raised frivolous defenses. In SEC v. Keating, 
1992 WL 207918, [1992 Transfer Binder] Fed.Sec.L.Rep. (CCH) 96,906 
(C.D.Cal.1992), the court imposed sanctions on the defendant Charles 
Keating because 12 of 14 ``shotgun'' defenses were ``patently 
frivolous.'' Sanctions were also imposed on defendants for filing 
inappropriate Rule 11 motions; See Berger v. Iron Workers, 843 F.2d 
1395 (D.C. Cir. 1988) (affirming in part per curiam 7 Fed. Rules Serv. 
3d 306 (D.D.C. 1986)); and also for filing frivolous or harassing 
counterclaims. See Aetna Insurance v. Meeker, 953 F.2d 1328 (11th Cir. 
1992) (affirming district court Rule 11 sanction of defendants for 
pursuing frivolous counterclaims of negligent salvage and conversion). 
In Swanson v. Sheppard, 445 N.W.2d 654 (N.D.1989), for example, the 
court imposed Rule 11 sanctions on the defendant because the defendant 
counterclaimed ``simply to discourage the plaintiff from continuing 
with his cause of action.'' Sanctions were imposed on defendants for 
failing to conduct a reasonable inquiry into the legal basis for their 
Rule 12(b)(6) motion to dismiss. In National Survival Game, Inc. v. 
Skirmish, U.S.A., Inc., 603 F. Supp. 339 (S.D.N.Y. 1985), the court sua 
sponte imposed Rule 11 sanctions on defendants' counsel on the ground 
that counsel failed to conduct a reasonable inquiry into the legal 
basis for the Rule 12(b)(6) motion to dismiss, stating ``Defendants 
failed to cite a single case or authority in their two-page memorandum 
[in support of the motion]. Apparently, they completely ignored the 
firmly established precedents directly contradictory to their position. 
No doubt exists that [defendants'] counsel failed to conduct the 
`reasonable inquiry' that Rule 11 requires to ensure that a motion `is 
warranted by existing law or a good faith argument for the extension, 
modification or reversal of existing law . . .' '' Id. at 341-42. See 
also Steele v. Morris, 608 F. Supp. 274 (S.D.W.Va. 1985) (court granted 
the plaintiff's motion for Rule 11 sanctions to be imposed upon the 
defendant, concluding that the defendant's counsel failed to make 
reasonable inquiry into both the facts and the law before filing a 
motion to dismiss in this case which alleged, among other things, that 
the plaintiff suffered emotional distress due to the defendant's 
willful, deliberate, and outrageous conduct). Sanctions were also 
imposed on defendants when they were found to have ignored firmly 
established precedent. In National Survival Game, Inc. v. Skirmish, 
U.S.A., Inc., 603 F. Supp. 339, 341-42 (S.D.N.Y. 1985), Rule 11 
sanctions were imposed because defendants ``completely ignored the 
firmly established precedents directly contradictory to their 
position.'' See also Smith v. United Transp. Union Local 81, 594 F. 
Supp. 96, 101 (S.D. Cal. 1984) (Rule 11 sanctions imposed where 
defendants frivolously maintained suit by ignoring relevant law, 
relying on irrelevant law, and basing arguments on vacated cases).
---------------------------------------------------------------------------
    The bill also expressly provides that ``Nothing in'' the 
changes made to Rule 11 ``shall be construed to bar or impede 
the assertion or development of new claims or remedies under 
Federal, State, or local civil rights law.'' Civil rights 
claims are thereby exempted from the bill's Rule 11 provisions.

                Background and Need for the Legislation

    H.R. 4571 will prevent frivolous lawsuits and help dispel 
the legal culture of fear that has come to permeate American 
society.

  FRIVOLOUS LITIGATION HAS A CORROSIVE EFFECT ON AMERICAN CULTURE AND 
   VALUES, THREATENING AMERICA'S CHURCHES, SCHOOLS, DOCTORS, SPORTS, 
 PLAYGROUNDS, FRIENDLY RELATIONS, AND EVEN THE GIRLS SCOUTS AND OTHER 
                          FAMILY INSTITUTIONS

    As Philip Howard has pointed out, due to an onslaught of 
frivolous lawsuits ``[l]egal fear has become a defining feature 
of our culture.'' \2\ This values crisis caused by lawsuit 
abuse reaches all parts of American society:
---------------------------------------------------------------------------
    \2\ Philip K. Howard, The Collapse of the Common Good: How 
America's Lawsuit Culture Undermines Our Freedom (2001) at 11.
---------------------------------------------------------------------------
Churches
    In response to litigation against a church after a 
parishioner committed suicide, churches have begun implementing 
policies discouraging counseling by ministers. Instead, 
parishioners are being referred to secular psychologists and 
other therapists.\3\ According to a recent Newsweek cover 
story, ``The Rev. Ron Singleton's door is always open. That 
way, when the Methodist minister of a small congregation in 
Inman, S.C., is counseling a parishioner, his secretary across 
the hall is a witness in case Singleton is accused of 
inappropriate behavior. (When his secretary is not around, the 
reverend does his counseling at the local Burger King.) 
Singleton has a policy of no hugging from the front; just a 
chaste arm around the shoulders from the side. And he's 
developed a lame little hand pat to console the lost and the 
grieving. The dearth of hugging is `really sad,' he says, but 
what is he going to do? He could ill afford a lawsuit.'' \4\
---------------------------------------------------------------------------
    \3\ Id. at 32.
    \4\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek 
(December 15, 2003) at 43.
---------------------------------------------------------------------------
Schools
    A recent poll found that ``[n]early 8 in 10 teachers (78%) 
said students are quick to remind them that they have rights or 
that their parents can sue.'' \5\
---------------------------------------------------------------------------
    \5\ Public Agenda, ``Teaching Interrupted: Do Discipline Policies 
in Today's Public Schools Foster the Common Good?'' (May 2004) at 2-3.
---------------------------------------------------------------------------
    The Supreme Court's 1975 Goss v. Lopez \6\ decision 
extended Federal due process rights to student discipline and 
literally made every school discipline decision a potential 
Federal case. According to Newsweek:
---------------------------------------------------------------------------
    \6\ 419 U.S. 565 (1975) (holding imposition of suspensions without 
preliminary hearings violated students' due process rights guaranteed 
by Fourteenth Amendment).

        ``Legal fear'' is just as intense in the educational 
        system. Many Americans sense that schools have become 
        chaotic and undisciplined over time and the quality of 
        teachers has declined. Many teachers say that the joy 
        has gone out of their jobs. What's not generally known 
        is the role of courts and Congress in creating these 
        problems by depriving teachers and principals of the 
        freedom to use their own common sense and best 
        judgment. Thanks to judicial rulings and laws over the 
        past four decades, parents can sue if their kids are 
        suspended for even a single day--for any reason--
        without adequate ``due process.''\7\
---------------------------------------------------------------------------
    \7\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek 
(December 15, 2003) at 48.

        Unruly students sense the teachers' fear and their own 
        empowerment. ``A kid will be acting out in class, and 
        you touch his shoulder, and he'll immediately come back 
        with `Don't touch me or I'll sue,' or, `You don't have 
        any witnesses','' says Rob Wiel, who taught high-school 
        math and coached football and baseball in the Denver 
        suburbs for 20 years before retiring recently.\8\
---------------------------------------------------------------------------
    \8\ Id. at 49.

    In New Jersey, ``A state judge . . . threw out a lawsuit 
filed by an Atlantic County man who said assigned seating in a 
school lunchroom violated his 12-year-old daughter's right to 
free speech. Superior Court Judge Valerie Armstrong said 
Galloway Township school administrators had the right to impose 
the restriction to maintain order and safety in a cafeteria 
that serves 260 students in each of four 30-minute lunch 
periods.''\9\
---------------------------------------------------------------------------
    \9\ John Curran, ``Judge Rejects a Rights Suit Over School's Lunch 
Seating,'' The Philadelphia Inquirer (July 20, 2004) at B4.
---------------------------------------------------------------------------
    According to the St. Petersburg Times:

        In Pinellas County [Florida], two Palm Harbor 
        University High School baseball players sued the school 
        district claiming they were wrongly booted from school 
        because of a roughhousing incident that occurred on a 
        team road trip. In Hillsborough County, Robinson High 
        School senior Nicole ``Nikki'' Youngblood filed suit 
        after her picture was left out of the school yearbook 
        when she refused to wear a feminine drape instead of a 
        shirt and tie as she wished. These two cases only 
        scratch the surface of lawsuits filed against local 
        public school districts on an almost daily basis. More 
        and more, offenses that used to be settled inside the 
        schoolhouse now end up at the courthouse. The result, 
        educators say, is less money for learning. ``We spend 
        millions and millions on attorney fees every year that 
        has nothing to do with the classroom,'' said Wayne 
        Blanton, executive director of the Florida School 
        Boards Association. ``Every lawsuit we have to defend 
        is money that doesn't get to the classroom.'' . . . 
        ``Lots of people file suit,'' said Crosby Few, 
        Hillsborough School Board attorney. ``A lot of them are 
        frivolous.'' . . . In the book, Judging School 
        Discipline: The Crisis of Moral Authority, the authors 
        argue that the hundreds of lawsuits challenging school 
        disciplinary procedures have hurt the quality of public 
        education. One of the authors, Richard Arum, an 
        associate professor of sociology at New York 
        University, said just the threat of lawsuits keeps 
        teachers from taking charge of their classrooms.\10\
---------------------------------------------------------------------------
    \10\ Melanie Ave, ``Lawsuits Drain School Dollars'' St. Petersburg 
Times (February 2, 2004) (emphasis added).

---------------------------------------------------------------------------
        And as the Arizona Republic has reported:

        Scottsdale School Board member Christine Schild has 
        called the legal fees ``outrageous.'' . . . Legal bills 
        for the 2003-04 school year are estimated to be as high 
        as $675,000. This is the highest amount in recent 
        years, and possibly ever . . . Large school districts 
        routinely spend thousands of dollars each year on 
        attorneys. The most common expenses are for student 
        expulsion hearings and employee discipline . . . [D]ay-
        to-day legal expenses involving disputes with employees 
        and student discipline are not covered by insurance and 
        come out of the operating budget.\11\
---------------------------------------------------------------------------
    \11\ Anne Ryman, ``Baracy to Pick In-house Attorney for School 
District,'' The Arizona Republic (July 8, 2004) at 1.

    Thanks to frivolous lawsuits, ``in America, hugging or, 
indeed, even a pat on the back is now considered so dangerous 
that teachers can't do it.'' \12\ According to Lynn Maher of 
the New Jersey chapter of the National Education Association 
(``NEA''), ``Our policy is basically don't hug children.'' \13\ 
The guidelines of the Pennsylvania chapter of the NEA urge 
teachers to do no more than ``briefly touch'' a child's arm or 
shoulder.\14\
---------------------------------------------------------------------------
    \12\ Philip K. Howard, The Collapse of the Common Good: How 
America's Lawsuit Culture Undermines Our Freedom (2001) at 5.
    \13\ Id. at 5.
    \14\ Id. at 5.
---------------------------------------------------------------------------
Doctor's Offices
    According to Newsweek:

        Dr. Sandra R. Scott of Brooklyn, N.Y., has never been 
        sued for malpractice, but that doesn't keep her from 
        worrying. As an emergency-room doctor, she often hears 
        her patients threaten lawsuits--even while she's 
        treating them. ``They'll come in, having bumped their 
        heads on the kitchen cabinet, and meanwhile I'll be 
        dealing with two car crashes,'' she says. ``And if they 
        don't have the test they think they should have in a 
        timely fashion, they'll get very angry. All of a 
        sudden, it's `You're not treating me, this hospital is 
        horrible, I'm going to sue you'.'' \15\ ``I'm only a 
        human being,'' she says. ``I'm an educated physician 
        but the miracles are out of my hands.'' \16\
---------------------------------------------------------------------------
    \15\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek 
(December 15, 2003) at 43-44.
    \16\ Id. at 51.

        When Dr. Brian Bachelder moved back to Mt. Gilead, 
        Ohio, to practice family medicine in 1984, he hoped to 
        emulate the country doc who'd treated him as a kid . . 
        . But in recent years, Bachelder, 49, has watched 
        litigation reshape his practice. Last December, facing 
        malpractice premiums that soared from $12,000 in 2000 
        to $57,000 in 2003, Bachelder decided to lower his bill 
        by cutting out higher-risk procedures like vasectomies, 
        setting broken bones and delivering babies--even though 
        obstetrics was his favorite part of the practice . . . 
        Today the threat of litigation hangs over nearly every 
        move Bachelder makes, changing the very nature of his 
        relationship with patients. He worries that the 
        slightest mistake could provoke a lawsuit. ``Anything 
        less than perfection is malpractice,'' he says. Even in 
        confronting the most common ailments--headaches or ear 
        infections--Bachelder must consider the possibility of 
        a rare and devastating disease. He often orders 
        expensive tests--not just to rule out the worst, but 
        also to bolster his case before a potential jury . . . 
        Bachelder's fear of lawsuits isn't just theoretical--
        he's been sued a half-dozen times in his 20-year 
        career. In one case, Bachelder referred a boy with a 
        bladder problem to a urologist. The urologist operated, 
        and the patient subsequently sued; Bachelder was also 
        named in the complaint. He was eventually dropped from 
        the case, but not before his liability insurance paid 
        out $40,000 in legal fees.\17\
---------------------------------------------------------------------------
    \17\ Debra Rosenberg, ``Hard Pill to Swallow'' Newsweek (December 
15, 2003) at 46.

        The most dangerously incompetent doctors often remain 
        in place for many years, in part because employers fear 
        wrongful-dismissal lawsuits by fired doctors even more 
        than malpractice suits by their victims.\18\
---------------------------------------------------------------------------
    \18\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek 
(December 15, 2003) at 48.
---------------------------------------------------------------------------
Sports
    The New Yorker reports on how diving boards and U.S. 
Olympic diving medals have both become a thing of the past due 
to frivolous lawsuits: ``After a golden age in the seventies . 
. . the American pool has suffered a gradual decline: thanks, 
for the most part, to concerns about safety and liability, 
diving boards have been removed and deep ends undeepened. . . . 
Such developments have consequences. . . . In the last two 
Olympics, medal counts for [once-dominant] American divers 
reached their lowest levels since the 1912 Games.'' \19\
---------------------------------------------------------------------------
    \19\ Field Maloney, ``Cannonball!'' New Yorker, Talk of the Town 
(September 8, 2004).
---------------------------------------------------------------------------
    According to Newsweek:

        Ryan Warner is a volunteer who runs an annual softball 
        tournament in Page, Ariz., that usually raises about 
        $5,000 to support local school sports programs. But not 
        this year. A man who broke his leg at a recent 
        tournament sliding into third base filed a $100,000 
        lawsuit against the city, and Warner fears he may be 
        named as a defendant. ``It's very upsetting when you're 
        doing something for the community, not making any money 
        for yourself, to be sued over something over which you 
        had no control,'' he says. So Warner canceled the 
        tournament.\20\
---------------------------------------------------------------------------
    \20\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek 
(December 15, 2003) at 44.

        Parents, on behalf of their children, increasingly sue 
        not only for physical injuries, but for ``hurt 
        feelings'' when they don't make a team, says John 
        Sadler of Columbia, S.C., who insures amateur sports 
        leagues .. If a ref steps into a fight, he can be sued 
        if one of the players he is holding back takes a punch. 
        If the ref doesn't intervene, he can be sued for 
        allowing the fight to go on.\21\
---------------------------------------------------------------------------
    \21\ Id. at 49.

        Even apparently innocent soccer moms are at risk. In 
        Jupiter, Fla., one mother volunteered to pick up a 
        pizza for the team. She drove over the foot of a child 
        who, left unattended, had run into the road. The police 
        did not even give the woman a ticket. But the parents 
        of the child sued the mother and the soccer league and 
        tried to sue the city, the refs and various 
        sponsors.\22\
---------------------------------------------------------------------------
    \22\ Id. at 49.

    Other examples include the following. In Vestavia Hills, 
Alabama, the father of Laura Brooke Smith ``sued [the] school 
district, saying his daughter's rejection from the high school 
cheerleading squad despite professional coaching has caused her 
humiliation and mental anguish.'' \23\
---------------------------------------------------------------------------
    \23\ Fox News (May 31, 2001).
---------------------------------------------------------------------------
    In North Haven, Connecticut, the ``families of two high 
school sophomores have filed a Federal lawsuit over the 
school's decision to drop them from the drum majorette squad.'' 
\24\
---------------------------------------------------------------------------
    \24\ Ann DiMatteo, ``Families Sue Over Unfair Twirl Tryouts,'' The 
New Haven Register, May 18, 2001.
---------------------------------------------------------------------------
    And in Pennsylvania, ``[a] teenager, who felt she was 
destined for greatness as a softball player, has filed a 
$700,000 lawsuit against her former coach, alleging his 
`incorrect' teaching style ruined her chances for an athletic 
scholarship.'' \25\
---------------------------------------------------------------------------
    \25\ Dave Sommers, ``Legal Pitch,'' The Trentonian, May 1, 2001.
---------------------------------------------------------------------------
    ABC News reported that:

        When his 16-year-old son didn't get the most valuable 
        player award, Michel Croteau didn't get upset. He hired 
        a lawyer and sued his son's youth hockey league to the 
        tune of more than $200,000 . . . The Croteaus are not 
        alone. In the last year, parents have filed more than 
        200 non-injury-related sports lawsuits against coaches, 
        leagues and school districts in the United States, 
        according to Gil Fried, a University of New Haven 
        professor who specializes in sports law . . . The 
        Butzke family sued the Comsewogue, N.Y., school 
        district because their eighth-grade daughter was taken 
        off the varsity high school soccer team. The Branco 
        family took legal action against the Washington 
        Township, N.J., school district after their son, David, 
        was cut from the junior varsity basketball team . . . 
        The Rubin family sued California's New Haven Unified 
        School District for $1.5 million because their son got 
        kicked off the varsity basketball team . . . The family 
        felt James Logan High School Coach Blake Chong may have 
        cost their son not just a scholarship, but an NBA 
        career.\26\
---------------------------------------------------------------------------
    \26\ ABCNews.com Report, ``Blame the Coach? Angry Parents Take 
School Coaches to Court'' (August 7, 2003).

    In 1999, even major league baseball issued a directive to 
players that they should no longer throw foul balls to eager 
fans in the stands because there might be a lawsuit if someone 
got hurt trying to recover a souvenir.\27\
---------------------------------------------------------------------------
    \27\ Philip K. Howard, The Collapse of the Common Good: How 
America's Lawsuit Culture Undermines Our Freedom (2001) at 46.
---------------------------------------------------------------------------
Playgrounds
    The lawsuit culture is even changing the traditional 
American landscape: playgrounds are increasingly removing 
seesaws for fear of liability.\28\ According to Newsweek:
---------------------------------------------------------------------------
    \28\ Id. at 3.

        Playgrounds all over the country have been stripped of 
        monkey bars, jungle gyms, high slides and swings, 
        seesaws and other old-fashioned equipment once 
        popularized by President John F. Kennedy's physical-
        fitness campaign. The reason: thousands of lawsuits by 
        people who hurt themselves at playgrounds. But some 
        experts say that new, supposedly safer equipment is 
        actually more dangerous because risk-loving kids will 
        test themselves by, for instance, climbing across the 
        top of a swing set. Other kids sit at home and get 
        fat--and their parents sue McDonald's.\29\
---------------------------------------------------------------------------
    \29\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek 
(December 15, 2003) at 44.

    As Philip Howard has written, ``just letting a claim go to 
a jury . . . will affect whether seesaws stay in playgrounds 
all across America.'' \30\
---------------------------------------------------------------------------
    \30\ Philip K. Howard, The Collapse of the Common Good (New York: 
2001) at 58.
---------------------------------------------------------------------------
    Today, a brochure from the National Program for Playground 
Safety advises: ``Seesaw use is quite complex because it 
requires two children to cooperate and combine their actions,'' 
and now ``there is a trend to replace [them] with spring-
centered seesaws.'' \31\ A culture of legal fear is actually 
reducing the opportunities of American children to burn 
calories in playgrounds.
---------------------------------------------------------------------------
    \31\ U.S. Consumer Product Safety Commission, Handbook for Public 
Playground Safety, Pub. No. 325 at 23.
---------------------------------------------------------------------------
Good Deeds
    According to the Chicago Daily Herald:

        By day, Dave Peterson works with diagnostic 
        multiplexers and beam shakers to maintain the Fermi 
        National Accelerator Laboratory's antiproton source. 
        But at dawn and dusk the Geneva resident drags a 
        homemade snowplow behind his daughter's Pacific Electra 
        mountain bike, clearing a 16-inch wide section of the 
        Fox River Trail as he rides to and from work in 
        Batavia. Because he rides at a time when few are 
        watching, he's become something of a local legend the 
        last two winters, a Bigfoot. ``It's one of those weird 
        things that has touched a nerve with a lot of people,'' 
        Peterson said. A whole lot. In fact, many of the path's 
        regulars have come to expect it to be clear--and that 
        has put Peterson's plowing on hiatus. The county has 
        asked him to stop because if there's an expectation 
        that the trail will be plowed, there's a greater chance 
        for litigation, said Kane County Forest Preserve 
        District operations supervisor Pat McQuilkin. ``If a 
        person falls, you are more liable than if you had never 
        plowed at all. Crazy world,'' wrote AnnMarie Fauske, 
        the district's community affairs director, in response 
        to a letter to Peterson. ``Unfortunately, the times we 
        are in allow for a much more litigious environment than 
        common sense would dictate.'' . . . ``There is 
        something I can do here,'' Peterson said. ``I can use 
        my skills as an engineer to make life easier for the 
        little old ladies who walk on the path.'' But the 
        forest preserve worries that if they take a wrong step 
        and fall, those little old ladies might decide to 
        sue.\32\
---------------------------------------------------------------------------
    \32\ Garrett Ordower, ``County Tells Bicyclist Thanks, But Stop 
Plowing Trail,'' The Chicago Daily Herald (February 21, 2004).
---------------------------------------------------------------------------
The Girl Scouts
    The Girl Scouts in Metro Detroit alone have to sell 36,000 
boxes of cookies each year just to pay for liability 
insurance.\33\ According to former Girl Scout Laurie Super [of 
Downington, Pennsylvania], ``[i]t's getting harder to sell 
[cookies] . . . Our local Wawa stores said they couldn't let 
the girls set up their booth anymore, because of liability 
issues.'' \34\
---------------------------------------------------------------------------
    \33\ See ``Fine Filers of Frivolous Lawsuits,'' The Detroit News 
(February 24, 2004).
    \34\ Julia Moskin, ``Crave Thin Mints?'' The New York Times (March 
14, 2004).
---------------------------------------------------------------------------
Everyone
    The corrosive effects of lawsuit abuse were recently 
summarized by Newsweek:

        Americans will sue each other at the slightest 
        provocation. These are the sorts of stories that fill 
        schoolteachers and doctors and Little League coaches 
        with dread that the slightest mistake--or offense to an 
        angry or addled parent or patient--will drag them into 
        litigation hell, months or years of mounting legal fees 
        and acrimony and uncertainty, with the remote but scary 
        risk of losing everything . . . Americans don't just 
        sue big corporations or bad people. They sue doctors 
        over misfortunes that no doctor could prevent. They sue 
        their school officials for disciplining their children 
        for cheating. They sue their local governments when 
        they slip and fall on the sidewalk, get hit by drunken 
        drivers, get struck by lightning on city golf courses--
        and even when they get attacked by a goose in a park 
        (that one brought the injured plaintiff $10,000). They 
        sue their ministers for failing to prevent suicides. 
        They sue their Little League coaches for not putting 
        their children on the all-star team. They sue their 
        wardens when they get hurt playing basketball in 
        prison. They sue when their injuries are severe but 
        self-inflicted, when their hurts are trivial and when 
        they have not suffered at all. Many of these cases do 
        not belong in court. But clients and lawyers sue 
        anyway, because they hope they will get lucky and win a 
        jackpot from a system that allows sympathetic juries to 
        award plaintiffs not just real damages--say, the cost 
        of doctor's fees or wages lost--but millions more for 
        impossible-to-measure ``pain and suffering'' and highly 
        arbitrary ``punitive damages.'' (Under standard 
        ``contingency fee'' arrangements, plaintiffs' lawyers 
        get a third to a half of the take.) . . . Many 
        Americans sue because they have come to believe that 
        they have the ``right'' to impose the costs and burdens 
        of defending a lawsuit on anyone who angers them, 
        regardless of fault or blame. The cost to society 
        cannot be measured just in money, though the bill is 
        enormous, an estimated $200 billion a year, more than 
        half of it for legal fees and costs that could be used 
        to hire more police or firefighters or teachers.\35\
---------------------------------------------------------------------------
    \35\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek 
(December 15, 2003) at 44-45.

        [T]he time may come when ordinary Americans recognize 
        that for every sweepstakes winner in the legal lottery, 
        there are millions of others who have to live with the 
        consequences--higher taxes and insurance rates, 
        educational and medical systems seriously warped by 
        lawsuits, fear and uncertainty about getting sued 
        themselves.\36\
---------------------------------------------------------------------------
    \36\ Id. at 51. Although the American Trial Lawyers Association has 
vociferously attacked the Newsweek article, Newsweek stands solidly by 
its report, stating ``Newsweek received a large volume of mail from 
trial lawyers critical of our cover story. We stand by the story as 
both accurate and fair. The criticisms are for the most part easily 
refuted with material in the public record.'' Newsweek, ``Mail Call'' 
(January 12, 2004).

    As Will Rogers once observed, Americans are ``letting 
lawyers instead of their conscience be their guide.''

    POLLS SHOW AMERICANS OVERWHELMINGLY SUPPORT LEGISLATION BARRING 
                           FRIVOLOUS LAWSUITS

    We all pay for these frivolous lawsuits through higher 
prices as consumers and through higher taxes as taxpayers.
    A recent poll found that 83% of likely voters believe there 
are too many lawsuits in America, 76% believe lawsuit abuse 
results in increased prices for goods and services, and 65% 
said they would be more likely to vote for congressional 
candidates who supported curbs on lawsuit abuse.\37\ Another 
poll found that 73% of Americans support requiring sanctions 
against attorneys who file frivolous lawsuits.\38\
---------------------------------------------------------------------------
    \37\ See American Tort Reform Association, ``National Poll on Tort 
Reform'' (February 27, 2003).
    \38\ See Insurance Research Council, ``IRC Study Finds Strong 
Support for Wide Variety of Civil Justice Reform Measures'' (April 5, 
2004) at 4.
---------------------------------------------------------------------------
    Small businesses rank the cost and availability of 
liability insurance as second only to the costs of health care 
as their top priority,\39\ and both problems are fueled by 
frivolous lawsuits.
---------------------------------------------------------------------------
    \39\ Bruce D. Phillips, ``Small Business Problems and Priorities'' 
(National Federation of Independent Business Research Foundation, June 
2004).
---------------------------------------------------------------------------

 FRIVOLOUS LAWSUITS AGAINST INNOCENT VICTIMS HAVE BECOME COMMONPLACE, 
        ESPECIALLY THREATENING SMALL BUSINESSES AND HEALTH CARE

    Because existing rules against frivolous lawsuits are 
ineffective, as one commentator has pointed out, ``The right to 
sue has been exploited by lawyers. They can gamble on taking 
cases on a contingency basis because they need only win 1 in 10 
to score the big judgment that will make up for the other 
losses.'' \40\
---------------------------------------------------------------------------
    \40\ Mortimer B. Zuckerman (Editorial) ``Welcome to Sue City, 
U.S.A.'' U.S. News & World Report (June 16, 2003) at 64.
---------------------------------------------------------------------------
    Small businesses and workers suffer. This year, the 
nation's oldest ladder manufacturer, family-owned John S. 
Tilley Ladders Co. of Watervliet, New York, near Albany, filed 
for bankruptcy protection and sold off most of its assets due 
to litigation costs. Founded in 1855, the Tilley firm could not 
handle the cost of liability insurance, which had risen from 6% 
of sales a decade ago to 29%, even though the company never 
lost an actual court judgment. ``We could see the handwriting 
on the wall and just want to end this whole thing,'' said 
Robert Howland, a descendant of company founder John 
Tilley.\41\
---------------------------------------------------------------------------
    \41\ Carrie Coolidge, ``The Last Rung; The Tort System Takes Down a 
149-year-old Ladder Manufacturer,'' Forbes (January 12, 2004) at 52.
---------------------------------------------------------------------------
    A recent report by the AEI-Brookings Joint Center for 
Regulatory Studies has concluded that ``The tort liability 
price tag for small businesses in America is $88 billion a 
year'' and that ``Small businesses bear 68 percent of business 
tort liability costs, but take in only 25% of business 
revenue.'' \42\ The small businesses studied in the report 
account for 98% of the total number of businesses with 
employees in the United States.\43\
---------------------------------------------------------------------------
    \42\ Judyth Pendell and Paul Hinton, ``Liability Costs for Small 
Business'' (U.S. Chamber Institute for Legal Reform, June, 2004) at 1 
(``small business'' defined as ``those with less than $10 million in 
annual revenue and at least one employee in addition to the owner'').
    \43\ Id.
---------------------------------------------------------------------------
    Doctors and patients suffer. Before the 1960s, only one 
physician in seven had ever been sued in their entire 
lifetime,\44\ whereas today's rate is about one in seven 
physicians sued per year.\45\
---------------------------------------------------------------------------
    \44\ See ``Opinion Survey of Medical Professional Liability,'' JAMA 
164:1583-1594 (1957).
    \45\ See R. Bovbjerg, ``Medical Malpractice: Problems & Reforms,'' 
The Urban Institute, Intergovernmental Health Policy Project (1995).
---------------------------------------------------------------------------
    Further, the Harvard Medical Practice Study found that over 
half of the filed medical professional liability claims they 
studied were brought by plaintiffs who suffered either no 
injuries at all, or, if they did, such injuries were not caused 
by their health care providers, but rather by the underlying 
disease.\46\ The researchers found that, of the 47 medical 
malpractice claims they studied that resulted in 
litigation,\47\ ``[i]n 14 cases, the physicians reviewed the 
record and found no adverse event. For most of these cases, the 
physicians examined the outcome and concluded that the cause 
was the underlying disease rather than medical treatment . . . 
In these 14 cases, our physician reviewers took a stand 
opposite to that of the plaintiff-patient's expert.'' \48\ 
Further, the reviewers found that in an additional 10 cases an 
adverse event occurred, but there was no negligence on the part 
of the health care provider.\49\ Of the 47 claims filed that 
the researchers analyzed, less than half demonstrated any 
actual negligence, and many demonstrated no discernable 
injury.\50\
---------------------------------------------------------------------------
    \46\ See Harvard Medical Practice Study to the State of New York, 
Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation, 
and Patient Compensation in New York at 11-5 (1990) (``[T]he tort 
system imposes the costs of defending claims on [health care] providers 
who may not even have been involved in an injury, let alone a negligent 
injury.'').
    \47\ See id. at 7-1.
    \48\ See id. at 7-33.
    \49\ See id. at 7-33.
    \50\ See also Paul Weiler, et al., A Measure of Malpractice (1993) 
at 71 (``[Of those 47,] 10 claims involved hospitalization that had 
produced injuries, though not due to provider negligence; and another 
three cases exhibited some evidence of medical causation, but not 
enough to pass our probability threshold. That left 26 malpractice 
claims, more than half the total of 47 in our sample, which provided no 
evidence of medical injury, let alone medical negligence.'').
---------------------------------------------------------------------------

                     EXAMPLES OF FRIVOLOUS LAWSUITS

    Here are just a few examples of the frivolous lawsuits that 
have tormented innocent Americans.\51\
---------------------------------------------------------------------------
    \51\ Recently, Britain's most senior judges, the Appellate 
Committee of the House of Lords, branded Britain's U.S.-style claims 
system an ``evil'' that interferes with civil liberties and freedom in 
a landmark ruling in a compensation case. In the case of Tomlinson v. 
Congleton Borough Council, [2003] U.K.H.L. 47 (2003), the Appellate 
Committee stated ``The pursuit of an unrestrained culture of blame and 
compensation has many evil consequences and one is certainly the 
interference with the liberty of the citizen. Of course there is some 
risk of accidents arising out of the joie de vivre of the young, but 
that is no reason for imposing a grey and dull safety regime on 
everyone.''

        
 LBarbara Streisand sued the California Coastal 
        Records Project, which took thousands of pictures of 
        the California coastline intended to protect the 
        state's shoreline. The photographs are made available 
        free of charge to state and local governments, 
        university researchers, conservation organizations, and 
        others. Streisand sued because a picture of her Malibu 
        estate (her mansion composed only 3% of one photo among 
        thousands) was posted on the public interest 
        organization's Web site. She sued for $50 million (five 
        separate claims for $10 million each), but on May 10, 
        2004, Streisand was ordered to pay the people she sued 
        $154,000 in legal fees they accrued defending against 
        her ridiculous lawsuit.\52\
---------------------------------------------------------------------------
    \52\ See Jennifer Pittman, ``The Blame Game'' The Silicon Valley/
San Jose Business Journal (January 9, 2004); Kenneth R. Weiss, 
``Streisand Sues Over Photograph of Her Coast Home on Web Site,'' The 
Los Angeles Times (May 30, 2003) at B1; Streisand v. Adelman, Case No. 
SC077257 (Sup. Ct. Los Angeles Cty.) (complaint filed May 30, 2003); 
Streisand v. Adelman, Case No. SC077257 (Sup. Ct. Los Angeles Cty.) 
(ruling on submitted matters: Motion to Tax Costs and Motion for 
Attorneys; Fees).

        
 LAccording to the Indianapolis Star, ``Indiana 
        drivers who get into wrecks with someone who is talking 
        on a cell phone can forget about suing the phone's 
        manufacturer. The Indiana Court of Appeals on Friday 
        dismissed an Evansville lawsuit in which Terry L. 
        Williams tried to do just that after a March 2002 
        traffic crash. Williams collided with Kellie Meagher, 
        who was allegedly talking on a Cingular Wireless phone. 
        In the lawsuit, Williams alleged Cingular knew--or 
        should have known--that Meagher would use the phone 
        while driving. Vanderburgh Superior Court Judge Mary 
        Margaret Lloyd dismissed Cingular from the suit. After 
        the dismissal, Williams asked the judge to reconsider, 
        citing new evidence that included a `Blondie' cartoon 
        strip in which Blondie, while talking on a cell phone, 
        caused an accident. But the Evansville judge was 
        unmoved. Now an appellate court also agrees that 
        Cingular was not liable.'' \53\
---------------------------------------------------------------------------
    \53\ Kevin Corcoran, ``Court: Don't Blame Cell-Phone Maker for 
Crash,'' The Indianapolis Star (June 5, 2004).

        
 LIn April, 1995, Carl and Diana Grady sued 
        Frito Lay claiming that Dorito chips stuck in Charles 
        Grady's throat and tore his esophagus. The Gradys 
        wanted to present the ``expert'' testimony of Dr. 
        Charles Beroes to support their claim that Doritos are 
        inherently dangerous and negligently designed. Beroes' 
        research included pressing Doritos onto a scale until 
        the tip snapped off, and measuring the amount of time 
        it took saliva to soften the Doritos. None of Beroes' 
        tests involved chewing. After eight years of costly 
        litigation, the Pennsylvania Supreme Court threw out 
        the case, noting that Dr. Beroes' tests ``smacked of a 
        high school science fair project and did not bear any 
        relationship to the reality of the . . . consumption of 
        foodstuffs.'' \54\ Justice Saylor pointed out in his 
        concurring opinion ``the common sense notion that it is 
        necessary to properly chew hard foodstuffs prior to 
        swallowing.'' \55\
---------------------------------------------------------------------------
    \54\ Grady v. Frito-Lay, Inc., 839 A.2d 1038, 1042 (8th Cir. 2003) 
(citing Grady v. Frito-Law, Inc., 2000 WL 33436367, at *2) (Pa.Com.Pl. 
April 3, 2000)).
    \55\ Id. at 1053 (Saylor, J., concurring).

        
 LAfter three years of litigation, an appeals 
        court finally held that the survivor of a crash cannot 
        sue an airline for punitive damages when the pilots did 
        not intentionally crash the plane. At midnight on June 
        1, 1999, during a severe thunderstorm, a fully loaded 
        American Airlines jet crashed while trying to land in 
        Little Rock, Arkansas. Eleven people died, including 
        the pilot. Two passengers sued seeking compensatory and 
        punitive damages. A U.S. district court judge ruled 
        that ``uncontroverted evidence'' showed the pilots had 
        a good faith belief that the plane could be landed 
        safely.\56\ Upholding the district court's decision, 
        Judge Morris Arnold held that no reasonable jury could 
        find that the members of the flight crew crashed the 
        plane on purpose. Judge Morris wrote, ``[s]tated 
        differently, we hold that no reasonable jury could find 
        that the members of the flight crew knew, or ought to 
        have known, in light of the surrounding circumstances, 
        that their conduct would naturally and probably result 
        in injury.'' \57\
---------------------------------------------------------------------------
    \56\ In re: Aircraft Accident at Little Rock, Arkansas on June 1, 
1999, 231 F.Supp. 852, 879 (E.D.Ark. 2002).
    \57\ Id. at 878-79.

        
 LAfter five years of litigation, the Nevada 
        Supreme Court dismissed the appeal of Lane Holmes, who 
        sued the Turtle Stop in Las Vegas, claiming a cup 
        caused him to suffer leg burns from dripping hot 
        coffee.\58\ The court upheld the decision of the trial 
        court that ruled ``[t]he danger is open and obvious.'' 
        \59\
---------------------------------------------------------------------------
    \58\ Holmes v. Turtle Stop, Inc., 62 P.3d 1165 (2000).
    \59\ Cy Ryan, ``Court Says Warning About Hot Coffee Unnecessary,'' 
The Las Vegas Sun (July 11, 2000).

        
 LA woman in Knoxville, Tennessee, sought 
        $125,000 in damages against McDonald's, claiming a hot 
        pickle dropped from a hamburger, burning her chin and 
        causing her mental injury. Her husband also sued for 
        $15,000 for loss of consortium.\60\
---------------------------------------------------------------------------
    \60\ See Randy Kenner, ``Lawsuit on Hot Pickle Draws Attention 
Around the Globe,'' Knoxville News-Sentinel (October 10, 2000) at A1.

        
 LOn September 3, 2003, a Federal district 
        judge in New York threw out for a second time a lawsuit 
        filed on behalf of obese children claiming McDonald's 
        Corporation was legally responsible for their over-
        consumption of food.\61\ The court earlier noted the 
        national ramifications of the complaint and the 
        requested damages, stating ``McDonalds has also, 
        rightfully, pointed out that this case, the first of 
        its kind to progress far enough along to reach the 
        stage of a dispositive motion, could spawn thousands of 
        similar `McLawsuits' against restaurants . . . The 
        potential for lawsuits is even greater given the 
        numbers of persons who eat food prepared at other 
        restaurants in addition to those serving fast food.'' 
        \62\
---------------------------------------------------------------------------
    \61\ See Pelman v. McDonald's Corp., S.D.N.Y. 02 Civ. 7821 (RWS), 
at 34-35 (September 3, 2003).
    \62\ Pelman v. McDonald's Corp., 237 F.Supp.2d 512, 518 (S.D.N.Y. 
2003).

        
 LThe Michigan Court of Appeals threw out a 
        case brought by Richard Overton, who ``pointed to 
        defendant's television advertisements featuring Bud 
        Light as the source of fantasies coming to life, 
        fantasies involving tropical settings, and beautiful 
        women and men engaged in unrestricted merriment. 
        Plaintiff sought monetary damages in excess of $10,000, 
        alleging that defendant's misleading advertisements had 
        caused him physical and mental injury, emotional 
        distress, and financial loss.'' \63\
---------------------------------------------------------------------------
    \63\ Overton v. Anheauser-Busch Co., 517 N.W.2d 308, 309 (Mich. 
App. 1994).

        
 LIn Florida, a woman sued Universal Studios 
        for $15,000 for ``extreme fear, emotional distress and 
        mental anguish'' because the theme park's annual 
        haunted house was too scary.\64\
---------------------------------------------------------------------------
    \64\ Tim Barker, ``Universal Fall Leads to Lawsuit,'' Orlando 
Sentinel (January 5, 2000) at C1.

        
 LAfter over three years of litigation, 
        Georgia's Court of Appeals held that the day trading 
        firms where Mark Barton invested before embarking on a 
        shooting rampage are not liable for the victims' 
        injuries and deaths. A unanimous panel on the court 
        stated ``We find this case is one in which the issue of 
        proximate cause is so plain, palpable and indisputable 
        as to demand summary judgment for the defendants.'' 
        \65\ The court noted that it was ``troubled by the 
        implication that the list of defendants potentially 
        liable for any person's violence, if sparked by 
        economic misfortune, would be limited only by the 
        number of stock brokers, investment advisers, lawyers, 
        business partners, lottery ticket sellers, etc., whom 
        the assailant blamed for his financial losses.'' \66\
---------------------------------------------------------------------------
    \65\ Brown v.All-Tech Investment Group, 2003 WL 23315394 (Ga. App.) 
at *5.
    \66\ Id. at *7, n.5.

        
 LAfter a decade of litigation, Texas's 1st 
        Court of Appeals reversed a $43 million judgment 
        against a car manufacturer in a products liability suit 
        that alleged a defective seat belt caused the 1992 
        drowning death of a woman with a blood-alcohol level of 
        0.17 who failed to escape from her Honda Civic when it 
        became submerged under water.\67\
---------------------------------------------------------------------------
    \67\ Honda of America Manufacturing, Inc. v. Norman, 104 S.W.3d. 
600 (2003) (Tex.App. 1st.).

        
 LThe family of a man who died on a fishing 
        trip sued the Weather Channel for $10 million, claiming 
        that the man relied on the channel's forecast for his 
        safety. In dismissing the case, the Miami Federal court 
        stated that if forecasters were held accountable, ``the 
        duty could extend to farmers who plant their crops 
        based on a forecast of no rain, construction workers 
        who pour concrete or lay foundation based on the 
        forecast of dry weather, or families who got to the 
        beach for the weekend.'' \68\
---------------------------------------------------------------------------
    \68\ See ``Storm Death Is Not Weatherman's Fault,'' New York Post 
(March 29, 1999) at 84.

        
 LA West Virginia man who fell down an 
        escalator at an airport finally dropped a lawsuit filed 
        against US Airways over the accident. According to the 
        Associated Press, ``The lawsuit in circuit court in 
        Fort Myers alleged the airline didn't warn Floyd 
        Shuler, 61, about the adverse affects of drinking 
        alcohol on a plane. Shuler said in a news release from 
        Wheeling, W.Va., that he didn't intend for the suit to 
        be filed. `I learned about the filing of the lawsuit 
        against US Airways . . . along with everyone else,' 
        Shuler said. `It was never my intent to take on the 
        airline industry. I apologize for any inconvenience 
        this has caused US Airways.' Shuler's attorney, Paul 
        Kutcher, did not return a phone call from The 
        Associated Press seeking comment. The suit . . . said 
        US Airways was negligent by failing to warn Shuler that 
        the effects of alcohol are greater at night on airline 
        passengers. The suit also alleged that the company did 
        not properly maintain the escalator at Southwest 
        Florida International Airport when he fell down it on 
        Aug. 28, 1999, and it sought damages in excess of 
        $15,000.'' \69\
---------------------------------------------------------------------------
    \69\ Associated Press, ``Man Drops Suit Filed Against Airline After 
He Drank Booze, Fell,'' USA Today (April 4, 2004).

        
 LSeveral months after the Escondido, 
        California library's resident cat attacked Richard 
        Espinosa's 50-pound Labrador-mix assistance dog, 
        Espinosa filed a $1.5-million claim against the city, 
        alleging that he was harmed due to the dog's injuries. 
        According to the legal papers filed, Espinosa claimed 
        his Federal and state constitutional rights were 
        violated and that ``. . . the defendants actions and 
        subsequent inactions caused Espinosa to suffer 
        significant lasting, extreme and severe mental anguish 
        and emotional distress including, but not limited to, 
        terror, humiliation, shame, embarrassment, 
        mortification, chagrin, depression, panic, anxiety, 
        flashbacks, nightmares, loss of sleep . . .'' \70\ 
        According to the North County Times, ``It took a jury 
        little more than 2 hours of deliberation Friday to 
        reject a claim from a man that the city of Escondido 
        violated his civil rights when a cat living in a city 
        library attacked his assistance dog more than 3 years 
        ago . . . Espinosa originally asked for $1.5 million in 
        compensation and damages . . . During jury selection 
        Wednesday, Judge Hofmann excused four potential jurors 
        who said they felt the case was `frivolous' and that 
        they could not be impartial. Others also said the case 
        was without merit, but said they could look beyond that 
        feeling. After that first juror said the word 
        `frivolous,' and so did the next five, I thought the 
        whole panel should have been thrown out,'' Espinosa 
        said . . . The city offered twice to settle with 
        Espinosa, including one offer of $1,000. Espinosa 
        declined. Nelson was unable to estimate how much the 
        city spent defending itself against Espinosa's 
        allegations, but he said it was a considerable sum. He 
        also said the case could drag on for months or years if 
        Espinosa does appeal.'' \71\
---------------------------------------------------------------------------
    \70\ Chuck Shepherd, ``News of the Weird,'' The Orlando Weekly 
(August 30, 2001).
    \71\ Teri Figueroa, ``Jury Rejects Claim by Man in Attack on Dog by 
Library Cat,'' The North County Times (January 20, 2004).

        
 LIn Ohio, Hamilton County Commissioner Todd 
        Portune sued the Bengals and the National Football 
        League claiming the team violated its stadium lease by 
        failing to be competitive. The complaint, which also 
        named the other 31 NFL franchises as defendants, 
        alleges fraud, civil conspiracy, antitrust violations 
        and breach of contract.\72\
---------------------------------------------------------------------------
    \72\ Terry Kinney (the Associated Press) ``Commissioner Sues 
Bengals, NFL'' (January 31, 2003).

        
 LAfter three years of litigation, the Nebraska 
        Supreme Court upheld a lower court ruling and found 
        Ford Motor Co. and Bridgestone/Firestone Inc. not 
        liable for the death of a woman killed by a man who 
        gave her a lift after she got a flat tire. The woman's 
        parents claimed in the lawsuit that a Firestone 
        Wilderness AT tire on their daughter's Ford Explorer 
        failed, setting off the chain of events that resulted 
        in her death. The Nebraska court said the companies 
        could not have foreseen the murderer's criminal 
        acts.\73\
---------------------------------------------------------------------------
    \73\ Kevin O'Hanlon, ``Court: Faulty Tire Didn't Cause Murder,'' 
the Associated Press (August 8, 2003).
---------------------------------------------------------------------------

          TODAY'S PRODUCT WARNINGS ARE A SAD TESTAMENT TO THE 
                         LEGAL CULTURE OF FEAR

    Today, testaments to the age of frivolous lawsuits are 
written on all manner of product warnings that aim to prevent 
obvious misuse. A label on a snow sled says ``Beware: sled may 
develop a high speed under certain snow conditions.'' A 5-inch 
brass fishing lure with three hooks is labeled ``Harmful if 
swallowed.'' A warning on an electric router made for 
carpenters states ``This product not intended for use as a 
dental drill.'' A warning label on a baby stroller cautions 
``Remove child before folding.'' A sticker on a 13-inch wheel 
on a wheelbarrow warns ``Not intended for highway use.'' A 
dishwasher carries the warning ``Do not allow children to play 
in the dishwasher.'' A manufactured fireplace log states 
``Caution--Risk of Fire.'' A household iron contains the 
warning ``Never iron clothes while they are being worn.'' \74\ 
And a cardboard car sun shield that keeps sun off the dashboard 
warns ``Do not drive with sun shield in place.'' \75\
---------------------------------------------------------------------------
    \74\ Sonny Garrett, ``Warning: People Are as Dumb as You Think,'' 
The Baxter Bulletin (April 17, 2004) (compiling list from Michigan 
Lawsuit Abuse Watch in Annual Wacky Warning Label Contest).
    \75\ Larry D. Hatfield, ``Dumbest Warning Labels Get their Due,'' 
The San Francisco Chronicle (January 24, 2002).
---------------------------------------------------------------------------

                   THE COSTS OF FRIVOLOUS LITIGATION

    It should be emphasized that statistics do not capture the 
very real experiences of victims of lawsuit abuse that people 
suffer, and this debate is not about aggregate statistics 
regarding the number of lawsuits filed.
    However, requiring sanctions when judges find lawsuits are 
frivolous will surely deter many frivolous cases from being 
brought. That will be a good thing, considering the cost of 
today's tort system to Americans is staggering. After leveling 
off during the 1990s, the system's direct costs soared by a 
stunning 14.4% in 2001 and another 13.3% in 2002, to a 2002 
total of $233 billion, the equivalent of a 5% tax on wages,\76\ 
according to a report released by Tillinghast-Towers Perrin, 
which publishes the most definitive trend statistics on tort 
system costs. Inflation-adjusted direct U.S. tort costs per 
person have shot from $89 in 1950 to $809 in 2002.\77\
---------------------------------------------------------------------------
    \76\ Tillinghast-Towers Perrin, U.S. Tort Costs: 2003 Update: 
Trends and Findings on the Costs of the U.S. Tort System, at 1. 
Tillinghast's reports on tort system costs are funded internally.
    \77\ Id. at 1.
---------------------------------------------------------------------------
    According to the Economic Report of the President, ``The 
expansive tort system has a considerable impact on the U.S. 
economy. Tort liability leads to lower spending on research and 
development, higher health care costs, and job losses.'' \78\ 
And according to the Council of Economic Advisers, ``the United 
States tort system is the most expensive in the world, more 
than double the average cost of other industrialized nations.'' 
\79\ The direct costs of medical malpractice claims jumped by 
an average of 11.9 percent a year from 1975 to 2002.\80\
---------------------------------------------------------------------------
    \78\ Economic Report of the President (February 2004) at 203.
    \79\ Council of Economic Advisers, ``Who Pays for Tort Liability 
Claims? An Economic Analysis of the U.S. Tort Liability System'' (April 
2002) at 1.
    \80\ Tillinghast-Towers Perrin, U.S. Tort Costs: 2003 Update: 
Trends and Findings on the Costs of the U.S. Tort System, at 2.
---------------------------------------------------------------------------
    Of the $233 billion total, only 22 cents on the dollar went 
to compensate alleged victims' economic losses; almost as much 
(19 cents) went to their lawyers; 24 cents went to payments for 
inherently unquantifiable noneconomic losses, mainly pain and 
suffering; 14 cents went to defense costs; and 21 cents went to 
insurance overhead costs.\81\
---------------------------------------------------------------------------
    \81\ Id. at 17. According to an analysis of a report by the 
National Center for State Courts by Newsweek's Stuart Taylor, Jr., 
although tort filings declined by 9 percent from 1992 to 2001, almost 
all of that decline came in routine car-crash lawsuits. The report 
shows that medical malpractice claims increased by 24 percent from 
1992-2001 and that total tort filings soared by 40 percent from 1975 to 
2001, despite a dip during the 1990's. See Stuart Taylor, Jr. Response 
to ATLA's Claims, available at http://www.overlawyered.com/archives/
000708.html. Chief Justice Rehnquist released new data on January 1, 
2004, showing an 8 percent drop in civil filings in fiscal year 2003, 
``primarily as a result of decreases in personal injury/product 
liability cases involving asbestos (such filings had soared 98 percent 
the previous year).'' William H. Rehnquist, 36 The Third Branch 1 
(January 2004), 2003 Year-End Report on the Federal Judiciary, Chapter 
III, n.5. See also Economic Report of the President (February 2004), at 
204-05 (``The number of injuries handles by the tort system has 
increased along with expenditures. The number of filings per capita 
started to rise in the early 1980's and peaked in the mid-1980's, at 
least in the 16 states for which data on lawsuit filings are available 
between 1975 and 2000. Much of the decline in filings since 1985 
appears to have occurred in California, where medical liability reforms 
included a $250,000 limit for noneconomic damages that was found 
constitutional in 1985.'').
---------------------------------------------------------------------------
    A recent report by Judyth Pendell, Senior Fellow at the 
AEI-Brookings Joint Center for Regulatory Studies, and Paul 
Hinton, Vice President of NERA Economic Consulting, has 
concluded that ``The tort liability price tag for small 
businesses in America is $88 billion a year'' and that ``Small 
businesses bear 68 percent of business tort liability costs, 
but take in only 25% of business revenue.'' \82\ The small 
businesses studied in the report account for 98% of the total 
number of businesses with employees in the United States.\83\
---------------------------------------------------------------------------
    \82\ Judyth Pendell and Paul Hinton, ``Liability Costs for Small 
Business'' (U.S. Chamber Institute for Legal Reform, June, 2004) at 1 
(``small business'' defined as ``those with less than $10 million in 
annual revenue and at least one employee in addition to the owner'').
    \83\ Id.
---------------------------------------------------------------------------
    Without the serious threat of punishment for filing 
frivolous lawsuits, innocent individuals and companies will 
continue to face the harsh economic reality that simply paying 
off frivolous claimants through monetary settlements is often 
cheaper than litigating the case. If it costs $10,000 to defend 
yourself in court against frivolous charges, it makes financial 
sense to settle the case for $9,000, even if you weren't at 
fault in any way. This perverse dynamic not only results in 
legalized extortion, but it leads to increases in the insurance 
premiums all individuals and businesses must pay.\84\
---------------------------------------------------------------------------
    \84\ Opponents of reform often claim that contingency fees--
agreements by which personal injury attorneys are allowed a percentage 
cut from any monetary damages awarded to their client--provide a 
``screening mechanism'' that weeds out frivolous cases. The argument 
used is that personal injury attorneys will not take frivolous cases 
because doing so would leave them with no monetary recovery. The 
perverse dynamic outlined above, and the fact that filing fees are 
usually no more than a hundred dollars and additional defendants can be 
named in the lawsuit at no extra charge, makes clear that contingency 
fee agreements provide no effective screening mechanism at all since 
personal injury attorneys can simply take advantage of the legal costs 
they impose on defendants simply in virtue of their filing a case to 
extort money from those they sue.
---------------------------------------------------------------------------
    The incentives for personal injury lawyers to file 
meritless nuisance lawsuits for their settlement value are 
clear. As leading commentators from Harvard Law School have 
described the situation under current law:

        [T]he plaintiff may choose to file a claim at some 
        (presumably small) cost. If the defendant does not then 
        settle with the plaintiff and does not, at a cost, 
        defend himself, the plaintiff will prevail by default 
        judgment . . . Given the model and the assumption that 
        each party acts in his financial interest and realizes 
        the other will do the same, it is easy to see how 
        nuisance suits can arise. By filing a claim, any 
        plaintiff, and thus the plaintiff with a weak case, 
        places the defendant in a position where he will be 
        held liable for the full judgment demanded unless he 
        defends himself. Hence, the defendant should be willing 
        to pay a positive amount in settlement to the plaintiff 
        with a weak case--despite the defendant's knowledge 
        that were he to defend himself, such a plaintiff would 
        withdraw.\85\
---------------------------------------------------------------------------
    \85\ D. Rosenberg and S. Shavell, ``A Model in which Suits are 
Brought for their Nuisance Value,'' 5 International Rev. of Law and 
Economics 3, 3 (June 1985).

    These commentators point out that defendants will always 
have to suffer extortion through nuisance lawsuits because ``to 
defeat a claim, the defendant will have to engage in actions 
that are frequently more expensive than the plaintiff's cost of 
making the claim, for the defendant will have to gather 
evidence supporting his contention that he was not legally 
responsible for harm done to the plaintiff or that no harm was 
actually done.'' \86\ The same commentators offer the following 
illustration:
---------------------------------------------------------------------------
    \86\ Id. at 10.

        Suppose, for instance, that the plaintiff files a claim 
        and demands $180 in settlement. The defendant will then 
        reason as follows. If he settles, his costs will be 
        $180. If he rejects the demand and does not defend 
        himself, he will lose $1000 by default judgment. If he 
        rejects the demand and defends himself, the plaintiff 
        will withdraw, but he will have spent $200 to 
        accomplish this. Hence, the defendant's costs are 
        minimized if he accepts the plaintiff's demand for 
        $180; and the same logic shows that he would have 
        accepted any demand up to $200. It follows that the 
        plaintiff will find it profitable to file his nuisance 
        claim; indeed, this will be so whenever the cost of 
        filing is less than the defendant's cost of 
        defense.\87\
---------------------------------------------------------------------------
    \87\ Id. at 4.

    Personal injury lawyers can always extort money from 
innocent victims by filing nuisance lawsuits for their 
settlement value. H.R. 4571 will prevent such extortion by 
giving victims an opportunity they do not have now to get 
financial compensation for the costs they are forced to bear by 
legal tormentors filing frivolous lawsuits.

         H.R. 4571: THE LAWSUIT ABUSE REDUCTION ACT (``LARA'')

    What follows is a discussion of the need for The Lawsuit 
Abuse Reduction Act (``LARA''), which was introduced by 
Congressman Lamar Smith on June 15.
Section 2 of LARA: Attorney Accountability
    Federal Rule of Civil Procedure 11 (``Rule 11''), as 
originally adopted and prior to the adoption of weakening 
amendments in 1993, was widely popular among Federal judges, 
and it served to significantly limit lawsuit abuse.
    In 1990, the Judicial Conference's Advisory Committee on 
Civil Rules undertook a review of Rule 11 and asked the Federal 
Judicial Center to conduct an empirical study of its operation 
and impact. The survey of 751 Federal judges found that an 
overwhelming majority of Federal judges believed that Rule 11 
did not impede development of the law (95%); the benefits of 
the rule outweighed any additional requirement of judicial time 
(71.9%); the 1983 version of Rule 11 had a positive effect on 
litigation in the Federal courts (80.9%); and the rule should 
be retained in its then-current form (80.4%).\88\
---------------------------------------------------------------------------
    \88\ Federal Judicial Center Final Report on Rule 11 to the 
Advisory Committee on Civil Rules of the Judicial Conference of the 
United States (May 1991). A subsequent survey conducted by the Federal 
Judicial Center in June, 1995, consisting of 148 Federal judges and 
over 1,000 trial attorneys found that the 1993 amendments that 
disallowed monetary compensation for victims of frivolous lawsuits were 
a bad idea. In that survey, two-thirds of judges (66%), defense 
attorneys (63%), and other attorneys (66%), and even a substantial 
portion of plaintiff's attorneys (43%), supported restoring Rule 11's 
compensatory function once again. See John Shapard et. al., Federal 
Judicial Center, Report of a Survey Concerning Rule 11, Federal Rules 
of Civil Procedure at 5.
---------------------------------------------------------------------------
    Despite this wide judicial support for a strong Rule 11, in 
1991 the Civil Rules Advisory Committee included provisions to 
weaken Rule 11 in a much broader package of proposed amendments 
to the Federal Rules driven largely by the desire to avoid 
``satellite litigation'' of Rule 11 issues that could burden 
allegedly overworked judges. The proposed changes were then 
sent to the Supreme Court for approval or modification. 
Exercising what it viewed to be a very limited oversight 
role,\89\ the Supreme Court approved the proposed changes 
without substantive comment in April, 1993.
---------------------------------------------------------------------------
    \89\ While the Supreme Court is authorized to ``prescribe'' the 
general rules of Federal court practice and procedure, See Judicial 
Improvements and Access to Justice Act, 28 U.S.C. Sec. 2072(a), in fact 
it has been the general practice of the Supreme Court to merely act as 
a conduit for the rule changes and rely on the Judicial Conference to 
make the decisions in this area. As pointed out in the House 
Judiciary's Committee Report on H.R. 988 in the 104th Congress, Justice 
White believed that, as a matter of practice, the role of the Supreme 
Court is to ``. . . transmit the Judicial Conference recommendations 
without change and without careful study as long as there is no 
suggestion that the committee system has not operated with integrity.'' 
Indeed Chief Justice Rehnquist's April 22, 1993 letter conveying the 
rules to the Speaker states: ``While the Court is satisfied that the 
required procedures have been observed, this transmittal does not 
necessarily indicate that the court itself would have proposed these 
amendments in the form submitted.'' H.R. Rep. No. 104-62, at 11, n.14 
(1995).
---------------------------------------------------------------------------
    In a strongly worded dissent on the Rule 11 changes, 
Justice Scalia correctly anticipated that the proposed revision 
would eliminate a ``significant and necessary deterrent'' to 
frivolous litigation, stating ``the overwhelming approval of 
the Rule by the Federal district judges who daily grapple with 
the problem of litigation is enough to persuade me that it 
should not be gutted.'' \90\ Justices Scalia and Thomas 
properly dissented from the transmittal of the amendments to 
Rule 11 to Congress, arguing that ``[t]he proposed revision 
would render the Rule toothless, by allowing judges to dispense 
with sanction, by disfavoring compensation for litigation 
expenses, and by providing a 21-day `safe harbor' within which, 
if the party accused of a frivolous filing withdraws the 
filing, he is entitled to escape with no sanction at all.'' 
\91\
---------------------------------------------------------------------------
    \90\ Id. at 11.
    \91\ 146 F.R.D. 401, 507-08 (1993).
---------------------------------------------------------------------------
    Rule 11 as it existed prior to the 1993 amendments was very 
popular with Federal judges. The Federal Judicial Center 
(``FJC'') was commissioned to conduct empirical studies and 
surveys on the operation of the old Rule 11,\92\ and in a 
survey of all Federal trial judges, the FJC found that 80% were 
of the opinion that the old Rule 11 had had an overall positive 
effect and should not be changed.\93\ We need to restore those 
positive effects once again.
---------------------------------------------------------------------------
    \92\ Standing Committee on Rules of Practice and Procedure of the 
Judicial Conference of the United States, Call for Written Comments on 
Rule 11 of the Federal Rules of Civil Procedure and Related Rules as 
Amended in 1983 (August 1990), reprinted in 131 F.R.D. 335 (1990).
    \93\ Interim Report on Rule 11, Advisory Committee on Civil Rules, 
reprinted in Georgene M. Vairo, Rule 11 Sanctions: Case Law 
Perspectives and Preventive Measures, App. at 1-8 to 1-10 (2d ed. 
1991).
---------------------------------------------------------------------------
    After the proposal to gut Rule 11 was forwarded to 
Congress, there was a 7-month period under the Rules Enabling 
Act in which the Congress had the authority to make changes, 
but time ran out before Congress could stop these damaging 
amendments to Rule 11.\94\
---------------------------------------------------------------------------
    \94\ Under the Rules Enabling Act, Congress has 7 months to act on 
the proposed rules; if Congress does not act, the proposed rules become 
law. See 28 U.S.C. Sec. 2074(a). Despite the introduction of H.R. 2979 
in the 103rd Congress by Carlos J. Moorhead, which would have delayed 
the effective date of the proposed changes to Rule 11, and a companion 
bill in the Senate, no formal action was taken in the Democrat-
controlled House, and the revisions went into effect on December 1, 
1993. The House later passed H.R. 988 in the 104th Congress--which, 
among other things, would have restored Rule 11 to its original form--
by a vote of 232-193, but it was not taken up in the Senate.
---------------------------------------------------------------------------
    Section 2 of LARA would restore teeth to Rule 11 once 
again.
    In particular, Section 2 of LARA would:

        
 LAllow monetary sanctions against parties that 
        file frivolous lawsuits. Shockingly, the 1993 
        amendments to Rule 11 prohibited any monetary sanctions 
        against parties who filed frivolous lawsuits. Rule 11 
        currently states that ``[m]onetary sanctions may not be 
        awarded against a represented party for a violation of 
        subdivision (b)(2),'' and subdivision (b)(2) requires 
        lawyers to certify that the case they're bringing is 
        ``warranted by existing law or by a nonfrivolous 
        argument for the extension, modification, or reversal 
        of existing law or the establishment of new law.'' H.R. 
        4571 would allow monetary penalties against parties who 
        file frivolous lawsuits. Indeed, a survey conducted by 
        the Federal Judicial Center in June, 1995, consisting 
        of 148 Federal judges and over 1,000 trial attorneys 
        found that the 1993 amendments that prohibited monetary 
        compensation for victims of frivolous lawsuits were a 
        bad idea. In that survey, two-thirds of judges (66%), 
        defense attorneys (63%), and other attorneys (66%), and 
        even a substantial portion of plaintiff's attorneys 
        (43%), supported restoring Rule 11's compensatory 
        function once again.\95\ H.R. 4571 would do just that.
---------------------------------------------------------------------------
    \95\ See John Shapard et al., Federal Judicial Center, Report of a 
Survey Concerning Rule 11, Federal Rules of Civil Procedure at 5.

        
 LReverse the 1993 amendments to Rule 11 that 
        made Rule 11 sanctions discretionary rather than 
        mandatory. Because today, under a weak Rule 11, 
        sanctions in frivolous cases are not mandatory, there 
        is little incentive for a victim of a frivolous lawsuit 
        to spend time and money seeking Rule 11 sanctions. 
        Deterrence cannot be achieved without certain 
        punishment. While a court should have discretion to 
        fashion an appropriate sanction based on the 
        circumstances of the violation, litigants making 
        frivolous claims should not be allowed the opportunity 
        to escape sanctions entirely. Even Senator John Edwards 
        has written in Newsweek that ``[L]awyers who bring 
        frivolous cases should face tough, mandatory 
        sanctions.'' \96\ Senator Edwards also said on Meet the 
        Press that ``I feel very strongly that we need real and 
        enforceable penalties for frivolous lawsuits that may 
        be filed in this country.'' \97\ And Senator Edwards's 
        campaign issued a statement saying Senator Edwards 
        ``believes that we need a national system in place that 
        will weed out the meritless lawsuits without taking 
        away patients' rights.'' \98\ H.R. 4571 would do 
        exactly that.
---------------------------------------------------------------------------
    \96\ John Edwards, ``Juries: `Democracy in Action,' '' Newsweek 
(December 15, 2003) at 53.
    \97\ NBC News, ``Meet the Press'' (May 5, 2002) (transcript).
    \98\ John Stossel, ``Lawyers and the Little Guy,'' ABCNews.com 
(``Give Me a Break'' commentary on ABC News' 20/20) (July 23, 2004).

        
 LReverse the 1993 amendments to Rule 11 that 
        allow parties and their attorneys to avoid sanctions 
        for making frivolous claims and demands by withdrawing 
        them within 21 days after a motion for sanctions has 
        been filed. Justice Scalia correctly pointed out that 
        such amendments would in fact encourage frivolous 
        lawsuits: ``In my view, those who file frivolous suits 
        and pleadings should have no `safe harbor.' The Rules 
        should be solicitous of the abused (the courts and the 
        opposing party), and not of the abuser. Under the 
        revised Rule, parties will be able to file thoughtless, 
        reckless, and harassing pleadings, secure in the 
        knowledge that they have nothing to lose: If objection 
        is raised, they can retreat without penalty.'' \99\ 
        H.R. 4571 would get rid of the ``free pass'' lawyers 
        have to file frivolous lawsuits under today's Rule 11.
---------------------------------------------------------------------------
    \99\ H.R. Rep. No. 104-62, at 11-12 (1995).

        
 LReverse the 1993 amendments to Rule 11 that 
        prohibit sanctions for discovery abuses. Monetary 
        sanctions for frivolous and harassing conduct during 
        the course of discovery should be allowed if 
        circumstances warrant. (``Discovery'' is the term used 
        to describe the process by which parties are made to 
        exchange information each side requests from the other 
        prior to trial.) A study conducted by the American 
        Judicature Society found that discovery was at issue in 
        over 19% of the motions that were filed under the 
        original Rule 11, prior to the 1993 amendments, when 
        discovery abuses were sanctionable.\100\
---------------------------------------------------------------------------
    \100\ See Marshall, Kritzer, and Zeamans, ``The Use and Impact of 
Rule 11,'' 86 N.W.U.L.Rev. 943, 951-55 (discovery abuse was cited as 
the reason for 19.2% of formal Rule 11 activity not leading to 
sanctions and 14.9% of activity resulting in sanctions).

    It is important to remember that nothing in H.R. 4571, the 
Lawsuit Abuse Reduction Act, changes the current standard by 
which frivolous lawsuits are judged. That is, under H.R. 4571, 
the standard a judge will use to determine whether a case is 
frivolous will remain as it has been, namely a determination 
---------------------------------------------------------------------------
that:

        
 Lthe case is not being presented for any 
        improper purpose, such as to harass or to cause 
        unnecessary delay or needless increase in the cost of 
        litigation;

        
 Lthe claims, defenses, and other legal 
        contentions therein are warranted by existing law or by 
        a nonfrivolous argument for the extension, 
        modification, or reversal of existing law or the 
        establishment of new law;

        
 Lthe allegations and other factual contentions 
        have evidentiary support or, if specifically so 
        identified, are likely to have evidentiary support 
        after a reasonable opportunity for further 
        investigation or discovery; and

        
 Lthe denials of factual contentions are 
        warranted on the evidence or, if specifically so 
        identified, are reasonably based on a lack of 
        information or belief.

    Only cases that meet the criteria outlined above will be 
subject to Rule 11 sanctions under the Lawsuit Abuse Reduction 
Act. The baseless nature of arguments by reform opponents that 
Rule 11 somehow stifles growth in the law is belied by the fact 
that Rule 11 explicitly allow for growth in the law, but not 
for frivolous arguments for extensions of the law.
    Further, LARA expressly provides that ``Nothing in'' the 
changes made to Rule 11 ``shall be construed to bar or impede 
the assertion or development of new claims or remedies under 
Federal, State, or local civil rights law.'' Civil rights 
claims are thereby exempted from the bill's Rule 11 provisions.
Section 3 of LARA: Applying Rules Against Frivolous Lawsuits to State 
        Cases Affecting Interstate Commerce
    Section 3 of LARA would extend Rule 11's provisions 
preventing frivolous lawsuits to state cases in which the state 
court determines, based on an analysis of the relief requested, 
that the case would affect interstate commerce. (For the most 
part, states' rules of civil procedure are modeled after 
Federal Rule 11,\101\ and sanctions for frivolous filings are 
not mandatory in 38 states and the District of Columbia, just 
as they are not mandatory under the Federal Rule 11.) \102\
---------------------------------------------------------------------------
    \101\ See Arkansas Rule 11, Addition to Reporter's Notes, 1997 
Amendment (``The rule has been amended by designating the former text 
as subdivision (a) and by adding new subdivision (b), which is based 
[on] Rule 11(c)(1) of the Federal Rules of Civil Procedure, as amended 
in 1993 . . . New subdivision (b) provides that requests for sanctions 
must be made as a separate motion, rather than simply be included as an 
additional prayer for relief in another motion. The motion for 
sanctions is not to be filed until at least 21 days, or other such 
period as the court may set, after being served . . .); Minn. R. Civ. 
P. 11.04 (Minnesota), Advisory Committee Comments, 2000 Amendments 
(``Rule 11 is amended to conform completely to the Federal rule . . . 
On balance, the Committee believes that the amendment to the Rule to 
conform to its Federal counterpart makes the most sense, given this 
Committee's long-standing preference for minimizing the differences 
between state and Federal practice . . .''); N.D. R. Civ. P. 1 (North 
Dakota), Explanatory Note (``As will become readily apparent from a 
reading of the rules, they are the Federal Rules of Civil Procedure 
adapted, insofar as practicable, to state practice.''), N.D. R. Civ. P. 
11, Explanatory Note (``Rule 11 was revised, effective March 1, 1996, 
in response to the 1993 revision of Rule 11.''); Tenn. R. Civ. P. 11 
(Tennessee), Advisory Commission Comment to 1995 Amendment (``Amended 
Rule 11 tracks the current Federal version. Sanctions no longer are 
mandatory, and non-monetary sanctions are encouraged. The 21-day safe 
harbor provision allows otherwise sanctionable papers to be withdrawn, 
thereby escaping sanctions.''); Utah R. Civ. P. 11 (Utah), Advisory 
Committee Note (``The 1997 amendments conform state Rule 11 with 
Federal Rule 11.''); Vt. R. Civ. P. 11 (Vermont), Reporter's Notes to 
1996 Amendment (``Rule 11 is amended to conform to the 1993 amendment 
of Federal Rule 11.''); W. Va. R. Civ. P. 11 (West Virginia) (West 
Virginia's Rule 11 as amended effective April 1, 1998, is identical to 
the current Federal Rule 11); Wyo. R. Civ. P. 11 (Wyoming) (Wyoming's 
Rule 11 is identical to the current Federal Rule 11); Restatement 
(Third) of the Law Governing Lawyers Sec. 170 reporter's note to cmt. c 
(Tentative Draft No. 8, 1997). State courts also often rely on Federal 
court decisions when interpreting their rules. See, e.g., Gray v. 
Washington, 612 A.2d 839, 842 (D.C. 1992); Bryson v. Sullivan, 412 
S.E.2d 327, 332 (1992); Bryant v. Joseph Tree, Inc., 829 P.2d 1099, 
1104-05 (Wash. 1992) (en banc).
    \102\ See Alabama Rule of Civil Procedure 11; Alaska Rule of Civil 
Procedure 11; Arkansas Rule of Civil Procedure 11; Cal.C.C.P. 
Sec. 128.5 (California); C.R.C.P. Rule 11 (Colorado); C.G.S.A. Sec. 52-
190a (Connecticut); De.R.S.Ct. Rule 33 (Delaware); D.C.R.R.C.P. Rule 11 
(D.C.); Fl.St. R.C.P. Rule 1.150 (Florida); Hi.R.R.C.P. Rule 11 
(Hawaii); Il.C.S.S.Ct. Rule 137 (Illinois); In.St. Trial P. Rule 11 
(Indiana); L.S.A.-C.C.P. Art. 864 (Louisiana); Me.R.R.C.P. Rule 11 
(Maine); Md.Rules, Rule 1-311 (Maryland); Massachusetts Rules of Civil 
Procedure (Mass.R.Civ.P.), Rule 11; Minnesota Rules of Civil Procedure, 
Rule 11.03; Ms.R.R.C.P. Rule 11; Miss. Code Ann. Sec. 11-55-5 
(Mississippi); Missouri Supreme Court Rule 55.03; Ne.R.Civ.Pro.St. 
Sec. 25-824 (Nebraska); N.H.R.Super.Ct. Rule 59 (New Hamphsire); 
N.J.S.A. 2A:15-59.1 (New Jersey); N.M.R.Dist.Ct.R.C.P. Rule 1-011 (New 
Mexico); N.D.R.R.C.P. Rule 11 (North Dakota); Ohio Civ.R. Rule 11; 12 
Okl.St.Ann. Sec. 2011 (Oklahoma); Or.R.R.C.P. O.R.C.P. 17 (Oregon); 
Pa.R.C.P. No. 1023.1; Pa.R.C.P. No. 1023.4 (Pennsylvania); R.I.R.R.C.P. 
Rule 11 (Rhode Island); Rule 11, S.C.R.C.P. (South Carolina); 
Tn.R.R.C.P. Rule 11.03 (Tennessee); Texas Civil Practice & Remedies 
Code Sec. 10.004; Ut.R.R.C.P. Rule 11 (Utah); Vt.R.R.C.P. Rule 11 
(Vermont); Va.R.S.S.Ct. Rule 1:4; Va.R.S.Ct. Rule 4:1 (Virginia); 
Wa.R.Super.Ct.Civ. Cr. 11 (Washington); W.V.R.R.C.P. Rule 11 (West 
Virginia); W.S.A. 802.05 (Wisconsin); Wy.R.R.C.P. Rule 11 (Wyoming).
    In the remaining states various exceptions to the sanctions rule 
allow frivolous filings to go unpunished and undeterred. See Arizona 
Rules of Civil Procedure, Rule 11(a) (only ``appropriate'' sanction 
required, not a sanction ``sufficient to deter repetition of such 
conduct'' as under Federal Rule 11); Ga.St. Sec. 9-15-14 (Georgia) 
(standard is that frivolous pleading must include claims or defenses no 
court anywhere could be reasonably expected to accept); Id.R.R.C.P. 
Rule 11 (Idaho) (only ``appropriate'' sanction required, not a sanction 
``sufficient to deter repetition of such conduct''); I.C.A. Rule 1.413 
(Iowa) (only ``appropriate'' sanction required, not a sanction 
``sufficient to deter repetition of such conduct''); Ks.R.R.C.P. Code 
60-211 (Kansas) (does not apply to abusive discovery requests and only 
``appropriate'' sanction required in other cases, not a sanction 
``sufficient to deter repetition of such conduct''); Ky.St.R.C.P. Rule 
11 (Kentucky) (only ``appropriate'' sanction required, not a sanction 
``sufficient to deter repetition of such conduct,'' and state rule 
postpones ruling on frivolous pleadings until after entry of final 
judgement); Mi.R.R.C.P.M.C.R. 2.114 (Michigan) (bars punitive damages 
for frivolous pleadings); Mt.R.R.C.P. Rule 11 (Montana) (only 
``appropriate'' sanction required, not a sanction ``sufficient to deter 
repetition of such conduct''); Nv.St.R.C.P. Rule 11 (Nevada) (only 
``appropriate'' sanction required, not a sanction ``sufficient to deter 
repetition of such conduct''); N.Y.C.P.L.R. Sec. 8303-a (New York) 
(sanctions limited to civil personal injury and property damage claims 
and subject to a $10,000 limit); N.C.St.R.C.P. Sec. 1A-1, Rule 11 
(North Carolina) (only ``appropriate'' sanction required, not a 
sanction ``sufficient to deter repetition of such conduct''); S.D.C.L. 
Sec. 15-6-11(b) (South Dakota) (only ``appropriate'' sanction required, 
not a sanction ``sufficient to deter repetition of such conduct'').
---------------------------------------------------------------------------
    Congress--under its constitutional authority in Article I, 
Section 8 to regulate interstate commerce--has a responsibility 
to require state judges to conduct their own analysis, upon 
motion of parties, to determine whether, based on the relief 
requested (including potentially huge monetary damage requests) 
the case is such that it would affect interstate commerce by 
threatening to bankrupt a multi-state industry, by risking the 
loss of out-of-state jobs, or by otherwise incurring costs to 
the interstate economy. Where a case filed in state court 
affects interstate commerce, as determined by a state judge, it 
is entirely appropriate that national attorney accountability 
rules should govern. Liability litigation, under existing 
rules, presents a serious threat to state autonomy. 
Manufacturers have no practical way of keeping their products 
out of certain states. Personal injury lawyers, on the other 
hand, get to choose their own forum and law. As a result, the 
jurisdictions most friendly to personal injury lawyers can 
unfairly impose the costs of their rules on the entire country 
and redistribute income from out-of-state parties to in-state 
parties.
    H.R. 4571's application of Rule 11 to state cases that 
affect interstate commerce is entirely consistent with 
federalism principles. James Madison, in Federalist No. 42, 
described the purpose of the Commerce Clause as follows: ``A 
very material object of this power was the relief of the States 
which import and export through other States, from the improper 
contributions levied on them by the latter. Were these at 
liberty to regulate the trade between State and State, it must 
be foreseen that ways would be found out to load the articles 
of import and export, during the passage through their 
jurisdiction, with duties which would fall on the makers of the 
latter and the consumers of the former.'' \103\ That is, 
Madison foresaw the problem in which products or services would 
be made to cost more to consumers in one state because other 
states those products and services passed through would levy 
duties on them. That is precisely the problem today: some 
states, by allowing frivolous lawsuits to be brought for 
unlimited damages in cases involving products or services that 
touch their jurisdictions are raising the costs of providing 
those products and services to out-of-state customers, 
resulting in higher prices and lost jobs across multiple states 
or nationwide. It is the duty of Congress to prevent such 
unfairness.\104\ H.R. 4571 addresses a problem directly 
analogous to the prime example James Madison used when 
describing the need for the Constitution's Commerce Clause.
---------------------------------------------------------------------------
    \103\ The Federalist Papers, Federalist No. 22 (Madison) at 267-68 
(Clinton Rossiter ed., 1961).
    \104\ James Madison, according to his own notes of what he argued 
at the Constitutional Convention (he referred to himself in the third 
person), made clear that Congress must have the power to regulate 
commerce in this manner: ``Whether the States are now restrained from 
laying tonnage duties depends on the extent of the power `to regulate 
commerce.' . . . He was more & more convinced that the regulation of 
Commerce was in its nature indivisible and ought to be wholly under one 
authority.'' Debates on the Adoption of the Federal Constitution in the 
Convention Held at Philadelphia in 1787 (Jonathan Elliot, ed. 1845) (as 
reported by James Madison, notes of May 31, 1787) at 548.
---------------------------------------------------------------------------
    Congress unquestionably has the authority to regulate 
economic activities that ``affect'' interstate commerce,\105\ 
and such a provision would have state judges themselves 
determine whether the case before them affected interstate 
commerce and national interests that would trigger a Federal 
rule against frivolous lawsuits.
---------------------------------------------------------------------------
    \105\ See Kenneth Thomas, CRS Report for Congress, Federalism, 
State Sovereignty and the Constitution: Basis and Limits of 
Congressional Power (September 5, 2003) at 7 (stating that Congress can 
regulate ``economic activities which `affect' commerce'').
---------------------------------------------------------------------------
    Further, requiring state courts to determine whether a case 
affects interstate commerce based on an assessment of the costs 
to the interstate economy, including the loss of jobs, ``were 
the relief requested granted'' is likely to deter trial lawyers 
from grossly inflating the size of damages requested (which are 
designed to pressure unfair settlements) because doing so will 
increase the chances that their case will be found to affect 
interstate commerce, thus triggering the application of Federal 
Rule 11's provisions preventing frivolous lawsuits. This 
provision takes personal injury attorneys requesting vast 
damages at their word regarding what damages might be 
appropriate, but then holds them to account for those requested 
damages by making them subject to an analysis of the interstate 
economic costs were such damages to be awarded. University of 
Chicago law professor Cass Sunstein, along with Nobel Prize 
winner Daniel Kahneman, have compiled research from studies 
involving more than 8,000 jury-eligible citizens in Illinois, 
Colorado, Texas, Arizona, and Nevada that shows that juries 
give higher awards when personal injury attorneys simply demand 
higher amounts.\106\ As Philip Howard has written, ``A great 
thing about bringing lawsuits in modern America is that it's so 
easy to threaten the adversary's entire livelihood. One stroke 
of a finger on the lawyer's word processor, and damages go from 
$100,000 to $1,000,000. Three more keystrokes, and we're suing 
for a billion dollars. This is fun . . . Damages claimed today 
are completely arbitrary. Just stick your finger in the air and 
threaten someone with any number that comes to mind.'' \107\ 
Section 3 of LARA will deter personal injury lawyers from 
making ridiculous claims for astronomical damages.
---------------------------------------------------------------------------
    \106\ See Cass Sunstein and Reid Hastie, Punitve Damages: How 
Juries Decide (University of Chicago Press 2002) at 62.
    \107\ Philip K. Howard, The Collapse of the Common Good: How 
America's Lawsuit Culture Undermines Our Freedom (2001) at 59.
---------------------------------------------------------------------------
    How ridiculous can damages claims get? In Michigan, a woman 
who had a $5 fingernail repair job done at a local salon filed 
a lawsuit for $500,000 or more in damages, claiming a 
beautician nicked her finger with cuticle scissors. The woman's 
lawyer said ``The $500,000 figure isn't necessarily what we'll 
get [in court]. It's to put some attention to the case, and to 
how important we consider it.'' \108\
---------------------------------------------------------------------------
    \108\ Chad Halcom, ``Woman Files $500,000 Lawsuit for `Ruined' 
Fingernail,'' The Macomb Daily (February 5, 2003).
---------------------------------------------------------------------------
    The following exchange between a 60 Minutes correspondent 
and Caesar Barber, who sued various restaurants for damages 
related to his overconsumption of their products, also 
illustrates the frivolous rationales behind gigantic damages 
claims:

        Caesar Barber: I'm saying that McDonald's affected my 
        health. Yes, I am saying that.

        Richard Carleton(CBS News, 60 Minutes): So what do you 
        want in return?

        Caesar Barber: I want compensation for pain and 
        suffering.

        Richard Carleton: But how much money do you want?

        Caesar Barber: I don't know . . . maybe $1 million. 
        That's not a lot of money now. \109\
---------------------------------------------------------------------------
    \109\ ``Food Fight,'' CBS News ``60 Minutes'' (Australia) 
(September 15, 2002) (transcript).

    Section 3 of LARA is not likely to be abused for several 
reasons. Any party that fears it may run afoul of Rule 11 
sanctions for filing frivolous pleadings will not move the 
court to determine if the case affects interstate commerce. 
Further, any party that does not fear sanctions under Rule 11 
will only request that a state court rule on whether the case 
affects interstate commerce in rare circumstances. This is 
because, first, no one is required under LARA to make such a 
request to a state court if they do not want to, and second, 
because the burden will be on any party who decides to move for 
a determination that the case ``affects interstate commerce'' 
to show just that, and that will not be an easy case to make, 
especially in smaller cases. The end result will be that 
motions will be made under Section 3 of LARA only in those 
cases in which large amounts of money are at stake with clear 
interstate effects and only by those parties who have very 
strong reasons to believe the court system is being abused by a 
party filing frivolous pleadings. In such cases, it is entirely 
appropriate that a Federal rule sanctioning lawsuit abuse be 
available.
    Section 3 of LARA would serve national economic interests 
by focusing attention on the jobs costs of frivolous 
litigation. The provision would provide that the interstate 
economy, including workers and jobs, when potentially 
negatively affected, should be protected by a rule prohibiting 
frivolous claims. The provision provides that if your lawsuit 
in state court asks for damages that will cost jobs in other 
states, and your lawsuit is determined to be frivolous, you'll 
have to pay for the costs of that frivolous lawsuit.\110\
---------------------------------------------------------------------------
    \110\ Such a provision will not result in state cases being removed 
to Federal court, as a Federal standard does not confer Federal 
question jurisdiction in the absence of Congressional creation of a 
Federal cause of action. Under Supreme Court precedent, Congress has 
given the lower courts jurisdiction to hear, originally or by removal 
from a state court, only those cases in which a well-pleaded complaint 
establishes either that Federal law creates the cause of action or that 
the plaintiff's right to relief necessarily depends on resolution of a 
substantial question of Federal law. Federal question jurisdiction 
exists only if plaintiffs' right to relief depends necessarily on a 
substantial question of Federal law. See Merrell Dow Pharmaceuticals 
Inc. v. Thompson, 478 U.S. 804, 807 n.2 (1986); 28 U.S.C. Sec. 1331.
---------------------------------------------------------------------------
    Further, LARA expressly provides that ``Nothing in section 
3 . . . shall be construed to bar or impede the assertion or 
development of new claims or remedies under Federal, State, or 
local civil rights law.'' Civil rights claims are thereby 
exempted from the bill's provisions governing the application 
of Rule 11 in cases with interstate effects.
Section 4 of LARA: Preventing Forum-Shopping for Favorably-minded 
        Judges
    One of the nation's wealthiest personal injury attorneys is 
Richard ``Dickie'' Scruggs, who sued asbestos companies in the 
1980s and has made about $844 million from lawsuits against 
tobacco companies. \111\ Here is what Scruggs said about what 
he calls ``magic jurisdictions'':
---------------------------------------------------------------------------
    \111\ Tom Wilemon, ``Social Ties Bind Political Elite,'' The Biloxi 
Sun Herald (October 13, 2002) at 10.

        ``What I call the `magic jurisdiction,' . . . [is] 
        where the judiciary is elected with verdict money. The 
        trial lawyers have established relationships with the 
        judges that are elected; they're State Court judges; 
        they're popul[ists]. They've got large populations of 
        voters who are in on the deal, they're getting their 
        [piece] in many cases. And so, it's a political force 
        in their jurisdiction, and it's almost impossible to 
        get a fair trial if you're a defendant in some of these 
        places. The plaintiff lawyer walks in there and writes 
        the number on the blackboard, and the first juror meets 
        the last one coming out the door with that amount of 
        money . . . Any lawyer fresh out of law school can walk 
        in there and win the case, so it doesn't matter what 
        the evidence or law is.'' \112\
---------------------------------------------------------------------------
    \112\ Richard ``Dickie'' Scruggs, ``Asbestos for Lunch Panel 
Discussion'' at the Prudential Securities Financial Research and 
Regulatory Conference (May 9, 2002) (quoted in Industry Commentary 
(Prudential Securities, Inc., N.Y., New York) (June 11, 2002) at 5).

    Personal injury lawyers often file cases in places that 
have no connection to the case. They file their cases where 
court procedures and the law are systematically applied in an 
unfair manner against defendants, including in jurisdictions 
with reputations for high damage awards and lower standards for 
the admissibility of expert testimony.\113\
---------------------------------------------------------------------------
    \113\ See generally, American Tort Reform Association, ``Bringing 
Justice to Judicial Hellholes'' (2003).
---------------------------------------------------------------------------
    West Virginia State Supreme Court Justice Richard Neely 
candidly described one of the reasons behind this phenomenon in 
a book: ``As long as I am allowed to redistribute wealth from 
out-of-state companies to injured in-state plaintiffs, I shall 
continue to do so. Not only is my sleep enhanced when I give 
someone else's money away, but so is my job security, because 
the in-state plaintiffs, their families, and their friends will 
reelect me . . . It should be obvious that the instate local 
plaintiff, his witnesses and his friends, can all vote for the 
judge, while the out-of-state defendants can't even be relied 
upon to send a campaign donation.'' \114\
---------------------------------------------------------------------------
    \114\ Richard Neely, The Product Liability Mess: How Business Can 
Be Rescued From The Politics of State Courts 4, 62 (1998).
---------------------------------------------------------------------------
    While businesses are hauled into court all over the 
country, local personal injury lawyers work with the same 
judges day after day, contribute to their election campaigns, 
and routinely socialize with them.
    Section 4 of LARA will help ensure that lawsuits have a 
logical connection with the jurisdiction in which they are 
heard. Section 4, by requiring plaintiffs to bring their cases 
where they live or where they were injured, or where the 
defendant's principal place of business is located, would help 
stop forum-shopping. It would also allow a court to refuse to 
hear a case if there is a more appropriate forum, including a 
different state, in which the case could and should be heard. 
By strengthening the rules governing venue and forum non 
conveniens, courts can help ensure that cases are heard in a 
court that has a logical connection to the claim, rather than a 
court that is expected to produce the highest award for the 
plaintiff.
    Section 4 of LARA would also prevent situations in which 
floods of cases by non-residents interfere with in-state 
residents' access to timely justice.
    Congress unquestionably has the authority to regulate 
economic activities that ``affect'' interstate commerce,\115\ 
and forum shopping clearly has a substantial affect on 
interstate commerce by allowing opportunities for personal 
injury lawyers to exploit lax venue and forum non conveniens 
rules to pick and choose those courts with a reputation for 
consistently awarding near-limitless awards. Section 4 of the 
Lawsuit Abuse Reduction Act clearly applies to economic 
activities, as the definition of ``personal injury claim'' is a 
claim ``to recover'' for a person's personal injury. Such a 
provision is entirely consistent with federalism principles. 
James Madison, in Federalist No. 42, described the purpose of 
the Commerce Clause as follows: ``A very material object of 
this power was the relief of the States which import and export 
through other States, from the improper contributions levied on 
them by the latter. Were these at liberty to regulate the trade 
between State and State, it must be foreseen that ways would be 
found out to load the articles of import and export, during the 
passage through their jurisdiction, with duties which would 
fall on the makers of the latter and the consumers of the 
former.'' \116\ That is, Madison foresaw the problem in which 
products or services would be made to cost more to consumers in 
one state because other states allowed the companies that 
manufactured those products or supplied those services to be 
sued in those other states even when the facts and 
circumstances of the lawsuit had no connection to those states. 
When personal injury attorneys are allowed to bring cases in 
certain states and county courts that have a reputation for 
being most favorable to granting the most lucrative awards, the 
costs imposed on companies by such awards must be passed on to 
consumers nationwide. That is precisely the problem today: some 
states, by allowing lawsuits to be brought in local 
jurisdictions even when the facts and circumstances of the case 
have no connection to such local jurisdictions, are raising the 
costs of providing products and services to out-of-state 
customers, resulting in higher prices and lost jobs to people 
in multiple states. It is the duty of Congress to prevent such 
unfairness.\117\
---------------------------------------------------------------------------
    \115\ See Kenneth Thomas, CRS Report for Congress, Federalism, 
State Sovereignty and the Constitution: Basis and Limits of 
Congressional Power (September 5, 2003) at 7 (stating that Congress can 
regulate ``economic activities which `affect' commerce'').
    \116\ The Federalist Papers, Federalist No. 22 (Madison) at 267-68 
(Clinton Rossiter ed., 1961).
    \117\ James Madison, according to his own notes of what he argued 
at the Constitutional Convention (he referred to himself in the third 
person), made clear that Congress must have the power to regulate 
commerce in this manner: ``Whether the States are now restrained from 
laying tonnage duties depends on the extent of the power `to regulate 
commerce.' . . . He was more & more convinced that the regulation of 
Commerce was in its nature indivisible and ought to be wholly under one 
authority.'' Debates on the Adoption of the Federal Constitution in the 
Convention Held at Philadelphia in 1787 (Jonathan Elliot, ed. 1845) (as 
reported by James Madison, notes of May 31, 1787) at 548.
---------------------------------------------------------------------------
    Jurisdictions with ``magic jurisdiction'' reputations 
include the following:

        
 LMadison County, Illinois. Twice, the Chicago 
        Tribune crowned Madison County a ``jackpot 
        jurisdiction.'' \118\ As the newspaper recognized, 
        ``[t]he number of suits has shot through the roof, and 
        local newspapers sport advertisements looking for the 
        local plaintiff who can provide a convenient excuse to 
        file in Edwardsville . . . [T]he Madison County 
        phenomenon also provides a dramatic illustration of the 
        potential for poor public policy when things get 
        carried away.'' \119\ A retired Madison County Judge 
        has said ``Eventually, because of the money created 
        through the plaintiffs bar and the power that money 
        brings, I believe there became an idea that the system 
        was beholden to the plaintiffs' bar.'' \120\ Retired 
        Madison County judge John DeLaurenti has said that it 
        took Madison County four decades to earn its 
        reputation, ``but now, it is so big with so much money 
        and potential influence on people's careers that is has 
        become very difficult to limit it in any way.'' \121\ 
        That same judge has also said ``When people come from 
        hither and thither to file these cases, there's gotta 
        be an inducement, doesn't there? They're not coming to 
        see beautiful Madison County.'' \122\
---------------------------------------------------------------------------
    \118\ Editorial, ``A Madison County Jackpot,'' The Chicago Tribune 
(April 2, 2003), at 22; Editorial, ``The Judges of Madison County,'' 
The Chicago Tribune (September 6, 2002) at 22.
    \119\ Editorial, ``The Judges of Madison County,'' The Chicago 
Tribune (September 6, 2002) at 22.
    \120\ David Bailey (Reuters), ``Illinois County Court a Corporate 
`Hellhole,' '' (October 5, 2003).
    \121\ Id.
    \122\ Marin Kasindorf, ``Robin Hood is Alive in Court, Say Those 
Seeking Lawsuit Limit,'' USA Today (March 8, 2004) at A1 (emphasis 
added).

          LMadison County judges are infamous for their 
        willingness to take cases from across the country, with 
        little or no local connection, and hand down decisions 
        that regulate entire industries nationwide. Madison 
        County's over-eagerness to hear cases from other parts 
        of the state has even been criticized by the Supreme 
        Court of Illinois. Both the Madison County Circuit 
        Court and the Fifth District Court of Appeals have been 
        reversed many times in cases in which they denied 
        defendants' motions to transfer venue. In January 2002, 
        the Supreme Court of Illinois counted fourteen cases 
        since 1995 in which it ordered the Madison County 
        Circuit Court to transfer venue. In another ten cases, 
        the Supreme Court ordered the Fifth District to 
        consider vacating its denial of a defendant's forum non 
        conveniens motion.\123\
---------------------------------------------------------------------------
    \123\ See First National Bank v. Guerine, 764 N.E.2d 54, 64-66 
(Ill. 2002) (appendix).

          LAsbestos cases, in particular, find their way to 
        Madison County Circuit Court at an astonishing rate. 
        Madison County (population 259,000) now hosts more 
        mesothelioma claims than New York City (population 
        8,000,000), and a nine member law firm with one office 
        in Madison County claims to handle more mesothelioma 
        cases than any firm in the country.\124\ This is 
        because, according to former Carter Administration U.S. 
        Attorney General Griffin Bell, its judges accept cases 
        from throughout the state and place them on 
        extraordinarily expedited schedules that do not provide 
        defendants with adequate time to prepare for 
        trial.\125\
---------------------------------------------------------------------------
    \124\ See ``Asbestos Case Leads to $5.1 Million, Sanction,'' 
National Law Journal (December 2, 2002) at A4.
    \125\ See Griffin B. Bell, ``Asbestos & the Sleeping 
Constitution,'' 31 Pepp.L. Rev. 1, 8 (2003).

        
 LJefferson County (Beaumont), Texas. The 
        Austin American-Statesman has recognized that ``[o]ver 
        the past few decades, personal injury lawyers have 
        claimed this territory as their own, establishing 
        Beaumont, Port Arthur, Orange, and nearby towns as an 
        enclave where . . . juries often pass down sizable 
        judgments.'' \126\ As a result, huge verdicts against 
        doctors have caused medical professional liability 
        insurance rates to soar, sending Jefferson County 
        neurosurgeons, obstetricians, and other doctors fleeing 
        the area.\127\
---------------------------------------------------------------------------
    \126\ David Pasztor, ``As Quinn Laid to Rest, Mourners Contemplate 
Irony of His Slaying,'' The Austin American-Statesman (June 16, 2002) 
at A1.
    \127\ See Andrea Wright, ``Beaumont, Texas, Area Loses Doctors to 
High Cost of Malpractice Insurance,'' Knight-Ridder Tribune Business 
News (November 6, 2001).

        
 L22nd Judicial Circuit (Copiah, Claiborne and 
        Jefferson Counties), Mississippi. Fayette, the county 
        seat of Jefferson County, Mississippi, was dubbed the 
        ``jackpot justice capital of America'' by CBS's 60 
        Minutes program.\128\ In this small, rural county, the 
        number of plaintiffs far exceeds the number of 
        residents.\129\ The national media, including the Los 
        Angeles Times,\130\ The New York Times,\131\ and the 
        Washington Times,\132\ have all recognized the 
        Jefferson County phenomenon. In November 2002, the CBS 
        News program, ``60 Minutes,'' devoted a program to 
        explaining why Mississippi's 22nd Judicial Circuit, 
        which includes Copiah, Claiborne, and Jefferson County 
        is a favorite place for plaintiffs' lawyers to flock 
        from all over the Nation. After the airing of the 60 
        Minutes program, Media General Operations, which owns 
        the local CBS-affiliate, the 60 Minutes producers, and 
        several individuals who commented in the program, found 
        themselves named as defendants in a $6.4 billion 
        defamation lawsuit in Jefferson County.\133\
---------------------------------------------------------------------------
    \128\ Transcript, ``Jackpot Justice,'' 60 Minutes (November 25, 
2002).
    \129\ See Robert Pear, ``Mississippi Gaining as Lawsuit Mecca,'' 
The New York Times (August 20, 2001) at A1 (``Jefferson County, with 
9,740 residents, is a small county, but litigation there is a big 
business. An affidavit . . . said that more than 21,000 people were 
plaintiffs in Jefferson County from 1995 to 2000.'').
    \130\ See Ken Ellingwood, ``Mississippi Curbs Big Jury Awards Caps 
on Liability Verdicts Are Seen as Pro-Business: Critics Say Companies 
Will be Less Accountable,'' The Los Angeles Times (December 4, 2002) at 
A1.
    \131\ See Robert Pear, ``Mississippi Gaining as Lawsuit Mecca,'' 
The New York Times (August 20, 2001) at A1.
    \132\ See Tim Lemke, ``Best Place to Sue?'' The Washington Times 
(June 30, 2002) at A1.
    \133\ See ``Judge Dismisses Two Mississippi Defendants from `60 
Minutes' Defamation Lawsuit,'' Mercury News (July 3, 2003). The lawsuit 
was filed by two former jurors who were offended by the program. See 
id.

          LOne small business, Bankston Drug Store, has been 
        called ``ground zero'' in the pharmaceutical litigation 
        business because, as the only pharmacy in Jefferson 
        County, it has been named in hundreds of lawsuits 
        alleging the defective manufacture of consumer 
        prescription drugs in order to bring a large, out-of-
        state pharmaceutical company into local court.\134\ The 
        costs are real, and staggering. As Ms. Bankston 
        explained, ``I've searched record after record and made 
        copy after copy for use against me . . . I've had to 
        hire personnel to watch the store while I was dragged 
        into court on numerous occasions to testify. I have 
        endured the whispers and questions of my customers and 
        neighbors wondering what we did to end up in court so 
        often. And I have spent many sleepless nights wondering 
        if my business would survive the tidal wave of lawsuits 
        cresting over it.'' \135\
---------------------------------------------------------------------------
    \134\ See Jerry Mitchell, ``Jefferson County Ground Zero for 
Cases,'' The Clarion-Ledger (June 17, 2001) at A1.
    \135\ Tom Wilemon, ``Judicial Probe Looking at Big Jury Awards,'' 
Sun Herald (July 12, 2003).

          LIn recent years, the 22nd Judicial Circuit has 
        handed out numerous awards of $100 million or 
        more.\136\
---------------------------------------------------------------------------
    \136\ See Betty Liu, ``The Poor Southern County That's Big on 
Lawsuits,'' Financial Times (August 20, 2001).

          LAnd in June 2003, it was reported that the Federal 
        Bureau of Investigation was probing possible judicial 
        corruption in South Mississippi as well as the 
        multimillion-dollar awards in Jefferson County.\137\
---------------------------------------------------------------------------
    \137\ See Tom Wilemon, ``Judicial Probe Looking at Big Jury 
Awards,'' Sun Herald (July 12, 2003); Tom Wilemon and Beth Musgrave, 
``Indictments Cast Doubt on Trial Lawyers, Mississippi Justice 
System,'' Sun Herald (July 26, 2003).

        
 LWest Virginia, particularly Kanawha County. 
        Litigation activity has increased 53.6% more rapidly in 
        West Virginia than in the nation as a whole over the 
        last 10 years.\138\ Current West Virginia Chief Justice 
        Larry Starcher has been quoted as saying, ``I have a 
        hard time not being lenient, as a jurist, on behalf of 
        those people.'' \139\
---------------------------------------------------------------------------
    \138\ See West Virginia Chamber of Commerce, Perryman Study, 
``Negative Impact On The Current Civil Justice System On Economic 
Activity In West Virginia'' (February 2003).
    \139\ Court Watch, West Virginia Chamber of Commerce (July 2003).

        
 LPhiladelphia, Pennsylvania (Court of Common 
        Pleas). The impact of extraordinary awards is most 
        noticed in Pennsylvania in the healthcare industry, 
        where, according to The Philadelphia Inquirer, 
        ``hitting the `malpractice lottery' is a made-for-
        Philadelphia phrase.'' \140\ According to a 2003 study 
        by the Pew Charitable Trusts, Pennsylvania is in one of 
        the worst situations in the nation regarding the 
        provision of affordable professional medical liability 
        insurance for physicians and hospitals.\141\ The report 
        shows that, in Philadelphia, plaintiffs are twice as 
        likely to win jury trials as in the rest of the nation 
        and a substantial percentage of cases result in 
        verdicts greater than $1 million.\142\
---------------------------------------------------------------------------
    \140\ Josh Goldstein, ``Malpractice Lawsuits Thrive in City; Still, 
Few are Filed, and Few are Decided by a Jury,'' Philadelphia Inquirer 
(December 10, 2001) at A1.
    \141\ See Randall R. Bovbjerg and Anna Bartow, ``Understanding 
Pennsylvania's Medical Malpractice Crisis: Facts About Liability 
Insurance, The Legal System, and Health Care in Pennsylvania'' (Pew 
Charitable Trusts 2003).
    \142\ See id. at 32.

        
 LCity of St. Louis, Missouri. St. Louis City 
        Circuit Court is reportedly ``the place to be'' if you 
        are a plaintiff.\143\ Plaintiffs move cases to St. 
        Louis City because ``St. Louis City is a better 
        venue,'' according to one St. Louis plaintiffs' 
        attorney.\144\ Even Missouri Supreme Court Judge 
        Michael Wolff has recognized that ``[t]he preponderance 
        of anecdotal evidence is that jurors in the city of St. 
        Louis are far more favorably disposed toward injured 
        plaintiffs' claims than are their counterparts in 
        suburban St. Louis County or in most other counties in 
        the state.'' \145\
---------------------------------------------------------------------------
    \143\ See Roland Klose, ``Venue's on the Menu For Lawyers Trying to 
Take a Bite of Doe Run, St. Louis is the Place to Be,'' Riverfront 
Times (April 10, 2002); Tim Bryant, ``Question of Merging City, County 
Jury Pools is Revived; State Supreme Court Judge Suggested Move Last 
Year,'' St. Louis Post-Dispatch (November 27, 2002) at B1 (discussing 
the suggestion by Missouri Supreme Court Judge Michael Wolff of joining 
the juror pools of St. Louis City and County because plaintiffs' 
lawyers are known for trying to get their personal injury cases into 
St. Louis City Circuit Court for a more sympathetic jury, to make the 
issue of venue less important).
    \144\ Id.
    \145\ See State ex rel. Linthicum, 57 S.W.3d 855, 859 (Mo. 2001) 
(Wolff, J., concurring in part, dissenting in part).

        
 LEagle Pass, Texas. According to the San 
        Antonio Express-News, ``L. Wayne Scott, a professor at 
        St. Mary's University Law School . . . who has mediated 
        civil cases in Eagle Pass, estimates defendants there 
        are roughly 10 times more likely to lose than in 
        conservative Dallas and two or three times more likely 
        to fall than in San Antonio . . . Indeed, the prospect 
        of facing a jury in Eagle Pass--where Mayor Joaquin L. 
        Rodriguez also is one of the city's top plaintiff's 
        attorneys--frequently makes companies more willing to 
        settle and in higher amounts than they would agree to 
        in other venues.'' Local plaintiff's attorney Earl 
        Herring says that a case worth $10,000 in Eagle Pass 
        would be ``worth $500 in Uvalde.'' \146\
---------------------------------------------------------------------------
    \146\ Greg Jefferson, ``Eagle Pass Remains Known as Plaintiff's 
Attorney Paradise,'' The San Antonio Express News (November 2, 2003).
---------------------------------------------------------------------------
Amendments Adopted at Committee
    Two amendments were adopted at Committee. The first, 
offered by Mr. Keller, applies a ``three strikes and you're 
out'' rule to attorneys who commit Rule 11 violations in 
Federal district court. The amendment provides that whenever a 
Federal district judge determines an attorney has violated Rule 
11 of the Federal Rules of Civil Procedure three or more times 
within that Federal district court, the court shall suspend 
that attorney from practice of law in that Federal district 
court for 1 year, and may suspend that attorney from practice 
of law in that Federal district court for any additional period 
the court considers appropriate. Under such provision, an 
attorney has the right to appeal any such suspension, and such 
suspension shall not take place pending such appeal. Further, 
to be reinstated to the practice of law in a Federal district 
court after completion of such suspension, the attorney must 
first petition the court for reinstatement under such 
procedures and conditions as the court may prescribe.
    A second amendment, offered by Mr. Scott, imposes mandatory 
civil sanctions that are comparable to those available under 
Rule 37 \147\ of the Federal Rules of Civil Procedure, in 
addition to other civil sanctions otherwise applicable, for the 
willful and intentional destruction of documents sought in 
\148\ a pending civil court proceeding, and highly relevant to 
such proceeding, with the willful intent to obstruct such 
proceeding. The amendment applies its rule to proceedings in 
both state and Federal court.
---------------------------------------------------------------------------
    \147\ Rule 37 of the Federal Rules of Civil Procedure already 
imposes mandatory sanctions for failure to comply with required 
discovery disclosures, following an opportunity to be heard. See Fed. 
R. Civ. P. 37(a)(4) (``Expenses and Sanctions''). All courts also 
already have inherent powers to sanction parties for abusive practices, 
including willful transgressions of discovery procedures, such as 
document destruction. See, e.g., Capellupo v. FMC Corp., 126 F.R.D. 
545, 550 (1989) (``[T]he Court relies on its inherent power to regulate 
litigation, preserve and protect the integrity of proceedings before 
it, and sanction parties for abusive practices.'') (citing cases); 
Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (``It has long been 
understood that certain implied powers must necessarily result to our 
Courts of justice from the nature of their institution, powers which 
cannot be dispensed with in a Court because they are necessary to the 
exercise of all others.'') (citations and quotations omitted). 
Generally, sanctions are appropriate when a party destroys discoverable 
material which the party knew or should have known was relevant to 
pending, imminent, or reasonably foreseeable litigation. See Jamie S. 
Gorelick et al., Destruction of Evidence Sec. 3.8, at 88 (1989). Rule 
37 also allows the court to forego sanction (defined as ``pay[ment] to 
the moving party [of] the reasonable expenses incurred in making the 
motion [for sanctions], including attorney's fees'') under various 
circumstances, including if the nondisclosure was ``substantially 
justified,'' or ``other circumstances make an award of expenses 
unjust.'' Fed. R. Civ. P. 37(a)(4)(A). The amendment adopted by the 
Committee requires the sanctions be ``commensurate'' with those in Rule 
37 and therefore under the amendment the same standards and safeguards 
for applying sanctions under Rule 37, or substantially similar state 
procedures, must be applied.
    \148\ The term ``sought in'' as used in the amendment means sought 
pursuant to the rules of the relevant Federal or state court 
proceeding.
---------------------------------------------------------------------------

         RESPONSE TO JUDICIAL CONFERENCE LETTER ON H.R. 4571, 
                    THE LAWSUIT ABUSE REDUCTION ACT

    On July 9, 2004, the Judicial Conference of the United 
States sent a letter to the Committee regarding H.R. 4571.\149\
---------------------------------------------------------------------------
    \149\ Letter from Leonidas Ralph Mecham, Secretary, United States 
Judicial Conference, to Chairman F. James Sensenbrenner, Jr. (July 9, 
2004) (``Judicial Conference Letter'').
---------------------------------------------------------------------------
    The letter states that Section 2 of H.R. 4571 would 
reinstitute provisions to Rule 11 that were removed in 1993, 
and that such provisions were removed ``because of the serious 
problems it engendered during a 10-year period of operation.'' 
\150\ This assertion is contradicted by the Judicial 
Conference's Advisory Committee on Civil Rules's own survey. 
That committee undertook a review of Rule 11, in its pre-1993 
form, and asked the Federal Judicial Center to conduct an 
empirical study of its operation and impact. The survey of 751 
Federal judges found that an overwhelming majority of Federal 
judges believed that Rule 11 did not impede development of the 
law (95%); the benefits of the rule outweighed any additional 
requirement of judicial time (71.9%); the 1983 version of Rule 
11 had a positive effect on litigation in the Federal courts 
(80.9%); and the rule should be retained in its then-current 
form (80.4%).\151\ Indeed, the letter from the Judicial 
Conference admits as much with the cursory statement that ``The 
1991 Federal Judicial Center Survey noted that most Federal 
judges believed that the 1983 version of Rule 11 had positive 
effects.'' \152\
---------------------------------------------------------------------------
    \150\ Judicial Conference Letter, at 1.
    \151\ Federal Judicial Center Final Report on Rule 11 to the 
Advisory Committee on Civil Rules of the Judicial Conference of the 
United States (May 1991).
    \152\ Judicial Conference Letter, at 2.
---------------------------------------------------------------------------
    Despite this survey conducted at the behest of the Judicial 
Conference itself, the letter cites four ``serious problems'' 
caused by the 1983 amendments to Rule 11.
    The first is that the 1983 amendments to Rule 11 resulted 
in ``creating a significant incentive to file unmeritorious 
Rule 11 motions by providing a possibility of monetary 
penalty.'' \153\ In response, first, any unmeritorious Rule 11 
motion could itself result in sanctions (and thereby be 
deterred) under Rule 11.\154\ Second, yet another survey 
conducted by the Federal Judicial Center contradicts the 
assertion that the option of monetary penalties under Rule 11 
caused problems. A survey conducted by the Federal Judicial 
Center in June, 1995, consisting of 148 Federal judges and over 
1,000 trial attorneys found that the 1993 amendments that 
discouraged monetary compensation for victims of frivolous 
lawsuits were a bad idea. In that survey, two-thirds of judges 
(66%), defense attorneys (63%), and other attorneys (66%), and 
even a substantial portion of plaintiff's attorneys (43%), 
supported restoring Rule 11's compensatory function once 
again.\155\
---------------------------------------------------------------------------
    \153\ Id. at 2.
    \154\ See Berger v. Iron Workers, 843 F.2d 1395 (D.C. Cir. 1988) 
(affirming in part per curiam 7 Fed. Rules Serv. 3d 306 (D.D.C. 1986)) 
(imposing sanctions for filing inappropriate Rule 11 motions).
    \155\ See John Shapard et. al., Federal Judicial Center, Report of 
a Survey Concerning Rule 11, Federal Rules of Civil Procedure at 5.
---------------------------------------------------------------------------
    The second problem the Judicial Conference letter cites is 
that the 1983 amendments to Rule 11 resulted in ``engendering 
potential conflict of interest between clients and their 
lawyers, who advised withdrawal of particular claims despite 
the clients' preference.'' \156\ In response, it is entirely 
appropriate that an attorney advise withdrawing claims a client 
wants to make when those claims are frivolous.
---------------------------------------------------------------------------
    \156\ Judicial Conference Letter, at 2.
---------------------------------------------------------------------------
    The third problem the Judicial Conference letter cites is 
that the 1983 amendments to Rule 11 resulted in ``exacerbating 
tensions between lawyers.'' \157\ In response, whatever 
tensions the amendments may have caused lawyers, the threat of 
frivolous lawsuits today has created a legal culture of fear 
that has come to permeate all of American society, threatening 
common sense judgments everywhere, from churches, to 
playgrounds, to schools, to doctors' offices, to small 
businesses nationwide, and everywhere in between. Surely if 
restoring teeth to Rule 11 results in some tension between 
lawyers, it is justified by helping to allow all Americans to 
live their lives free of the constant fear that their every 
innocent move could result in a devastating frivolous lawsuit.
---------------------------------------------------------------------------
    \157\ Id. at 2.
---------------------------------------------------------------------------
    The fourth problem the Judicial Conference letter cites is 
that the 1983 amendments to Rule 11 resulted in ``providing 
little incentive, and perhaps a distinct disincentive, to 
abandon or withdraw a pleading or claim--and thereby admit 
error--that lacked merit after determining that it no longer 
was supportable in law or fact.'' \158\ In response, the 
argument that mandatory sanctions deter offenders from 
retracting offending conduct is no more persuasive than the 
argument that stealing again and again should be allowed, 
provided each time the thief gets caught he or she returns the 
stolen goods; except in this case the argument is even weaker, 
since under the current Rule 11, the money victims of frivolous 
lawsuits are forced to spend to defend themselves, or to 
prepare to defend themselves, against frivolous claims is not 
even returned when an attorney is called to the carpet for 
filing a frivolous pleading: rather, such attorney need only 
withdraw the pleading and suffer no penalty whatsoever.
---------------------------------------------------------------------------
    \158\ Id. at 2.
---------------------------------------------------------------------------
    The letter from the Judicial Conference also states that, 
if Section 3 of H.R. 4571 is enacted, it ``could affect the 
cost and duration of a very large number of civil actions in 
state courts.'' \159\ In response, Section 3 of H.R. 4571 is 
not likely to be abused for several reasons. Any party that 
does not fear sanctions under Rule 11 will only request that a 
state court rule on whether the case affects interstate 
commerce in rare circumstances. This is because, first, no one 
is required under H.R. 4571 to make such a request to a state 
court if they do not want to, and second, because the burden 
will be on any party who decides to move for a determination 
that the case ``affects interstate commerce'' to show just 
that, and that will not be an easy case to make, especially in 
smaller cases. The end result will be that motions will be made 
under Section 3 of H.R. 4571 only in those cases in which large 
amounts of money are at stake with clear interstate effects and 
only by those parties who have very strong reasons to believe 
the court system is being abused by a party filing frivolous 
pleadings. In such cases, it is entirely appropriate that a 
Federal rule sanctioning lawsuit abuse be available. Section 3 
of H.R. 4571 would serve national economic interests by 
focusing attention on the employment costs of frivolous 
litigation. The provision would provide that the interstate 
economy, including workers and jobs, when potentially 
negatively affected, should be protected by a rule prohibiting 
frivolous claims.
---------------------------------------------------------------------------
    \159\ Id. at 3.
---------------------------------------------------------------------------
    Finally, the Judicial Conference letter states that H.R. 
4571 is ``inconsistent with the longstanding Judicial 
Conference policy opposing direct amendment of the Federal 
rules by legislation.'' \160\ However, Congress has never 
relinquished its constitutional authority to create and alter 
the rules of Federal court procedure,\161\ and it has a duty to 
do so to address pressing problems, in this case the threat of 
frivolous lawsuits that affect all aspects of American society.
---------------------------------------------------------------------------
    \160\ Id. at 1.
    \161\ See U.S. Const. Art. I, Sec. 8, cl. 9; Art. III, Sec. 1, cl. 
1; Art. III, Sec. 2, cl. 2.
---------------------------------------------------------------------------

                                Hearings

    The full Committee on the Judiciary held a hearing on H.R. 
4571 and the issue of ``Safeguarding Americans from a Legal 
Culture of Fear: Approaches to Limiting Lawsuit Abuse'' on June 
22, 2004. Testimony was received from Victor Schwartz, General 
Counsel, American Tort Reform Association; Philip Howard, 
Chair, Common Good; Karen R. Harned, Executive Director, 
National Federation of Independent Business; and Theodore 
Eisenberg, Professor of Law, Cornell Law School, with 
additional material submitted by individuals and organizations.

                        Committee Consideration

    On September 8, 2004, the Committee met in open session and 
ordered favorably reported the bill H.R. 4571 with amendment by 
a recorded vote of 18 yeas to 10 nays, a quorum being present.

                         Vote of the Committee

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee notes that the 
following rollcall votes occurred during the committee's 
consideration of H.R. 4571 .
    1. Mr. Keller offered an amendment that would require the 
suspension of attorneys from practice when they commit 3 or 
more Rule 11 violations in Federal court. The Keller amendment 
was amended by a Berman second degree amendment that provided 
for attorney appeals which was adopted by voice vote. By a 
rollcall vote of 20 yeas to 6 nays, the Keller amendment, as 
amended, was agreed to.

                                                   ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................              X
Mr. Coble.......................................................              X
Mr. Smith.......................................................              X
Mr. Gallegly....................................................
Mr. Goodlatte...................................................              X
Mr. Chabot......................................................              X
Mr. Jenkins.....................................................              X
Mr. Cannon......................................................
Mr. Bachus......................................................              X
Mr. Hostettler..................................................              X
Mr. Green.......................................................              X
Mr. Keller......................................................              X
Ms. Hart........................................................              X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes......................................................              X
Mr. King........................................................              X
Mr. Carter......................................................              X
Mr. Feeney......................................................              X
Mrs. Blackburn..................................................              X
Mr. Conyers.....................................................
Mr. Berman......................................................              X
Mr. Boucher.....................................................
Mr. Nadler......................................................                              X
Mr. Scott.......................................................                              X
Mr. Watt........................................................                              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................
Ms. Waters......................................................
Mr. Meehan......................................................
Mr. Delahunt....................................................                              X
Mr. Wexler......................................................
Ms. Baldwin.....................................................                              X
Mr. Weiner......................................................
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................                              X
Mr. Sensenbrenner, Chairman.....................................              X
                                                                 -----------------------------------------------
    Total.......................................................             20               6
----------------------------------------------------------------------------------------------------------------

    2. Mr. Nadler offered an amendment that would have mandated 
that state courts follow certain procedures before sealing 
records or subjecting them to a protective order. By a rollcall 
vote of 8 yeas to 17 nays, the amendment was defeated.

                                                   ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................                              X
Mr. Coble.......................................................                              X
Mr. Smith.......................................................                                           Pass
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................                              X
Mr. Chabot......................................................              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................
Mr. Bachus......................................................                              X
Mr. Hostettler..................................................                              X
Mr. Green.......................................................                              X
Mr. Keller......................................................                              X
Ms. Hart........................................................                              X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Carter......................................................                              X
Mr. Feeney......................................................                              X
Mrs. Blackburn..................................................
Mr. Conyers.....................................................
Mr. Berman......................................................              X
Mr. Boucher.....................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................                              X
Ms. Lofgren.....................................................                              X
Ms. Jackson Lee.................................................
Ms. Waters......................................................
Mr. Meehan......................................................
Mr. Delahunt....................................................              X
Mr. Wexler......................................................
Ms. Baldwin.....................................................              X
Mr. Weiner......................................................
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................              X
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................              8              17          1 pass
----------------------------------------------------------------------------------------------------------------

    3. Motion to report H.R. 4571, as amended, was agreed to by 
a rollcall vote of 18 yeas and 10 nays.

                                                   ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................              X
Mr. Coble.......................................................              X
Mr. Smith.......................................................              X
Mr. Gallegly....................................................              X
Mr. Goodlatte...................................................              X
Mr. Chabot......................................................              X
Mr. Jenkins.....................................................              X
Mr. Cannon......................................................
Mr. Bachus......................................................              X
Mr. Hostettler..................................................              X
Mr. Green.......................................................              X
Mr. Keller......................................................              X
Ms. Hart........................................................              X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes......................................................              X
Mr. King........................................................              X
Mr. Carter......................................................              X
Mr. Feeney......................................................              X
Mrs. Blackburn..................................................              X
Mr. Conyers.....................................................
Mr. Berman......................................................                              X
Mr. Boucher.....................................................
Mr. Nadler......................................................                              X
Mr. Scott.......................................................                              X
Mr. Watt........................................................                              X
Ms. Lofgren.....................................................                              X
Ms. Jackson Lee.................................................
Ms. Waters......................................................
Mr. Meehan......................................................
Mr. Delahunt....................................................                              X
Mr. Wexler......................................................                              X
Ms. Baldwin.....................................................                              X
Mr. Weiner......................................................
Mr. Schiff......................................................                              X
Ms. Sanchez.....................................................                              X
Mr. Sensenbrenner, Chairman.....................................              X
                                                                 -----------------------------------------------
    Total.......................................................             18              10
----------------------------------------------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 4571, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                                September 13, 2004.
Hon. F. James Sensenbrenner, Jr.,
Chairman, Committee on the Judiciary, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4571, the Lawsuit 
Abuse Reduction Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Lanette J. 
Walker (for federal costs), and Melissa Merrell (for the state 
and local impact).
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 4571--Lawsuit Abuse Reduction Act of 2004

    H.R. 4571 would amend Rule 11 of the Federal Rules of Civil 
Procedure to require courts to impose appropriate sanctions on 
attorneys, law firms, or parties who file frivolous lawsuits 
and to require them to compensate parties injured by such 
conduct. (Courts currently may, but are not required to, impose 
such sanctions.) In addition, the bill would require certain 
personal injury claims to be filed in a court where the person 
bringing the claim lives, where the alleged injury occurred, or 
where the defendant's business is located.
    Under the legislation, any monetary sanction imposed under 
Rule 11 would be between the parties to the suit. Thus, CBO 
estimates that enacting the legislation would result in no cost 
or savings to the federal government. H.R. 4571 would not 
affect direct spending or revenues.
    H.R. 4571 contains an intergovernmental mandate as defined 
in the Unfunded Mandates Reform Act because it would preempt 
certain state laws governing court procedures. Specifically, it 
would require state judges to determine whether certain 
liability lawsuits affect interstate commerce and apply federal 
civil procedures for frivolous lawsuits to those cases. CBO 
estimates that the cost of complying with that mandate would be 
minimal and well below the threshold established in that act 
($60 million in 2004, adjusted annually for inflation). The 
bill contains no new private-sector mandates.
    The CBO staff contacts for this estimate are Lanette J. 
Walker (for federal costs), and Melissa Merrell (for the state 
and local impact). This estimate was approved by Robert A. 
Sunshine, Assistant Director for Budget Analysis.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
4571 would (1) restore mandatory sanctions for filing frivolous 
lawsuits in violation of Rule 11 of the Federal Rules of Civil 
Procedure, (2) remove Rule 11's ``safe harbor'' provision that 
currently allows parties and their attorneys to avoid sanctions 
for making frivolous claims by withdrawing frivolous claims 
after a motion for sanctions has been filed, (3) allow monetary 
sanctions, including attorneys' fees and compensatory costs, 
against any party making a frivolous claim, (4) allow sanctions 
for abuses of the discovery process (the process by which 
lawyers on each side request information from the other side 
prior to trial), (5) apply Rule 11's provisions to state cases 
a state judge finds affect interstate commerce, (6) require 
that personal injury cases be brought only where the plaintiff 
resides, where the plaintiff was allegedly injured, or where 
the defendant's principal place of business is located; (7) 
apply a ``three strikes and you're out'' rule to attorneys who 
commit Rule 11 violations in Federal district court; and (8) 
impose mandatory civil sanctions for willful and intentional 
document destruction willfully intended to obstruct a pending 
court proceeding.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, Sec. 8 of the Constitution.

               Section-by-Section Analysis and Discussion

    The following discussion describes H.R. 4571 as reported by 
the Judiciary Committee.
    Sec. 1. Short title. This section provides that the Act may 
be cited as the ``Lawsuit Abuse Reduction Act of 2004.''
    Sec. 2. Attorney Accountability. This section would restore 
mandatory sanctions for filing frivolous lawsuits in violation 
of Rule 11; remove Rule 11's ``safe harbor'' provision that 
currently allows parties and their attorneys to avoid sanctions 
for making frivolous claims by withdrawing frivolous claims 
after a motion for sanctions has been filed; allow monetary 
sanctions, including attorneys' fees and compensatory costs, 
against any party making a frivolous claim; and allow sanctions 
for abuses of the discovery process (the process by which 
lawyers on each side request information from the other side 
prior to trial).
    Sec. 3. Applicability of Rule 11 to State Cases Affecting 
Interstate Commerce. This section applies Rule 11's provisions 
to state cases a state judge finds affect interstate commerce, 
including by costing jobs in other states.
    Sec. 4. Prevention of Forum-Shopping. Subsection (a) of 
this section requires that personal injury cases be brought 
only where the plaintiff resides, where the plaintiff was 
allegedly injured (or where the circumstances giving rise to 
the injury allegedly occurred) or where the defendant's 
principal place of business is located. Subsection (b) of this 
section provides that if a person alleges that the injury or 
circumstances giving rise to the personal injury claim occurred 
in more than one county (or Federal district), the trial court 
shall determine which State and county (or Federal district) is 
the most appropriate forum for the claim. If the court 
determines that another forum would be the most appropriate 
forum for a claim, the court shall dismiss the claim. Any 
otherwise applicable statute of limitations shall be tolled 
beginning on the date the claim was filed and ending on the 
date the claim is dismissed under this subsection. Subsection 
(c) of this section provides the definition of terms used in 
section 4.
    Sec. 5. Rule of Construction. This section provides that 
nothing in section 3 or in the amendments made by section 2 
shall be construed to bar or impede the assertion or 
development of new claims or remedies under Federal, State, or 
local civil rights law.
    Sec. 6. Three-Strikes Rule for Suspending Attorneys Who 
Commit Multiple Rule 11 Violations. This section provides that 
whenever a Federal district judge determines an attorney has 
violated Rule 11 of the Federal Rules of Civil Procedure three 
or more times within that Federal district court, the court 
shall suspend that attorney from practice of law in that 
Federal district court for 1 year, and may suspend that 
attorney from practice of law in that Federal district court 
for any additional period the court considers appropriate. 
Under such provision, an attorney has the right to appeal any 
such suspension, and such suspension shall not take place 
pending such appeal. Further, to be reinstated to the practice 
of law in a Federal district court after completion of such 
suspension, the attorney must first petition the court for 
reinstatement under such procedures and conditions as the court 
may prescribe.
    Sec. 7. Enhanced Sanctions for Document Destruction. This 
section provides that provides for mandatory civil sanctions 
that are commensurate with those available under Rule 37 of the 
Federal Rules of Civil Procedure, in addition to other civil 
sanctions otherwise applicable, for the willful and intentional 
destruction of documents sought in a pending civil court 
proceeding, and highly relevant to such proceeding, with the 
willful intent to obstruct such proceeding. The amendment 
applies to proceedings in both state and Federal court.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

            RULE 11 OF THE FEDERAL RULES OF CIVIL PROCEDURE


Rule 11. Signing of Pleadings, Motions, and Other Papers; 
                    Representations to Court; Sanctions

    (a) * * *

           *       *       *       *       *       *       *

    (c) Sanctions.--[If, after notice and a reasonable 
opportunity to respond, the court determines that subdivision 
(b) has been violated, the court may, subject to the conditions 
stated below, impose an appropriate sanction upon the 
attorneys, law firms, or parties that have violated subdivision 
(b) or are responsible for the violation.] If a pleading, 
motion, or other paper is signed in violation of this rule, the 
court, upon motion or upon its own initiative, shall impose 
upon the attorney, law firm, or parties that have violated this 
subdivision or are responsible for the violation, an 
appropriate sanction, which may include an order to the other 
party or parties to pay for the reasonable expenses incurred as 
a direct result of the filing of the pleading, motion, or other 
paper, that is the subject of the violation, including a 
reasonable attorney's fee.
            (1) How initiated.--
                    (A) By motion.--A motion for sanctions 
                under this rule shall be made separately from 
                other motions or requests and shall describe 
                the specific conduct alleged to violate 
                subdivision (b). It shall be served as provided 
                in [Rule 5, but shall not be filed with or 
                presented to the court unless, within 21 days 
                after service of the motion (or such other 
                period as the court may prescribe), the 
                challenged paper, claim, defense, contention, 
                allegation, or denial is not withdrawn or 
                appropriately corrected.] Rule 5. If warranted, 
                [the court may award] the court shall award to 
                the party prevailing on the motion the 
                reasonable expenses and attorney's fees 
                incurred in presenting or opposing the motion. 
                Absent exceptional circumstances, a law firm 
                shall be held jointly responsible for 
                violations committed by its partners, 
                associates, and employees.

           *       *       *       *       *       *       *

            (2) Nature of sanction; limitations.--A sanction 
        imposed for violation of this rule [shall be limited to 
        what is sufficient to deter repetition of such conduct 
        or comparable conduct by others similarly situated. 
        Subject to the limitations in subparagraphs (A) and 
        (B), the sanction may consist of, or include, 
        directives of a nonmonetary nature, an order to pay a 
        penalty into court, or if imposed on motion and 
        warranted for effective deterrence, an order directing 
        payment to the movant of some or all of the reasonable 
        attorneys' fees and other expenses incurred as a direct 
        result of the violation.
                    [(A) Monetary sanctions may not be awarded 
                against a represented party for a violation of 
                subdivision (b)(2).
                    [(B) Monetary sanctions may not be awarded 
                on the court's initiative unless the court 
                issues its order to show cause before a 
                voluntary dismissal or settlement of the claims 
                made by or against the party which is, or whose 
                attorneys are, to be sanctioned.] shall be 
                sufficient to deter repetition of such conduct 
                or comparable conduct by others similarly 
                situated, and to compensate the parties that 
                were injured by such conduct. The sanction may 
                consist of an order to pay to the party or 
                parties the amount of the reasonable expenses 
                incurred as a direct result of the filing of 
                the pleading, motion, or other paper that is 
                the subject of the violation, including a 
                reasonable attorney's fee.

           *       *       *       *       *       *       *

    [(d) Inapplicability to Discovery.--Subdivisions (a) 
through (c) of this rule do not apply to disclosures and 
discovery requests, responses, objections, and motions that are 
subject to the provisions of Rules 26 through 37.]

                              Agency Views
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

                           Markup Transcript



                            BUSINESS MEETING

                      WEDNESDAY, SEPTEMBER 8, 2004

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:00 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee will be in order, a 
working quorum is present and pursuant to notice I will now 
call up the bill H.R. 4571, the ``Lawsuit Abuse Reduction Act 
of 2004'' for purposes of mark up and move its favorable 
recommendation to the House. Without objection, the bill will 
be considered as read and open for amendment at any point. And 
the Chair recognizes the gentleman from Texas, Mr. Smith, for 5 
minutes to explain the bill.
    [The bill, H.R. 4571, follows:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    
    Mr. Smith. Mr. Chairman, I am not sure my speaker is 
working. Oh, there it is. Mr. Chairman, frivolous lawsuits harm 
our economy and threaten to bankrupt business owners. This is 
especially true of small business owners who do not have the 
money to fund prolonged lawsuits. The alarming spread of 
frivolous lawsuits has made a mockery of our legal system. For 
example, frivolous suits are brought despite no evidence that 
shows negligence on the part of the defendant. These are 
nuisance lawsuits but costly to the defendants. Of course many 
Americans have legitimate legal grievances from someone wrongly 
disfigured during an operation, to a company responsible for 
contaminating a community's water supply. Americans deserve 
their day in court. No one who deserves justice should be 
denied justice. However, the gaming of the system by some 
lawyers makes the cost of doing business rise and draws down 
the integrity of the judicial system.
    Let me give some examples. The chief executive officer of 
San Antonio's Methodist Children's Hospital was sued after he 
stepped into a patient's hospital room and asked how he was 
doing. Of course the jury cleared him of any wrongdoing. A 
Pennsylvania man sued the Frito Lay Company claiming that 
Doritos chips were inherently dangerous after one stuck in his 
throat. After 8 years of costly litigation, the Pennsylvania 
Supreme Court threw out the case, writing that there is, quote, 
a common sense notion that it is necessary to properly chew 
hard foodstuffs prior to swallowing. End quote.
    In a New Jersey Little League game a player lost sight of a 
fly ball hit to him because of the sun. He was injured when the 
ball struck him in the eye. The coach was forced to hire a 
lawyer after the boy's parents sued and the coach had to settle 
the case for $25,000.
    Today almost any party can bring any suit in practically 
any jurisdiction. That is because plaintiffs and their 
attorneys have nothing to lose. All they want is for the 
defendant to settle. This is legalized extortion. It is lawsuit 
lottery.
    Some Americans have filed lawsuits for reasons that can 
only be described as absurd. They sue a theme park because its 
haunted houses are too scary. They sue the Weather Channel for 
an inaccurate forecast. And they sue McDonald's claiming a hot 
pickle dropped from a hamburger caused a burn and mental 
injury.
    Our national motto might as well be, when in doubt file a 
lawsuit. It is always someone else's fault. Defendants on the 
other hand can unfairly lose their careers, their businesses 
and their reputations; in short, they can lose everything.
    This is not justice and there is a remedy. Change Federal 
Rule of Civil Procedure 11. The Lawsuit Abuse Reduction Act 
requires judges to sanction plaintiffs who file frivolous 
lawsuits merely to extort financial settlements as well as 
defendants who unnecessarily prolong the process. Under H.R. 
4571 if either party feels they have been subject to a 
frivolous claim or pleading, they can file a motion with the 
court for sanctions. If the judge determines that the claim was 
frivolous then the sanctions imposed can include an order to 
pay the attorney's fees of the party who was the victim of the 
frivolous claim.
    In addition, this legislation removes the provision that 
currently allows an attorney to file a frivolous pleading and 
then withdraw it within 21 days. Attorneys now have no 
incentive to avoid filing frivolous pleadings because they can 
simply withdraw the pleading to avoid sanctions.
    Also if the State judge determines that a frivolous lawsuit 
has an impact on interstate commerce the judge could sanction 
the litigants by using Rule 11.
    Finally, this legislation prevents forum shopping. It 
requires that personal injury claims only be filed in the 
State, county or Federal district where the plaintiff resides, 
where the injury occurred, or in the State or county where the 
defendant's principal place of business is located. This 
provision addresses the growing problem of attorneys who shop 
around the country for judges who routinely award plaintiffs 
excessive amounts.
    I might add, Mr. Chairman, that the presidential and vice 
presidential candidates all agree that we would be a better and 
a more prosperous America if we discouraged frivolous lawsuits. 
The Lawsuit Abuse Reduction Act is sensible reform that will 
help restore confidence in America's justice system.
    Mr. Chairman, I will yield back.
    Chairman Sensenbrenner. Who wishes to give the Democratic 
opening statement?
    Mr. Scott. I have----
    Chairman Sensenbrenner. The gentleman from Virginia, Mr. 
Scott.
    Mr. Scott. Mr. Chairman, I have an amendment when the time 
comes.
    Chairman Sensenbrenner. Okay. Without objection, all 
Members may place opening statements in the record at this 
point. Are there amendments? The gentleman from Florida, Mr. 
Keller.
    Mr. Keller. Mr. Chairman, I have an amendment at the desk.
    Chairman Sensenbrenner. The Clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 4517 offered by Mr. Keller of 
Florida. At the end of the bill insert the following new 
section. Section.
    [The amendment follows:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    
    Mr. Keller. Mr. Chairman, I would ask unanimous consent 
that the amendment be considered as read.
    Chairman Sensenbrenner. Without objection, so ordered and 
the gentleman is recognized for 5 minutes.
    Mr. Keller. Thank you, Mr. Chairman. I am offering a three 
strikes and you are out amendment to deal with frivolous 
lawsuits. I would like to begin by quoting from Senator John 
Edwards of North Carolina and I am holding here an article that 
he wrote for Newsweek magazine on December 15, 2003, where he 
said, quote, frivolous lawsuits waste good people's time and 
hurt the real victims.
    That is why I have proposed to prevent them. Lawyers who 
bring frivolous cases should face tough mandatory sanctions 
with a three strikes penalty.
    Also, in The Washington Post, on May 20, 2003, Senator John 
Edwards of North Carolina wrote an editorial where he said, 
quote, lawyers who file frivolous cases should face tough 
mandatory sanctions. Lawyers who file three frivolous cases 
should be forbidden to bring another suit for the next 10 
years.
    In other words, three strikes and you are out. On the good 
advice of Senator Edwards, I have prepared a three strikes and 
you are out amendment. If an attorney were to be found by a 
particular Federal District Court to have filed three frivolous 
lawsuits, this amendment would automatically suspend that 
attorney from practicing law in that particular Federal 
District Court for 1 year, and require that that attorney 
petition for reinstatement after that year under such 
procedures and conditions as that court may prescribe. This is 
an automatic 1-year suspension, less severe than even what John 
Edwards proposed of 10 years.
    And so I would ask my colleagues in the spirit of 
bipartisanship and the good advice of myself and Senator John 
Edwards to accept this amendment, and I yield back the balance 
of my time.
    Chairman Sensenbrenner. The gentleman from California, Mr. 
Berman.
    Mr. Berman. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Berman. I had two questions of the author of the 
amendment. It seems on its surface like a good amendment. But 
is a finding by a Federal judge of a Rule 11 violation, that 
the suit or the motion is frivolous, is that an appealable 
decision?
    Mr. Keller. It would be governed under the existing rules 
of Rule 11.
    Mr. Berman. I am sure it would. Is it appealable?
    Mr. Keller. I don't know. Do you know?
    Anything that you would normally be able to appeal under 
Rule 11 you would be able to appeal. Anything that you wouldn't 
be able to appeal under Rule 11 you wouldn't be able to appeal. 
We are not changing any appellate rules. It is a much 
narrower----
    Mr. Berman. I am asking a factual question. If you don't 
know the answer, I understand because I don't know the answer 
and that is why I am asking. Is it----
    Chairman Sensenbrenner. Will the gentleman yield?
    Mr. Berman. Sure.
    Chairman Sensenbrenner. Final orders are appealable under 
the Federal Rules of Civil Procedure and my guess is that if a 
Rule 11 violation has been found to occur the court would 
dismiss the action and impose sanctions in Rule 11 and that 
would be a final order.
    Mr. Berman. That is what I would have thought and I 
appreciate the clarification.
    Mr. Watt. Would the gentleman yield?
    Mr. Berman. I would be happy to yield.
    Mr. Watt. Unfortunately, it is not quite that clear. If the 
decision results in a final order of dismissal, the case would 
be appealable. But this amendment seems to go far beyond that 
to deal with discovery violations, argument violations, and 
those things are interlocutory decisions by a court, and quite 
often don't get resolved at all on any final basis. The case 
goes on. That order or decision having been entered on a 
procedural basis, the case goes on. The case may get appealed 
at some point, but seldom would that be the grounds for appeal, 
nor would it be appealable on an interlocutory basis, so--it is 
his time.
    Mr. Berman. I would be happy to yield. Let me just--I am 
not so concerned whether there is interlocutory appeal. I am 
just trying to deal with the factual--the situation where a 
particular judge in a particular case on three different 
occasions in that case, for reasons perhaps of animus towards 
the counsel has made a Rule 11 finding. At some point is that 
subject to being reversed on appeal? Not necessarily before the 
end of the case, but in other words, would the attorney be 
suspended from practice before he would have a chance to 
contest the abuse of discretion, the finding that there was a 
Rule 11 violation?
    Mr. Watt. The point that I am making is that seldom would 
there be an appeal on a procedural motion of that kind because 
the case would continue. Suppose you have a finding that a 
frivolous argument is made. The case continues.
    Mr. Berman. Sure.
    Mr. Watt. And that one item never gets appealed because the 
case goes on. You can't stop the case right there in the middle 
of that particular thing, take an appeal of that order.
    Mr. Berman. I understand.
    Mr. Watt. Because it is an interlocutory order.
    Mr. Berman. I guess the question for the author of the 
amendment, Rick, if--would you be willing to adjust your 
amendment to ensure that before the suspension is affected the 
lawyers had a chance to have a review of the finding three 
times--it could occur in one case. This applies, as somebody 
mentioned, to discovery motions, to other kinds of pleadings, 
and just--it would keep--essentially would keep the thrust of 
your amendment, but allow their, the actual suspension to be 
delayed until such time as the counsel has had a chance to 
review that finding on appeal.
    Mr. Keller. Let me tell you where I share your sympathies 
and let me tell you what my concerns are about what you are 
asking. Okay, the idea that an attorney is about to be barred 
from practicing in a particular Federal District Court for 1 
year because a judge has found three separate times.
    Chairman Sensenbrenner. The gentleman's time has expired.
    Mr. Berman. I would ask unanimous consent for 2 additional 
minutes.
    Chairman Sensenbrenner. Without objection.
    Mr. Berman. Okay.
    Mr. Keller. Will the gentleman yield?
    Mr. Berman. Yes.
    Mr. Keller. I understand at that point, when it is final he 
should be allowed to appeal, and it is my understanding from 
talking with staff that he would have that existing right under 
Rule 11. But the reason I am concerned about broadening this, I 
made this so narrow, specifically to come within the confines 
of what Senator Edwards was talking about and to avoid 
controversy, that if we are now talking about changing the 
Federal Rules of Civil Procedure with respect to an appellate 
rights under Rule 11 I think would unnecessarily broaden the 
amendment and make it more controversial than less 
controversial.
    Mr. Berman. Reclaiming my time, I am not suggesting 
changing the appellate rights. I am suggesting that the 
suspension not be implemented until the appeal of that--of the 
finding is deferred. Obviously, if three such findings could 
occur in one case, you don't intend that in the middle of that 
case even though it has not resulted in the dismissal of the 
case. It is about a specific pleading, it is about a specific 
discovery request----
    Mr. Keller. Will the gentleman yield?
    Mr. Berman. Yes.
    Mr. Keller. Because right now I don't see any case law that 
would cause me concerns about the appellate rights, I am not 
willing to amend it at this point. If after this amendment is 
adopted between now and the time it comes to the floor there is 
a reason to adjust it in the spirit of fairness I will 
certainly work with you and ask for a manager's amendment.
    Mr. Berman. Okay. And then my second question, I notice you 
only apply this to Federal actions. You don't seek to control 
what States do with attorneys who engage in frivolous motions 
and frivolous suits.
    Mr. Keller. That is correct.
    Mr. Berman. In State courts. What was your reason for not 
doing that?
    Mr. Keller. Well, and not only is it Federal action, it is 
a particular Federal district court like in Florida. If you 
have three frivolous suits in the middle district court that 
would apply. If you have two in the middle and one in the south 
it wouldn't apply. The reason is I wanted it narrow and clean. 
Customarily the practice of disciplining and suspending 
attorneys and barring them is a State issue, and I----
    Chairman Sensenbrenner. The time of the gentleman has 
expired.
    Mr. Keller. That should be the case.
    Chairman Sensenbrenner. Has once again expired.
    Mr. Coble. Mr. Chairman.
    Chairman Sensenbrenner. Gentleman from North Carolina, Mr. 
Coble.
    Mr. Coble. Mr. Chairman, move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Coble. And Mr. Chairman, I will not consume 5 minutes. 
I think the gentleman from Florida's amendment and the bill 
comes under the heading of reform, and on reform, particularly 
as it applies to capping damages, I have consistently voted 
against capping damages, Mr. Chairman, because I believe 
philosophically damages should be exclusively reserved for 
juries. This bill, however, is a different cat. And I am 
inclined to--while I support the bill and I am inclined to 
support the gentleman from Florida's amendment on the ground 
that, as he pointed out in his statement, frivolous lawsuits 
serve no good purpose and create inestimable mischief. I want 
to ask the gentleman from Florida a question to be sure I am 
reading this correctly.
    Mr. Keller. Yes, sir.
    Mr. Coble. Rick, this--you have separated this as to 
district. In North Carolina, for example, we have three Federal 
districts.
    Mr. Keller. That is right.
    Mr. Coble. They would not be cumulative. If I brought a 
frivolous lawsuit in the Eastern District, for example, and two 
in the middle district I would not be penalized at that point. 
Am I correct about that?
    Mr. Keller. That is correct, sir.
    Mr. Coble. Very well. I support the bill and the amendment, 
Mr. Chairman. Yield back.
    Mr. Watt. Mr. Chairman.
    Chairman Sensenbrenner. The gentleman from North Carolina, 
Mr. Watt.
    Mr. Watt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. I thank the Chairman for the time. I would just 
say to the gentleman that it does appear that he has tried to 
narrow this, but in the process of trying to narrow it he 
really has the potential of creating a very serious problem 
because you are talking about a potential interaction between 
one particular judge in one case and a lawyer in that case and 
nobody outside that case, so basically you end up with a 
situation where a judge who has a particular animus, either 
toward the case that the lawyer has filed or toward a 
particular lawyer, is going to be the final and sole arbiter of 
whether that lawyer gets disbarred. And I will give you a real 
life example so that you will know exactly what my concern is 
with this amendment, and hopefully Mr. Coble would know this 
also.
    In a civil rights case in North Carolina a particular 
judge, because he didn't like the civil rights case, not 
because the lawyers were out of line in any way, decided that 
he was going to do everything that he could to frustrate that 
case. This amendment leaves that judge as the final and sole 
arbiter of whether a lawyer gets disbarred in that case. That 
is not something that you should be doing. And because these 
are procedural findings, not substantive findings on the final 
outcome of a case, they are not appealable immediately so that 
the lawyer could actually be disbarred before the case even 
gets resolved in the final analysis by any court of appeal. 
There is no parallel judge in that judicial district who could 
overrule one particular judge because there is no way to appeal 
over to another judge. There is no appellate judge who can 
review this because it is an interlocutory procedural order. 
And you have set up a situation where one lawyer, one judge 
with a particular animus in a case, can ruin the whole legal 
career of a lawyer without any possibility of appeal, and that 
is just going way overboard and I don't think--I mean, I can't 
support that.
    Mr. Keller. Will the gentleman yield?
    Mr. Watt. Yeah, I am happy to yield to you.
    Mr. Keller. We are not talking about disbarring anybody. We 
are talking about a 1-year suspension and it is far narrower 
with the----
    Mr. Watt. Well, I suppose you think that is not important 
to a particular lawyer who practices in one judicial district 
that is equivalent to a disbarment of that lawyer, and the 
abuse is even more pronounced in this case because it typically 
is going to be some lawyer who----
    Mr. Keller. Will the gentleman yield?
    Mr. Watt. --who is constantly bringing cases that some 
judge doesn't like and if the judge sees the opportunity to get 
rid of that lawyer for a year, then the next year they are 
going to come back and do the same thing and they will be gone 
for a second year. And in many States lawyers don't practice in 
but one judicial district as a practical matter. So you can 
talk about this as some theoretical rhetorical issue, but this 
is a practical problem that you have created that gives a judge 
absolute final authority to say to a lawyer you can't practice 
in my court this year and when you come back next year I am 
going to start it over again because I will find you did 
something frivolous in that case.
    I am happy to yield to the gentleman.
    Mr. Keller. Well, thank you. And I may not have enough time 
here.
    Chairman Sensenbrenner. The gentleman's time has expired. 
For what purpose does the gentleman from Wisconsin, Mr. Green, 
seek recognition?
    Mr. Green. Move to strike the last word, Mr. Chairman.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Green. Mr. Chairman, in listening to the comments of my 
colleague on the other side of the aisle, I am sure that 
Senator Edwards considered such things and maybe he decided 
that the quickest way to avoid the problems the gentleman 
raises is not to file frivolous claims. I yield the balance of 
my time to the gentleman from Florida.
    Mr. Watt. Will the gentleman yield to me for just one 
response?
    Mr. Keller. I thank the gentleman for yielding.
    Chairman Sensenbrenner. The time belongs to the gentleman 
from Wisconsin.
    Mr. Keller. Mr. Watt, I am not under any pretense that 
whatever I am going to say is going to convince you here. But 
just to respond to a couple of issues, first, another lawyer 
from North Carolina, Senator Edwards, wanted to ban you for 10 
years from filing lawsuits anywhere. We are talking about a 
suspension of 1 year in that particular district court. Now, 
your objection to that, saying, well, maybe a judge may not 
like you and what if this judge on three separate occasions 
found that not only is he going to grant this motion for 
summary judgement against the plaintiff attorney's client. He 
is also going to enter a Rule 11 and wouldn't that be awful 
because one particular judge doesn't like an attorney and 
therefore this is a bad situation. I would respond to just 
bring you to the real world, and you and I both practice law. 
You may be a plaintiff's attorney who does civil rights cases, 
I may be a defense attorney who does civil rights cases, and in 
any particular Federal District Court there is going to be some 
judges that are going to be more likely to grant a summary 
judgement and some more that are likely to let it go to jury 
trial. So in any particular case you may have a judge who 
doesn't like you, you feel, or who is too tough in granting 
dismissals or summary judgments and once you have the final 
order entered that can be appealed. The likelihood that you 
will have three separate judicial findings that there was a 
frivolous case filed and then they are upheld on appeal, and 
the person is only suspended for 1 year, that that being 
unjust, I think is relatively remote. The likelihood of 
preventing frivolous lawsuits because they will think twice 
about filing suits is relatively great.
    So I think the benefits outweighs whatever risk you are 
bringing, and I would just point out that it is a lot narrower 
and more focused than the other Member of Congress from North 
Carolina, and I would urge my colleagues to support this 
motion.
    Mr. Watt. Would the gentleman yield?
    Mr. Keller. Yes, I would yield. Or I am sorry.
    Mr. Green. Yes, I would yield time to the gentleman from 
North Carolina.
    Mr. Watt. I would just say you are in the Judiciary 
Committee practicing politics. I am in the Judiciary Committee 
trying to assess the practical impact. I don't much care what 
John Edwards said in some political context, in some other 
context that had nothing to do with the point that I am raising 
here, had nothing to do with the civil rights case, had nothing 
to do with anything else that we are talking about the 
practical consequences of the way you have drafted this 
amendment. Now, you can either practice national politics, in 
which case you know damn well you know you have no intention of 
using John Edwards as any kind of an authority on any kind of 
issue. You can practice national politics, or you can do what 
this Committee is supposed to do, which is to look at the 
practical consequences of how these things play out in court. 
And my point to you is the practical consequences of your 
political posturing can be devastating in the real world in a 
real life situation. And if you want to do that, go right 
ahead.
    Mr. Green. Reclaiming my time, it is a pity if Senator 
Edwards was indeed political posturing. I thought he was making 
a valid point with respect to our judicial system. I further 
yield time to the gentleman from Florida.
    Mr. Keller. I thank the gentleman for yielding and at this 
time I would ask unanimous consent that the article that 
Senator Edwards wrote for Newsweek on December 15, 2003 and the 
articles he wrote for The Washington Post of May 20, 2003 be 
submitted into the record without objection.
    Chairman Sensenbrenner. Without objection.
    [The articles referred to follow:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    
    Mr. Keller. I would also point out that I have to take 
Senator Edwards at face value, assuming he was genuine in 
wanting to ban frivolous lawsuits, that it wasn't just some 
sham political stunt to try to cover the fact that he doesn't 
like caps and I take him at his word. I am genuine. He is 
genuine. This is a good faith idea, and I ask everyone to vote 
for this amendment. Yield back the balance of my time.
    Chairman Sensenbrenner. The Chair would admonish all 
Members that it is a violation of the rules to call into 
question the motivations of Members of either this body or the 
other body.
    Gentleman from California, for what purpose do you seek 
recognition?
    Mr. Berman. Mr. Chairman, I have an amendment to the 
amendment.
    Chairman Sensenbrenner. The Clerk will report the amendment 
to the amendment.
    The Clerk. Mr. Chairman, I don't have an amendment.
    Chairman Sensenbrenner. There is no amendment at the desk.
    Mr. Berman. There should be a perfecting amendment offered 
by Mr. Berman. It is at the desk right now.
    Chairman Sensenbrenner. That is not the desk.
    Mr. Berman. It is a desk. It is not that desk.
    Chairman Sensenbrenner. Amendments will be submitted to the 
Clerk so they can be read by the Clerk. The Clerk will read the 
amendment.
    The Clerk. Amendment--perfecting amendment offered by Mr. 
Berman to the Keller amendment to H.R. 4571. Add the following 
new section a(3). (3), an attorney has the right to appeal any 
suspension described by this section and the suspension shall 
not take place pending such appeal.
    [The amendment follows:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes in support of his perfecting amendment.
    Mr. Berman. Yes, Mr. Chairman, I take Mr. Keller's comments 
at face value and in responding to Mr. Watt, he said I don't 
think an amendment which says three findings of frivolous 
conduct by the attorney approved, supported continued or 
maintained after an appeal should allow that attorney to avoid 
any suspension, and this simply makes clear that there is an 
appeal of the suspension and the suspension doesn't take place 
pending the appeal.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Keller. Move to strike the last word.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Berman. I yield back.
    Chairman Sensenbrenner. Gentleman from Florida.
    Mr. Keller. I will accept the amendment.
    Mr. Berman. Thank you.
    Chairman Sensenbrenner. The question is on agreeing to the 
Berman amendment to the Keller amendment. Gentleman from--those 
in favor will say aye. Opposed no. The ayes appear to have it. 
The ayes have it. And the perfecting amendment by Mr. Berman to 
the Keller amendment is agreed to.
    The question now is on the adoption of the Keller 
amendment, as amended.
    Gentleman from Virginia, Mr. Scott.
    Mr. Scott. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, notwithstanding the amendment that 
was just adopted, you still have the first two strikes that you 
can be placed on the edge even with the frivolous findings. The 
suspension of the attorney for one violation may be 
appropriate, it may not be appropriate for just a minor 
offense. This is not only the filing of the lawsuit, but also 
anything that goes on in the middle of the lawsuit, a filing, a 
failure to provide information on a timely basis, anything can 
result in a Rule 11. And some of the findings of a violation of 
Rule 11 may be minor, in fact you may just get a warning. 
Three--two warnings early in your career and a third warning 20 
years later should not result in--even if the warning is well 
taken, should not result as a mandatory, with no discretion, 
suspension from practice for a year. I would hope that we would 
defeat the bill.
    Mr. Keller. Will the gentleman yield?
    Mr. Scott. Excuse me. I yield to the gentleman from 
Florida.
    Mr. Keller. I think it is fine the way it is. And whatever 
concerns you may have about injustice, we tried to be 
reasonable and accommodate by giving you an immediate appeal. 
So I think by taking the last amendment that should alleviate 
your concerns.
    Mr. Scott. Reclaiming my time, the immediate appeal is for 
the third strike, not the first two. And the finding may in 
fact be valid. It is just a very minor technical offense for 
which a warning would be appropriate, not a 1-year suspension.
    I yield to the gentleman from North Carolina.
    Mr. Watt. Can I just ask the gentleman a question? Your 
amendment says shall determine the number of times that the 
attorney has violated that rule in that Federal District Court 
during that attorney's career. What is your intention with 
respect to--how would you define that Federal court?
    Mr. Keller. Will the gentleman yield?
    Mr. Watt. Would it be the North Carolina Federal courts? 
Would it be the Western District, the Eastern District? Would 
it be that particular----
    Mr. Keller. Will the gentleman yield?
    Mr. Watt. Yeah.
    Mr. Keller. I don't know the names of your districts in 
North Carolina, but if you----
    Mr. Watt. There are three in North Carolina.
    Mr. Keller. Okay, let me just use Florida because it also 
has three. You have a northern district, a middle district and 
a southern district. You would have to be found in the middle 
district three times to have violated Rule 11. If you were 
found two times in the middle district and one time in the 
southern district, this would not apply, the suspension. I am 
defining a district court as it reads, that District Court.
    I yield back.
    Mr. Scott. I yield back.
    Chairman Sensenbrenner. The question is on the Keller 
amendment, as amended by the Berman amendment. Those in favor 
will say aye.
    Mr. Smith. May we have a rollcall vote on that?
    Chairman Sensenbrenner. Those in favor will say aye. 
Opposed no. The ayes appear to have it.
    Mr. Smith. May we have a rollcall vote?
    Chairman Sensenbrenner. rollcall will be ordered. The 
question is on agreeing to the amendment offered by the 
gentleman from Florida, Mr. Keller, as modified by the 
perfecting amendment of the gentleman from California, Mr. 
Berman. Those in favor will as your names are called answer 
aye. Those opposed no.
    And the Clerk will call the roll.
    The Clerk. Mr. Hyde.
    Mr. Hyde. Aye.
    The Clerk. Mr. Hyde votes aye.
    Mr. Coble.
    Mr. Coble. Aye.
    The Clerk. Mr. Coble votes aye.
    Mr. Smith.
    Mr. Smith. Aye.
    The Clerk. Mr. Smith votes aye.
    Mr. Gallegly.
    [no response.]
    The Clerk. Mr. Goodlatte.
    Mr. Goodlatte. Aye.
    The Clerk. Mr. Goodlatte votes aye.
    Mr. Chabot.
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot votes aye.
    Mr. Jenkins.
    Mr. Jenkins. Aye.
    The Clerk. Mr. Jenkins votes aye.
    Mr. Cannon.
    [no response.]
    The Clerk. Mr. Bachus.
    [no response.]
    The Clerk. Mr. Hostettler.
    Mr. Hostettler. Aye.
    The Clerk. Mr. Hostettler votes aye.
    Mr. Green.
    Mr. Green. Aye.
    The Clerk. Mr. Green votes aye.
    Mr. Keller.
    Mr. Keller. Aye.
    The Clerk. Mr. Keller votes aye.
    Ms. Hart.
    Ms. Hart. Aye.
    The Clerk. Ms. Hart votes aye.
    Mr. Flake.
    [no response.]
    The Clerk. Mr. Pence.
    [no response.]
    The Clerk. Mr. Forbes.
    Mr. Forbes. Aye.
    The Clerk. Mr. Forbes votes aye.
    Mr. King.
    Mr. King. Aye.
    The Clerk. Mr. King votes aye.
    Mr. Carter.
    Mr. Carter. Aye.
    The Clerk. Mr. Carter votes aye.
    Mr. Feeney.
    Mr. Feeney. Aye.
    The Clerk. Mr. Feeney votes aye.
    Mrs. Blackburn.
    Mrs. Blackburn. Aye.
    The Clerk. Mrs. Blackburn votes aye.
    Mr. Conyers.
    [no response.]
    The Clerk. Mr. Berman.
    Mr. Berman. Aye.
    The Clerk. Mr. Berman votes aye.
    Mr. Boucher.
    [no response.]
    The Clerk. Mr. Nadler.
    Mr. Nadler. No.
    The Clerk. Mr. Nadler votes no.
    Mr. Scott.
    Mr. Scott. No.
    The Clerk. Mr. Scott votes no.
    Mr. Watt.
    Mr. Watt. No.
    The Clerk. Mr. Watt votes no.
    Ms. Lofgren.
    Ms. Lofgren. Aye.
    The Clerk. Ms. Lofgren votes aye.
    Ms. Jackson Lee.
    [no response.]
    The Clerk. Ms. Waters.
    [no response.]
    The Clerk. Mr. Meehan.
    [no response.]
    The Clerk. Mr. Delahunt.
    Mr. Delahunt. No.
    The Clerk. Mr. Delahunt votes no.
    Mr. Wexler.
    [no response.]
    The Clerk. Ms. Baldwin.
    Ms. Baldwin. No.
    The Clerk. Ms. Baldwin votes no.
    Mr. Weiner.
    [no response.]
    The Clerk.Mr. Schiff.
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff votes aye.
    Ms. Sanchez.
    Ms. Sanchez. No.
    The Clerk. Ms. Sanchez votes no.
    Mr. Chairman.
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Sensenbrenner votes aye.
    Chairman Sensenbrenner. Members in the chambers who wish to 
cast or change their vote. Gentleman from Alabama, Mr. Bachus.
    Mr. Bachus. Mr. Chairman, I vote aye.
    The Clerk. Mr. Bachus aye.
    Chairman Sensenbrenner. Further Members in the chamber who 
wish to cast or change their vote? If not, the Clerk will 
report.
    The Clerk. Mr. Chairman, there are 20 ayes and six noes.
    Chairman Sensenbrenner. And the amendment is agreed to. Are 
there further amendments.
    Mr. Nadler. Mr. Chairman.
    Chairman Sensenbrenner. The gentleman from New York, Mr. 
Nadler.
    Mr. Nadler. Mr. Chairman, I have an amendment at the desk.
    Chairman Sensenbrenner. The Clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 4571 offered by Mr. Nadler. At 
the end of the bill insert the following section. Availability 
of court records. (a), in general, a court may not order that a 
court record be sealed or subjected to a protective order or 
that access to that record be otherwise restricted unless the 
court makes a finding of fact in writing that identifies the 
interest that justifies the order and that determines that the 
order is no broader than necessary to protect the interest. 
(b), applicability. This section applies to any court record 
including a record obtained through discovery whether or not 
formally filed with the Court in any Federal or State court.
    [The amendment follows:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    
    Mr. Smith. Mr. Chairman, I reserve a point of order.
    Chairman Sensenbrenner. Point of order is reserved. The 
gentleman from New York is recognized for 5 minutes.
    Mr. Nadler. Thank you, Mr. Chairman. Mr. Chairman, this is 
the same amendment I offered to a bill 2 years ago when you 
said that you thought it was a very constructive amendment and 
you are pleased to support it and I said I would like to take 
yes for an answer and the amendment was adopted. But the bill 
was not.
    What the amendment says is that--well, let's put it this 
way. Very often in civil litigation someone may have an unsafe 
product or an unsafe procedure, and rather than go to trial 
they settle with the plaintiff and they pay the plaintiff a 
certain amount of money because the plaintiff was damaged by 
this unsafe product, but a condition of the settlement which 
the plaintiff agrees to, because he or she is getting the 
money, is that the records will be sealed and no one will ever 
talk about it. And this perpetuates the situation where the 
unsafe product is continued to be marketed and nothing changes.
    Now, clearly the--when you are involving health services 
the secrecy keeps vital health and safety information out of 
the public's reach. It leads to more needless injuries and 
deaths caused by defective products. Secrecy orders should not 
be enforced unless they meet stringent standards to protect the 
public interest. This amendment is tailored to address the 
problem. It requires that a judge must make a finding of fact 
where a gag order is requested. If the judge finds that the 
privacy interest is broader than the public interest because 
there may be a legitimate privacy interest, then the judge must 
allow the gag order and the secrecy. But if the judge finds 
that the public interest and the health and safety of the 
situation outweighs the privacy interest claim, then the judge 
will not issue or will not approve the gag order. When it comes 
to health and safety, public access to medical malpractice 
lawsuit materials is absolutely essential. When it comes to 
public safety, public access to knowledge that a given product 
is unsafe is essential because otherwise it may not be changed. 
If the public knows as a result that a given car is unsafe or 
whatever, the manufacturer will have pressure to fix it up 
rather than simply bear the cost of settlement of litigation 
every so often. So this amendment balances the public interest 
and knowledge and public knowledge of admitted safety defects 
with the privacy interest that a manufacturer or someone else 
may actually have and says that the judge decides in each case 
that the privacy interest outweighs the public interest and 
therefore he will okay the privacy agreement or that the public 
safety and health interest outweighs the privacy interest and 
therefore he won't. And therefore, I urge my colleagues to vote 
for this amendment, and I hope the Chairman will agree with 
himself 2 years ago that this is a wise amendment.
    Ms. Lofgren. Would the gentleman yield?
    Mr. Nadler. Yes, I will.
    Ms. Lofgren. I agree with the intent of this amendment and 
I think whenever there is litigation that affects health and 
safety, product liability issues, you are absolutely correct. A 
phenomenon that has occurred in California in the last several 
years, however, is impacted potentially by this amendment, and 
it is situations where you have competitors who are filing 
litigation primarily to discover trade secrets. It has nothing 
to do with the kind of litigation you are discussing. And there 
has been a lot of discussion in the California legislature 
about this very issue, and how to make sure that the real 
object of the litigation isn't actually to discover something 
that should not be discovered. And I think that if we adopt 
this amendment we need to make clear, I would prefer actually 
that it be in the amendment but perhaps we could just do it in 
report language, that there is a presumption that if it is not 
a health and safety issue, but merely a trade secret, that 
great deference should be given to protecting trade secret.
    Mr. Nadler. Reclaiming my time.
    Ms. Lofgren. I certainly would.
    Mr. Nadler. If the gentlelady would yield, we give the 
judge the discretion in any case where the gentlelady is 
describing. The public interest and publicity would not 
outweigh the interest in privacy, and that is exactly the way 
this amendment is drafted for that reason.
    Ms. Lofgren. I understand that. But what we have discovered 
in California, and it is really a Silicon Valley issue in large 
part, is that in the course of discovery, because the courts 
are so overburdened, that it has become a huge issue in terms 
of even the judicial calendar and in the discovery issue, which 
is why I was struggling to figure out a way to offer an 
amendment to this. But I wasn't able to do so. The California 
legislature has not in the course of 2 years.
    So I just wanted to raise the issue, and perhaps we could 
give guidance to the judiciary in our----
    Mr. Nadler. Reclaiming my time.
    Chairman Sensenbrenner. The gentleman's time has expired. 
Does the gentleman wish to pursue his point of order?
    Mr. Smith. Mr. Chairman, I do wish to pursue the point of 
order.
    Chairman Sensenbrenner. Gentleman from Texas will state his 
point of order.
    Mr. Smith. Okay. Mr. Chairman, let me say at the outset 
that this may well be a good amendment and well intentioned. 
However, it is not relevant to the underlying piece of 
legislation and therefore is not germane. This amendment deals 
primarily with the sealing of court records whereas the 
underlying legislation deals with frivolous lawsuits. So I 
don't believe this particular amendment is germane. It may be 
worthy at another time, with another bill, but here it is not 
germane and I will----
    Mr. Berman. Would the gentleman yield?
    Mr. Smith. And I will be happy to yield to the gentleman 
from New York.
    Mr. Nadler. Are you going to offer this?
    Mr. Smith. Or the gentleman from California.
    Mr. Berman. If the gentleman would yield.
    Chairman Sensenbrenner. The proper procedure on a point of 
order is for Members to seek recognition.
    Mr. Smith. Okay. I will yield back the balance of my time.
    Chairman Sensenbrenner. Gentleman from California.
    Mr. Berman. I would just like to say that unfortunately 
this bill doesn't simply deal with frivolous lawsuits. It opens 
up to--this bill has a provision regulating venue 
determinations in State courts having nothing to do with 
frivolous lawsuits. This bill goes unfortunately far beyond the 
issue of Rule 11 and frivolous lawsuits. And I just think the 
Members of the Committee should understand that it has 
additional provisions in this bill that have no relationship 
either to Rule 11 or frivolous lawsuits and in fact seeks to 
decide what historically has always been State law decisions 
about which county you can bring a lawsuit in in a personal 
injury case for reasons that I truly don't understand and will 
look forward to hearing from you as author of it later on.
    Chairman Sensenbrenner. Anybody else wish to be heard on 
the point of order? Gentleman from New York.
    Mr. Nadler. Mr. Chairman, I would suggest--first of all, I 
agree with Mr. Berman. The amendment is not out of order for 
the reasons that he stated. But I think we can even clarify 
that because I am willing to narrow the amendment and simply 
say in any case concerning Rule 11 or forum shopping, a court, 
et cetera, and that I think would obviate any problem that Mr. 
Smith may have.
    Chairman Sensenbrenner. Does the gentleman withdraw the 
amendment?
    Mr. Nadler. I would like to amend the amendment.
    Chairman Sensenbrenner. Well, the Chair has to rule on the 
point of order first.
    Mr. Nadler. I will withdraw the amendment.
    Chairman Sensenbrenner. The amendment is withdrawn. Are 
there further amendments?
    Mr. Nadler. Yes. Mr. Chairman.
    Chairman Sensenbrenner. Gentleman from New York.
    Mr. Nadler. I have an amendment, the same amendment with 
the words ``in any case concerning Rule 11 or forum shopping'' 
after the words ``In General.''
    Chairman Sensenbrenner. The Clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 4571 offered by Mr. Nadler. At 
the end of the bill insert the following: ``section. 
Availability of court records. In general.''
    [The amendment follows:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    
    Mr. Nadler. At that point, right after the words ``In 
General,'' ``In any case concerning Rule 11 or forum 
shopping,'' and then just read the rest.
    The Clerk. ``a court may not order that a court record''--
--
    Mr. Nadler. Mr. Chairman. I make----
    The Clerk. --``be sealed or subjected to a protective order 
. . .''
    Mr. Nadler. Mr. Chairman, I move to waive the reading of 
the rest of the amendment.
    Chairman Sensenbrenner. Well, are there copies of the 
amendment for Members of the Committee? Because we have never 
waived the reading of an amendment----
    Mr. Nadler. Then I withdraw the motion.
    Chairman Sensenbrenner. Okay. The Clerk will continue to 
read.
    The Clerk. --``or that access to that record be otherwise 
restricted, unless the court makes a finding of fact in writing 
that identifies the interest that justifies the order and that 
determines that the order is no broader than necessary to 
protect that interest.
    ``(b) Applicability. This section applies to any court 
record, including a record obtained through discovery, whether 
or not formally filed with the court, in any Federal or State 
court.''
    Chairman Sensenbrenner. The gentleman from New York is 
recognized for 5 minutes.
    Mr. Nadler. Thank you, Mr. Chairman. I won't take 5 minutes 
because I explained the point of the amendment before. I think 
Members of the Committee in the prior year recognized the merit 
of the amendment. The Chairman certainly did. And I think that 
the addition of these words at the beginning of the amendment, 
in any case, limiting its applicability to any case concerning 
Rule 11 or forum shopping, should satisfy any validity to the 
point of order. I don't think the point of order was valid in 
any event because of what Mr. Berman said. But certainly 
limiting it to cases concerning Rule 11 or forum shopping 
certainly makes it germane to the bill.
    I yield back.
    Chairman Sensenbrenner. The gentleman yield back.
    Mr. Nadler. Yes, I do.
    Chairman Sensenbrenner. Gentleman from Texas.
    Mr. Smith. Mr. Chairman, if you have accepted this 
amendment in past years, I don't have any objection to the 
amendment now.
    Chairman Sensenbrenner. The gentleman yield back?
    Mr. Smith. And I will yield back.
    Chairman Sensenbrenner. The question is on agreeing to the 
second Nadler amendment. Those in favor will say aye. Opposed 
no. The noes appear to have it.
    Mr. Nadler. Mr. Chairman, there was one no. I would ask for 
the ayes and nays.
    Chairman Sensenbrenner. rollcall was ordered. Those in 
favor of the amendment offered by the gentleman from New York 
will as your names are called answer aye. Those opposed no. And 
the Clerk will call the roll.
    The Clerk. Mr. Hyde.
    Mr. Hyde. No.
    The Clerk. Mr. Hyde votes no.
    Mr. Coble.
    Mr. Coble. No.
    The Clerk. Mr. Coble votes no.
    Mr. Smith.
    Mr. Smith. Pass.
    The Clerk. Mr. Smith passes.
    Mr. Gallegly.
    [no response.]
    The Clerk. Mr. Goodlatte.
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte votes no.
    Mr. Chabot.
    [no response.]
    The Clerk. Mr. Jenkins.
    Mr. Jenkins. No.
    The Clerk. Mr. Jenkins votes no.
    Mr. Cannon.
    [no response.]
    The Clerk. Mr. Bachus.
    [no response.]
    The Clerk. Mr. Hostettler.
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler votes no.
    Mr. Green.
    Mr. Green. No.
    The Clerk. Mr. Green votes no.
    Mr. Keller.
    Mr. Keller. No.
    The Clerk. Mr. Keller votes no.
    Ms. Hart.
    Ms. Hart. No.
    The Clerk. Ms. Hart votes no.
    Mr. Flake.
    [no response.]
    The Clerk. Mr. Pence.
    [no response.]
    The Clerk. Mr. Forbes.
    Mr. Forbes. No.
    The Clerk. Mr. Forbes votes no.
    Mr. King.
    Mr. King. No.
    The Clerk. Mr. King votes no.
    Mr. Carter.
    Mr. Carter. No.
    The Clerk. Mr. Carter votes no.
    Mr. Feeney.
    Mr. Feeney. No.
    The Clerk. Mr. Feeney votes no.
    Mrs. Blackburn.
    [no response.]
    The Clerk. Mr. Conyers.
    [no response.]
    The Clerk. Mr. Berman.
    Mr. Berman. Aye.
    The Clerk. Mr. Berman votes aye.
    Mr. Boucher.
    [No response.]
    The Clerk. Mr. Nadler.
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler votes aye.
    Mr. Scott.
    Mr. Scott. Aye.
    The Clerk. Mr. Scott votes aye.
    Mr. Watt.
    Mr. Watt. No.
    The Clerk. Mr. Watt votes no.
    Ms. Lofgren.
    Ms. Lofgren. Pass.
    The Clerk. Ms. Lofgren passes.
    Ms. Jackson Lee.
    [No response.]
    The Clerk. Ms. Waters.
    [No response.]
    The Clerk. Mr. Meehan.
    [No response.]
    The Clerk. Mr. Delahunt.
    Mr. Delahunt. Aye.
    The Clerk. Mr. Delahunt votes aye.
    Mr. Wexler.
    [No response.]
    The Clerk. Ms. Baldwin.
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin votes aye.
    Mr. Weiner.
    [No response.]
    The Clerk.Mr. Schiff.
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff votes aye.
    Ms. Sanchez.
    Ms. Sanchez. Aye.
    The Clerk. Ms. Sanchez votes aye.
    Mr. Chairman.
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Sensenbrenner votes no.
    Chairman Sensenbrenner. Further Members in the Committee 
wish to cast or change their vote? The gentlewoman from 
California.
    Ms. Lofgren. No.
    The Clerk. Ms. Lofgren, no.
    Chairman Sensenbrenner. Gentleman from California, Mr. 
Gallegly.
    Mr. Gallegly. No.
    The Clerk. Mr. Gallegly, no.
    Chairman Sensenbrenner. Gentleman from Alabama, Mr. Bachus.
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no.
    Chairman Sensenbrenner. Further Members who wish to cast or 
change their votes? Gentleman from Ohio, Mr. Chabot.
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot, aye.
    Chairman Sensenbrenner. The Clerk will report.
    The Clerk. Mr. Chairman, there are 8 ayes, 17 noes.
    Chairman Sensenbrenner. The amendment is not agreed to.
    Are there further amendments? The gentleman from Virginia, 
Mr. Scott.
    Mr. Scott. Mr. Chairman, I have an amendment at the desk, 
SD-010.XML, with interdelineations.
    Chairman Sensenbrenner. The Clerk will report that 
amendment.
    The Clerk. Amendment to H.R. 4571 offered by Mr. Scott. At 
the end of the bill, insert the following: Section 'blank'. 
Enhanced sanctions for document destruction.
    (a) In General. Whoever willfully and intentionally----
    [The amendment follows:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read. The gentleman from Virginia is recognized 
for 5 minutes.
    Mr. Scott. Thank you, Mr. Chairman. Mr. Chairman, this 
deals with people who willfully and intentionally destroy 
documents that are subject to discovery. The bill--the 
amendment as originally introduced had criminal sanctions. 
Those have been removed and it leaves it to civil, just civil 
penalties for destroying documents sought and relevant to the 
proceeding.
    I would hope that the amendment would be adopted.
    Mr. Smith. Mr. Chairman.
    Chairman Sensenbrenner. Gentleman from Texas, Mr. Smith.
    Mr. Smith. Mr. Chairman, I think this is a good amendment. 
I know it is well-intentioned and to the best of my knowledge 
the gentleman from Virginia has in fact made the changes that 
we suggested. Is that correct?
    The only question I have for the gentleman from Virginia 
deals with a word in the second sentence of section (a) which 
now reads ``whosoever willfully and intentionally influences, 
obstructs, or impedes, or endeavors to influence, obstruct, or 
impede.'' the word ``endeavors'' could be vague, even 
unconstitutionally vague, and if the gentleman is satisfied 
with that, I would still support the amendment. But I don't 
want the amendment to be found unconstitutional because of too 
vague of a word.
    Mr. Scott. I would ask unanimous consent that ``endeavors'' 
be changed to ``attempts.''
    Chairman Sensenbrenner. Without objection.
    Mr. Scott. And thank the gentleman.
    Mr. Smith. And Mr. Chairman, I support the amendment and 
recommend that we adopt it.
    Chairman Sensenbrenner. The question is on agreeing to the 
amendment offered by the gentleman from Virginia, Mr. Scott. 
Those in favor will say aye. Opposed aye. The ayes appear to 
have it. The ayes have it. The amendment is agreed to.
    Are there further amendments? The gentleman from North 
Carolina, Mr. Watt.
    Mr. Watt. Mr. Chairman, I don't have an amendment. I move 
to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. And I won't take 5 minutes, Mr. Chairman. I just 
want to express that I think we are making a mistake if we pass 
this bill and go back to a situation where we have removed 
discretion from judges once again. We have been through this 
over and over again. There seems to be a consistent tug of war 
between whether we think we as legislators can decide what 
procedural consequences should take place in a courtroom 
without giving judges any discretion and control over their 
courtrooms, or whether judges are better positioned to do that. 
I think we have consistently politicized that and that the 
right decision was made originally when we went away from this 
back in 1993 to give judges more discretion and not make these 
penalties mandatory.
    Judges have the authority to prevent frivolous lawsuits, 
prevent frivolous conduct in their courts, and I think we ought 
to allow them to do that. When we cast these broad ``one size 
fits all'' rules and make a certain course of action mandatory 
in every single case, we are ignoring what is just in cases, 
and I think judges are better positioned to know that, 
observing the conduct in their courtroom and making good, 
judicious decisions about it.
    Now, do judges make bad decisions sometimes? Yes, they do, 
but I think we are about to make a bad decision by telling 
every judge in America that you must have a mandatory 
consequence for something that is going on in your case, in 
your courtroom. And it may have the reverse effect because it 
may make judges less likely to find that there was frivolous 
actions around the edges so that they don't get into this 
mandatory situation. I think we are seeing that in mandatory 
sentencing now, and I think we are making a real serious 
mistake to go in this direction.
    And I will yield back.
    Chairman Sensenbrenner. Gentleman from California, Mr. 
Berman, for what purpose do you seek recognition.
    Mr. Berman. Move to strike the last word.
    Chairman Sensenbrenner. Gentleman is recognized for 5 
minutes.
    Mr. Berman. Mr. Chairman, I don't entirely agree with my 
friend from North Carolina on the subject. I think there is a 
great deal of discretion remaining. The court has the 
discretion to decide whether or not a particular pleading or 
motion is frivolous and by its very nature that involves a 
great deal of discretion in the judge. And then, unlike 
mandatory sentencing, which provides whole minimum sentences 
regardless of the factual situation or of the particular case, 
this allows the judge to decide the appropriate sanction. There 
is no effort to say that a finding of rule 11 violation has a 
minimum financial burden or an automatic suspension or 
disbarment.
    So I think there is a part of this bill that makes a great 
deal of sense, and I also think it answers. I think, giving 
Rule 11 teeth deals with the issue of abuse of the process. I 
think it is a far better approach than some of the tort reform 
measures that I have seen pushed through this Committee. My 
concern, and the reason I have to vote no on this bill is 
because of the provisions that are unrelated to Rule 11. All of 
a sudden, in a bill that is packaged as a bill dealing with 
frivolous lawsuits, there are all these rules on venue, not 
just in Federal court, but in State courts.
    I don't know if a particular State rule on where you can 
bring a personal injury action is appropriate or not 
appropriate. The notion that we are now going to automatically 
amend 50 State laws and rules of State courts on venue for 
personal injury actions, even where they are said to involve 
interstate commerce, makes no sense to me whatsoever, absent 
some compelling case that all 50 of these States have 
inappropriate rules that allow what the sponsors call forum 
shopping.
    What happens in a--let's assume Boeing, the principal 
office is in Chicago, the product is manufactured in the State 
of Washington, and designed in the State of Washington. A 
plaintiff who resides in North Carolina wants to bring a 
lawsuit where Boeing has most of its operations in the State of 
Washington, where the particular plane was manufactured on a 
products liability theory. The notion that that is the 
inappropriate place because it is not where the injury 
occurred, and it is not where the plaintiff resides, and it is 
not where Boeing's principal office is, maybe that is right and 
maybe it isn't.
    The notion that we are going to, in one fell swoop, 
automatically restrict in any other place where you can bring 
that action, without any demonstration that it is simply for 
the purposes of finding a judge that is plaintiff-oriented, 
especially when there is nothing done here to limit the ability 
of Defendants to remove to Federal Court any cases, shows, I 
think, a bias on one side of an issue and conflict.
    So, I would implore the sponsor of the bill, my friend from 
Texas, to limit this to sections 1, 2 and 3, and to eliminate 
section 4, which opens up a whole can of worms, has nothing to 
do with frivolous lawsuits, and seeks to amend personal and 
State court personal injury actions in cases involving 
interstate commerce in a way that we have no idea what it means 
in terms of which county in a particular State you can bring 
this action in.
    If you proceed with this, I have no doubt you have the 
votes to pass it in the House and out of this Committee. But 
once again, you will have overreached. You have a good idea, 
but you can't resist adding more and more on to it, and this 
will be another in a trail of 10 years of bills put out in the 
name of reform that never come into law, and they never do, 
whether it is class action, medical malpractice, joint and 
several liability or all of the dozens of other cases, 
elimination of Federal jurisdiction that you try because you, 
even when you have a reasonable idea, you add on stuff and go 
too far and make it another one-house bill.
    Take out Section 4 on forum shopping, make that the subject 
of a separate hearing in the appropriate Subcommittee of 
Judiciary about whether it is appropriate, and move ahead with 
your efforts on Rule 11, and you will have my support.
    Mr. Chabot. Will the gentleman yield?
    Mr. Berman. I would happy to.
    Mr. Chabot. I think the gentleman--the point is most of 
these don't become law because they get blocked by the trial 
lawyers over in the other body. That is what happens.
    Mr. Berman. No. I will give you--if I may reclaim my time.
    Chairman Sensenbrenner. The gentleman's time has expired.
    Mr. Delahunt. I move to strike the last word.
    Chairman Sensenbrenner. Does the gentleman from California 
want 2 additional minutes?
    Mr. Berman. I would like one additional minute.
    Chairman Sensenbrenner. Without objection. You may have 5.
    Mr. Berman. I will let Mr. Delahunt seek recognition. With 
that offer, I can't----
    Chairman Sensenbrenner. Does the gentleman yield back his 
additional minute?
    Mr. Berman. I do.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Massachusetts seek recognition?
    Mr. Delahunt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Delahunt. I yield to the gentleman from California as 
much time as he may consume.
    Mr. Berman. To simply characterize it in that fashion, as 
trial lawyers defeating the bill in the Senate, that demeans 
the integrity of a lot of different people. When you come 
forward on medical malpractice legislation, and you make some 
cases regarding different aspects of abuse and reasons why 
healthcare costs could be contained, but you will not look at 
any of the provisions or moderate any of those provisions 
regarding what the cap should be or how you should deal with 
the collateral source rule.
    When you deal with class actions in a fashion that 
essentially removes State role and any meaningful fashion 
without providing any kinds of balance, you go too far. One day 
you will get the message that you keep having one House bill 
because you always add stuff on. Deal with the merits of the 
forum shopping issue. Why does that need to be in here? You 
promote it as a Rule 11 bill in effort to give Rule 11 some 
teeth to deal with the frivolous lawsuits and then you have to 
add this other section--which raises a whole series of other 
questions--which involves really an unprecedented intrusion 
into Federalism by seeking to regulate how State laws, State 
legislatures and State courts decide venue issues on personal 
injury cases handled in State courts.
    Why? Why go that far? You are risking a partisan, more of a 
partisan fight here and a sure death in the Senate. It isn't 
simply because of a particular interest group's lobbying. It is 
because you guys never let a reasonable idea be enough. You 
always want to push it further, go to an extreme in order to 
make a point, a point that I don't think you are making very 
well.
    I yield back.
    Mr. Delahunt. I am reclaiming my time. I would just like to 
associate myself with the remarks of the gentleman from 
California.
    I think there is opportunity, and I think there is 
opportunity and I think he has articulated well to address some 
of the concerns that have been mentioned by proponents. But, 
again, there is simply an overreaching effort here. I am not 
going to suggest it is for political motives, but some would 
infer that it might be.
    Mr. Watt. Would the gentleman yield to me so I can suggest 
that?
    Mr. Delahunt. I will yield to the gentleman from North 
Carolina for purposes of a suggestion.
    Mr. Watt. I think it is quite obvious that they would 
rather have the issue than a bill that does some constructive 
things to reduce frivolous lawsuits----
    Mr. Delahunt. Well, reclaiming my time----
    Mr. Watt. --instead of blaming that on somebody in the 
Senate, but--so, I don't think I am hesitant to suggest that 
that is the case.
    Mr. Delahunt. Well, reclaiming my time.
    As I look down the list of the bills that we are 
considering here today, one might describe the agenda as the 
frivolous anti-Plaintiff legislative day in the Judiciary 
Committee. I mean, we all know what this is about. It is about 
an election cycle.
    But I really do think that, you know, there are 
opportunities are as put forth by Members such as Mr. Berman, 
where there could be a consensus and where good sound public 
policy could be crafted. The direction that we are going, we 
might as well just simply eliminate the jurisdiction of State 
courts.
    Why don't we just simply file an amendment to the 
Constitution, the United States Constitution, repealing--if the 
gentleman from North Carolina could help me, what is the States 
rights amendment of the U.S. Constitution, because I knew you 
were the Chair of that caucus?
    Mr. Scott. What is the question again?
    Mr. Delahunt. Well, if the gentleman had been listening to 
me, I think it is the 10th amendment.
    Mr. Watt. I try to tune out all of that, a good portion of 
the morning, but go ahead.
    Mr. Delahunt. Well, is it the 10th amendment that invests 
in States' certain rights, that reserve certain rights?
    Mr. Watt. Last time I checked. I think they may have 
repealed it by now.
    Mr. Delahunt. At least in terms of the Federalism as it 
applies to the judicial systems of the States and the Federal 
Government, the direction that we have been going in, since I 
served in this Committee is de facto elimination, a repeal of 
the 10th amendment as it applies----
    Chairman Sensenbrenner. The time of the gentleman has 
expired.
    Mr. Schiff. Mr. Chairman.
    Chairman Sensenbrenner. The gentleman from California, Mr. 
Schiff, has had very little to say today.
    Mr. Schiff. I thank you for not applauding that.
    Mr. Chairman, I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Schiff. My colleague from Massachusetts poses the 
question of why don't we just stop fooling around and remove 
the jurisdiction of the State courts. The problem with that is 
we have already moved to remove the jurisdiction of the Federal 
courts. We did that last month.
    And pretty soon, we will be left with no jurisdiction of 
any court. I have often remarked in Committee my concern about 
the degradation of relationship between this Congress and the 
courts in general. In addition to the concern raised by my 
colleague from California, Mr. Berman, over really an 
impressive interference with the venue decisions that are made 
by the States and in the State courts, I am also troubled by 
the intrusion that we are making and the way we are making it 
into the Federal courts promulgations of rules over their own 
procedures.
    We passed in Congress some years ago the rules enabling act 
that establish certain procedures for how rules would be 
adopted in the Federal courts. Under those congressionally-
mandated procedures, those new rules will, in the first 
instance be considered and drafted by the U.S. Judicial 
conference, thereafter be submitted for public comment and 
reconsideration, then be submitted to the U.S. Supreme Court 
for consideration and promulgation, and finally they are sent 
to Congress which retains the power to veto any rule before it 
goes into effect.
    We have bypassed all of that. In fact, in section 2 of this 
bill gone way beyond bypassing that; in fact, we are reversing 
exactly that process that was actually undertaken. This section 
2 of the bill was something that was enacted in 1983, evidently 
caused great problems within the judiciary, and then was undone 
in 1993. The judicial conference has written to the Congress 
with respect to this bill that undoing the rule 1993 Rule 11 
amendments, even though no serious problem has been brought to 
the judicial conference rules attention would frustrate the 
purpose and the intent of the Rules Enabling Act.
    Section 2 of H.R. 4571 would effectively reinstate the 1983 
version of Rule 11 that proved so contentious and wasted so 
much time and energy of the bar and bench. Section 2 indeed, in 
some ways, seems to go beyond the provisions that created 
serious problems with the 1983 rule. It may cause even greater 
mischief. Rule 11 in its present form has proven effective and 
should not be revised. That is what the judicial conference has 
to say.
    Basically, what we are contemplating here, and, frankly, 
when I first read this proposal, it struck me at a gut level as 
something very worthwhile consideration. I didn't know the 
history of it. When you look at the history of it, you read 
that this was tried for 10 years and that it spawned a cottage 
industry where someone would file the Rule 11 motion, the 
opposing counsel would then file the Rule 11 motion on the Rule 
11 motion, and you would have litigation over whose Rule 11 
motion should succeed. That when there were mandatory 
attorneys' fees and mandatory imposition of sanctions, that 
basically you end up creating this cottage industry in Rule 11 
motions. Revenue, the bench says this was a waste of time. In 
fact, the bench said it created more dollars of unnecessary 
litigation.
    Now that is, I would admit, a kind of counterintuitive 
result. I would not have anticipated that. But that has been 
the experience of the judiciary, and, to my experience, no one 
has contradicted that. No one has said the evidence the 
judiciary put forward, the surveys of judges were somehow wrong 
in error, missed the point or that the judicial conference now 
takes a different point of that.
    Mr. Smith. Would the gentleman from California yield.
    Mr. Schiff. I would be delighted to yield.
    Mr. Smith. I want to point out a couple or surveys that 
were done that the gentleman may not be aware of. For example, 
in 1990 the judicial conference surveyed 750 Federal judges and 
found that 95 percent believed that Rule 11--this is the pre-
1993 rule--did not impede development of the law. 80 percent of 
the judges believed the rule should not--excuse me, 80 percent 
of the judges believed the rule should have been retained in 
its then current form.
    Furthermore, they did another poll after the rule was 
repealed. This survey was done in 1985 and in that survey, two-
thirds of the judges, two thirds of the defense attorneys, and 
66 percent of the other attorneys supported restoring Rule 11's 
compensatory function once again. So we may be looking at 
different surveys, but clearly the judges themselves felt that 
the original revenue was a good rule and regretted changing it.
    Chairman Sensenbrenner. The time of the gentleman from 
California has expired.
    Mr. Schiff. Mr. Chairman, may I request 2 additional 
minutes.
    Chairman Sensenbrenner. Without objection.
    Mr. Schiff. I appreciate the author's comments, but again, 
turning to the views expressed by the judicial conference, 
``experience with the amended rule since 1993 has demonstrated 
a market decline to Rule 11 satellite litigation without any 
noticeable increase in the number of frivolous filings.''
    In June 1995, the Federal Judicial Center conducted a 
survey of 1130 lawyers, 148 judges, on the effect of the 1993 
Rule 11 amendments. 580 attorneys, 120 judges responded. The 
center found general satisfaction with the amended rule. It 
also found that more than 75 percent of the judges and lawyers 
would oppose a provision that would require a court to impose a 
sanction when the rule is violated. A majority of the judges 
and lawyers, both Plaintiffs and Defendant's lawyers believed 
that groundless litigation was handled effectively by judges.
    So I don't understand the disparity in our statistics. But 
I also don't understand why if, the judges do feel, that the 
rule should go back to the form it was in before the 10-year 
bad experience, that the judicial conference is not 
recommending that course, is not initiating the rules, enabling 
act procedures.
    Why they are opposing Congress bypassing their process and 
their point of view. So, again, the gentleman--this doesn't 
seem at odds with what we are hearing directly from the 
judicial conference. I would be more than interested in having 
the judicial conference come and testify and maybe explain the 
statistics shortsighting and in preparation for this hearing.
    And I thank the gentleman for the additional time and yield 
back.
    Chairman Sensenbrenner. Are there further amendments?
    Mr. Watt. Mr. Chairman.
    Chairman Sensenbrenner. The gentleman from North Carolina.
    Mr. Watt. I ask unanimous consent that the letter from the 
Secretary of the Judicial Conference of the United States,\1\ 
dated July 9, 2004 from which Mr. Schiff was reading, be made a 
part of the record.
---------------------------------------------------------------------------
    \1\ See ``Agency Views.''
---------------------------------------------------------------------------
    Chairman Sensenbrenner. Without objection.
    The gentleman from Texas.
    For what purpose do you seek recognition?
    Mr. Smith. Mr. Chairman, I have a unanimous consent request 
that the letter from the American Tort Reform Organization be 
made a part of the record as well as a list, as well of those 
organizations requesting the Lawsuit Reduction Act. Those 
organizations would include the American Medical Association, 
National Association of Manufacturers, National Federation of 
Independent Businesses, National Restaurant Association and the 
Chamber of Congress.
    Thank you, Mr. Chairman.
    Chairman Sensenbrenner. Thank you. Without objection.
    [The material referred to follows:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    
    Are there further amendments? If there are no further 
amendments. The question occurs on the motion to report the 
bill H.R. 4571 favorably as amended.
    All in favor say will say aye.
    Aye.
    Opposed no.
    No.
    Ayes appear to have it.
    Mr. Smith. Mr. Chairman, I would like a rollcall vote.
    Chairman Sensenbrenner. rollcall is ordered.
    Those in favor of the motion to report H.R. 4571 favorably 
as amended will as your name is called answer aye.
    Those opposed, no.
    And the clerk will call the roll.
    The Clerk. Mr. Hyde.
    Mr. Hyde. Aye
    The Clerk. Mr. Hyde votes aye.
    Mr. Coble.
    Mr. Coble. Aye.
    The Clerk. Mr. Coble votes aye.
    Mr. Smith.
    Mr. Smith. Aye.
    The Clerk. Mr. Smith votes aye.
    Mr. Gallegly.
    Mr. Gallegly. Aye.
    The Clerk. Mr. Gallegly votes aye.
    Mr. Goodlatte.
    Mr. Goodlatte. Aye.
    The Clerk. Mr. Goodlatte votes aye.
    Mr. Chabot.
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot votes aye.
    Mr. Jenkins.
    Mr. Jenkins. Aye.
    The Clerk. Mr. Jenkins votes aye.
    Mr. Bachus.
    Mr. Bachus. Aye.
    The Clerk. Mr. Bachus votes aye.
    Mr. Hostettler.
    Mr. Hostettler. Aye.
    The Clerk. Mr. Hostettler votes aye.
    Mr. Green.
    Mr. Green. Aye.
    The Clerk. Mr. Green votes aye.
    Mr. Keller.
    Mr. Keller. Aye.
    The Clerk. Mr. Keller votes aye.
    Ms. Hart.
    Ms. Hart. Aye.
    The Clerk. Ms. Hart votes aye.
    Mr. Flake.
    [no response.]
    The Clerk. Mr. Pence.
    [no response.]
    The Clerk. Mr. Forbes.
    Mr. Forbes. Aye.
    The Clerk. Mr. Forbes votes aye.
    Mr. King.
    Mr. King. Aye.
    The Clerk. Mr. King votes aye.
    Mr. Carter.
    Mr. Carter. Aye.
    The Clerk. Mr. Carter votes aye.
    Mr. Feeney.
    Mr. Feeney. Aye.
    The Clerk. Mr. Feeney votes aye.
    Mrs. Blackburn.
    Mrs. Blackburn. Aye.
    The Clerk. Mrs. Blackburn votes aye.
    Mr. Conyers.
    [no response.]
    The Clerk. Mr. Berman
    Mr. Berman. No.
    The Clerk. Mr. Berman votes no.
    Mr. Boucher.
    [no response.]
    The Clerk. Mr. Nadler.
    Mr. Nadler. No.
    The Clerk. Mr. Nadler votes no.
    Mr. Scott.
    Mr. Scott. No.
    The Clerk. Mr. Scott votes no.
    Mr. Watt.
    Mr. Watt. No.
    The Clerk. Mr. Watt votes no.
    Ms. Lofgren.
    Ms. Lofgren. No.
    The Clerk. Ms. Lofgren votes no.
    Ms. Jackson Lee.
    [no response.]
    The Clerk. Ms. Waters.
    [no response.]
    The Clerk. Mr. Meehan.
    [no response.]
    The Clerk. Mr. Delahunt.
    Mr. Delahunt. No.
    The Clerk. Mr. Delahunt votes no.
    Mr. Wexler.
    [no response.]
    The Clerk. Ms. Baldwin
    Ms. Baldwin. No.
    The Clerk. Ms. Baldwin votes no.
    Mr. Weiner.
    [no response.]
    The Clerk.Mr. Schiff.
    Mr. Schiff. No.
    The Clerk. Mr. Schiff votes no.
    Ms. Sanchez.
    Ms. Sanchez. No.
    The Clerk. Mr. Chairman.
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman votes aye.
    Chairman Sensenbrenner. Members in the Chamber who wish to 
cast or change their votes.
    The gentleman from Florida, Mr. Wexler.
    Mr. Wexler. No, please.
    The Clerk. Mr. Wexler, no.
    Chairman Sensenbrenner. Further Members who wish to cast or 
change their votes. If not, the clerk will report.
    The Clerk. Mr. Chairman, there are 18 ayes and 10 noes.
    Chairman Sensenbrenner. Then the motion to report favorably 
is agreed to.
    Without objection the bill will be reported favorably to 
the House in the form of a single amendment in the nature of a 
substitute incorporating the amendments adopted here today. 
Without objection the Chairman is moved to go to conference 
pursuant to House rules. Without objection the staff is 
directed to make any technical and conforming changes. That all 
Members will be given 2 days as provided by the House rules in 
which to submit additional supplementing or minority views.

                            DISSENTING VIEWS

    We strongly oppose H.R. 4571, the so-called ``Frivolous 
Lawsuit Reduction Act.''
    The legislation will have a significant, adverse impact on 
the ability of civil rights plaintiffs to seek recourse in our 
courts, will operate to benefit foreign corporate defendants at 
the expense of their domestic counterparts, and will massively 
skew the playing field against injured victims. This sweeping 
overhaul of our civil justice system is being completed on the 
thinnest conceivable record of a single cursory hearing and the 
basis of a few anecdotes and hypothetical concerns. The 
legislation is opposed by numerous civil rights, consumer and 
judicial groups, including the United States Judicial 
Conference, the NAACP, Public Citizen, the Alliance for 
Justice, People for the American Way, the American Association 
of People with Disabilities, the Lawyers' Committee for Civil 
Rights Under Law, the American Bar Association, the National 
Conference on State Legislatures, National Partnership for 
Women, National Women's Law Center, the Center for Justice & 
Democracy, Consumers Union, National Association of Consumer 
Advocates, USAction, U.S. PIRG, and the Legal Defense Fund. For 
these and the reasons set forth herein, we dissent from this 
legislation.

                       DESCRIPTION OF LEGISLATION

    Section 2 of the bill makes a number of changes to Rule 11 
of the Federal Rules of Civil Procedure concerning attorney 
sanctions for improper pleadings and motions.\1\ First, it 
would revert to the pre-1993 rules by removing a court's 
discretion to impose sanctions on improper and frivolous 
pleadings (e.g., it makes the sanctions mandatory, rather than 
discretionary). Second, it would eliminate the current ``safe 
harbor'' provision permitting attorneys to withdraw improper or 
frivolous motions 21 days after they are challenged by opposing 
counsel.\2\ Third, it would eliminate the provision providing 
that the sanction rules do not apply to discovery 
violations.\3\
---------------------------------------------------------------------------
    \1\ Since these changes amend the Federal Rules of Civil Procedure, 
they are all subject to modification or revision by the federal 
judiciary pursuant to the Rules Enabling Act.
    \2\ Currently, no withdrawal right exists for court-initiated 
sanctions.
    \3\ Such violations are already subject to mandatory sanctions 
under Rule 26(f) of the Federal Rules.
---------------------------------------------------------------------------
    Section 3 of the bill applies this new Federal Rule 11 to 
state cases that affect interstate commerce and requires the 
judges to make this determination within 30 days after the 
filing of the motion for sanctions.
    Section 4 of the bill alters both federal and state 
jurisdiction and venue rules. It provides that plaintiffs may 
``only'' be filed in the state and county (or federal district) 
where the plaintiff resides, where the injury took place, or 
where the defendant's principal place of business is located. 
As such, it eliminates the possibility of a harmed victim 
pursuing a corporate defendant where it is incorporated and in 
many states where it is found to be doing business. It also 
contains a ``most appropriate forum'' provision, which mandates 
dismissal of the lawsuit (rather than transfer) if the court 
determines another forum ``would be the most appropriate 
forum.''
    Section 5 of the bill is a rule of construction, stating 
that the proposed Rule 11 modifications are not to be construed 
to bar or impede the assertion or development of ``new claims 
or remedies under the civil rights laws.
    Section 6, added to the bill by an amendment offered by Mr. 
Keller, requires judges to sanction an attorney if the court 
determines that the attorney has violated Rule 11 three times 
in his or her entire career (a so-called ``three strikes and 
you're out'' provision). The required sanction is suspension 
from the practice of law in that district court for at least 
one year. This sanction appears to apply retroactively, to 
violations that occurred before their new statute takes effect.
    Finally, Section 7, added to the bill by an amendment 
offered by Mr. Scott, provides for enhanced penalties for 
parties who destroy documents concerning a legal proceeding.
I. The Rule 11 and the ``Three Strikes and You're Out'' provision will 
        have a chilling impact on civil rights actions
    By requiring a mandatory sanctions regime that would apply 
to civil rights cases, H.R. 4571 will chill many legitimate and 
important civil rights actions. This is due to the fact that 
much if not most of the impetus for the 1993 changes stemmed 
from abuses by defendants in civil rights cases--namely that 
civil rights defendants were choosing to harass civil rights 
plaintiffs filing a series of rule 11 motions intended to slow 
down and impede meritorious cases.
    For example, a 1991 Federal Judicial Study: The Federal 
Judicial Center's Study of Rule 11 found that ``The incidence 
of Rule 11 motions or sua sponte orders is higher in civil 
rights cases than in some other types of cases.'' Another study 
showed that ``civil rights cases made up 11.4% of federal cases 
filed, [and] that 22.7% of the cases in which sanctions had 
been imposed were civil rights cases.''\4\
---------------------------------------------------------------------------
    \4\ Lawrence C. Marshall et. al., The Use and Impact of Rule 11, 86 
Nw. U.L. Rev. 943 (1992).
---------------------------------------------------------------------------
    Another recent study found that ``revisions to Rule 11 (the 
1993 amendments) alleviate what was perceived as the rule's 
disproportionate impact on civil rights plaintiffs. Under the 
1983 version, both the fact that sanctions were mandatory and 
that there was a significant risk that a large attorney fee 
award would be the sanction of choice were believed to have had 
a stifling effect on the fling of legitimate civil rights 
claims . . . Furthermore, there is ample evidence to suggest 
that plaintiffs and civil rights plaintiffs in particular, were 
far more likelythan defendants to be the targets of Rule 11 
motions and the recipients of sanctions.'' \5\
---------------------------------------------------------------------------
    \5\ Ending Illegitimate Advocacy: Reinvigorating Rule 11 Through 
Enhancement of the Ethical Duty to Report, 62 OHSLJ 1568, (2001).
---------------------------------------------------------------------------
    As Professor Theodore Eisenberg, Professor of Law, Cornell 
University testified before the House Judiciary Committee, ``A 
Congress considering reinstating the fee-shifting aspect of 
Rule 11 in the name of tort reform should understand what it 
will be doing. It will be discouraging the civil rights cases 
disproportionately affected by old Rule 11 in the name of 
addressing purported abuse in an area of law, personal injury 
tort, found to have less abuse than other areas.'' \6\
---------------------------------------------------------------------------
    \6\ Uncertain and Certain Litigation Abuses, 2004: Hearings on 
``Safeguarding Americans from a Legal Culture of Fear: Approaches to 
Limiting Lawsuit Abuse'' Before the Comm. on the Judiciary, 108th Cong. 
(2004) (statement of Theodore Eisenberg, Professor, Cornell 
University).
---------------------------------------------------------------------------
    A good example of the effect of this rule on civil rights 
cases was cited by the Honorable Robert L. Carter, United 
States District Court Judge for the Southern District of New 
York, when he stated: ``I have no doubt that the Supreme 
Court's opportunity to pronounce separate schools inherently 
unequal [in Brown v. Board of Education] would have been 
delayed for a decade had my colleagues and I been required, 
upon pain of potential sanctions, to plead our legal theory 
explicitly from the start.'' \7\
---------------------------------------------------------------------------
    \7\ Symposium, The 50th Anniversary of the Federal Rules of Civil 
Procedure, 1938-1988, The Federal Rules of Civil Procedure as a 
Vindicator of Civil Rights, 137 U. Pa. L. Rev. 2179, 2193 (June 1989).
---------------------------------------------------------------------------
    The language in the bill that purports to mitigate the 
damage to civil rights cases is not sufficient to alleviate our 
concerns. Section 5 of the bill states that the proposed Rule 
11 changes shall not be construed to ``bar or impede the 
assertion or development of new claims or remedies under 
Federal, State, or local civil rights law.'' The problem is the 
language does not clearly and simply exempt civil rights and 
discrimination cases, as should be the case. Determining what a 
``new claim or remedy'' is will be a daunting and complex issue 
for most courts and clearly does not cover all civil rights 
cases in any event.
    For similar reasons we object to Section 6, added to the 
bill in the markup by Rep. Keller, which provides that if a 
court finds that an attorney has violated Rule 11 three times, 
the court must suspend the attorney from practice for at least 
one year. We object to this provision because like the 
Majority's Rule 11 changes, it will have a chilling effect on 
civil rights cases. Here the impact could well be worse than 
the Rule 11 amendments, because there is no rule of 
construction concerning civil rights to mitigate the harm to 
any extent. Even more egregiously, as drafted, the three 
strikes penalty would appear to apply on a retroactive basis. 
This means a civil rights attorney could have his license 
suspended for violations that occurred before this penalty 
regime even existed.\8\
---------------------------------------------------------------------------
    \8\ Mr. Keller (R-FL) claims that he offered this provision because 
it is based on language offered by Senator Edwards, who introduced a 
bill with Senator Durbin providing for a ``three strikes and you're 
out'' attorney sanctions regime for medical malpractice cases. S. 1374, 
108th Cong. (2004). The problem with this line of argument is that the 
Senate Republicans rejected the Edwards proposal. Moreover, the Edwards 
proposal specifies that upon the third frivolous filing, the judge is 
required to refer the attorney to disciplinary proceedings. It does not 
mandate a one-year suspension, but rather leaves that decision to the 
State Bar.
---------------------------------------------------------------------------
    Finally, H.R. 4571 does not provide an attorney with the 
ability to appeal a Rule 11 sanction. History has demonstrated 
that civil rights lawsuits are extremely unpopular, 
particularly in certain parts of the country where some judges 
almost automatically consider civil rights cases frivolous. In 
such courts, plaintiffs' attorneys would unreasonably be 
subject to sanctions, and even suspension, without appeal 
contrary to the purpose of Rule 11.

II. The sweeping new forum shopping provision will unfairly benefit 
        foreign corporations to the disadvantage of their U.S. 
        competitors and unfairly omits business litigation from its 
        scope

            A. Section 4 will benefit foreign corporations
    We are particularly offended by Section 4 of the bill, 
which would recast state and federal court jurisdiction and 
venue in personal injury cases.
    Our most significant concern is that the provision would 
operate to provide a litigation and financial windfall to 
foreign corporations at the expense of their domestic 
competitors. This is because, instead of permitting claims to 
be filed wherever a corporation does business or has minimum 
contacts, as most state long-arm statutes provide, Section 4 
only permits the suit to be brought where the defendant's 
principal place of business is located.\9\ This means that it 
will be far more difficult to pursue a personal injury or 
product liability action against a foreign corporation in the 
United States.
---------------------------------------------------------------------------
    \9\ As a threshold, it is quite problematic even determining how 
the forum shopping provision would apply. Depending upon the meaning of 
the term ``only'' in the phrase ``may be filed only in the state . . 
.,'' the provision could be read as (1) creating a new grant of 
jurisdiction and venue, or (2) merely limiting the current rules to the 
specified new rules. If it is a new grant of jurisdiction and venue, 
the section would serve to authorize suits wherever plaintiffs reside 
or were injured, even if there are no minimum contacts with the 
defendant. This would lead to an explosion in cases, and would decimate 
years of Supreme Court decisions holding that defendants may only be 
sued where jurisdiction lies (Pennoyer v. Neff, 20 A.L.R. 3d (1201)) or 
where the defendant has minimum contacts (International Shoe Co. v. 
Washington, 326 U.S. 310 (1945)). If the provision operates as a limit 
on the current rules, it would represent a significant federal 
usurpation of state court rules, possibly in violation of the Commerce 
Clause and the Tenth Amendment. See e.g., United States v. Morrison, 
529 U.S. 598 (2000) and United States v. Lopez, 514 U.S. 549 (1995), 
striking down the Violence Against Women Act and the Gun Free School 
Zone Act as unconstitutional, holding that Congress lacked the 
authority to pass laws that have only an attenuated effect on 
interstate commerce.
---------------------------------------------------------------------------
    Consider the case of a U.S. citizen that is harmed by a 
product produced or manufactured by a foreign competitor. If 
that foreign company transacts business or has minimum contacts 
in a state other than the state of the plaintiff's residence or 
where the injury occurred, as if often the case, any suit 
against the foreign company would be banned by H.R. 4571. In 
other words, the harmed U.S. citizen would have no recourse 
against a foreign corporation, whereas he or she would have 
recourse against a comparable U.S. corporation. This is unfair 
to both the U.S. citizen and all U.S. companies that compete 
against the foreign firm. It is hard for us to understand why 
the Congress would want to pass a law that grants foreign 
companies such a financial windfall at the expense of U.S. 
firms.
    The bill forces this absurd result because it is drafted 
from the premise that every personal injury suit is brought 
against a business defendant headquartered in the U.S. In the 
real world, of course, this is not the case. The result is that 
not only do foreign corporations receive a financial windfall 
under the bill, but so does every possible defendant who is not 
a U.S. corporation. Thus legal actions brought against 
individuals who do not have minimum contacts with the state the 
victim resides in or is injured in, but do have contacts with 
other states, would be barred by H.R. 4571. Similarly, personal 
injury cases brought against aliens, foreign states, and state 
and federal officials all would be much harder, if not 
impossible, to pursue if H.R. 4571 were to become law.\10\
---------------------------------------------------------------------------
    \10\ It is instructive to consider Title 28, Section 1391 of the 
United States Code, which governs venue in federal courts, provides for 
jurisdiction when the action is based on diversity of citizenship or 
federal question, and specifies where the suit may be filed if the 
defendant is a corporation, if the defendant is an alien, if the 
defendant is an officer or employee of the United States or any agency, 
acting in his official capacity, or if the defendant is a foreign 
state. By contrast, most of these categories of defendants are simply 
ignored by Section 4 of H.R. 4571.
---------------------------------------------------------------------------

B. Section 4 will place victims at a significant litigation 
        disadvantage compared with corporate defendants

    It is difficult to consider H.R. 4571 as even-handed 
litigation reform, when it is drafted to so obviously benefit 
corporate defendants.
    Consider the operation of subsection (b), requiring a court 
to dismiss properly filed legal claims if it determines another 
forum would be ``the most appropriate.'' We are aware of no 
legal precedent for a court having such open-ended authority to 
dismiss lawful actions. The problemsand unfairness with this 
provision are many. First, of course, is the ambiguous, open-ended 
wording. The legislation gives absolutely no guidance as to what a 
court is to take into account in determining which court is ``most 
appropriate.'' Is it nexus to the injury? Nexus to the plaintiff? The 
defendant? The bulk of other claims? Until this issue is worked out, 
significant hardships will no doubt result. While defendants do not 
mind waiting, the confusion would work a significant disadvantage to 
harmed victims in immediate need of compensation.
    Beyond this, mandating dismissal would seem to be an 
extreme and costly remedy as compared to simply transferring 
the case to another court. It is also unclear from the drafting 
whether or not the finding of the first court that a second 
court is most appropriate binds the second court under general 
rules of preclusion. If it is binding, the first court might 
make an egregious error and stick an inappropriate second court 
with a case that does not belong there. Or, if the decision is 
not binding, then plaintiffs' lawsuits could get bounced around 
by a string of courts all asserting that another court is most 
appropriate. It is also unclear whether a dismissal is 
appealable, which could cause huge delays. Even more 
problematic, the provision is unclear as to whether the statute 
of limitations would be tolled during such appeal (the statute 
is tolled until the claim is dismissed under the bill, but what 
about afterwards until a new claim is filed?). The provision 
will also cause delays because it requires the state court to 
make another time consuming and costly determination before 
accepting or dismissing the case. Again, these delays should 
not bother a defendant, but what about a victim who may be in 
drastic need of medical attention and expenses?
    Beyond this, it seems fundamentally unfair for Section 4 to 
apply only to personal injury lawsuits when studies show that 
business lawsuits are far more prevalent and costly. In fact, a 
study by Public Citizen shows that businesses file four times 
as many lawsuits as do individuals represented by trial 
lawyers.\11\ Another paper, reported by the National Law 
Journal in November 2003, showed that of the top ten jury 
verdicts rendered thus far that year, 8 of the 10 involved 
businesses suing other businesses--accounting for $3.12 billion 
of the total $3.54 billion awarded by the ten juries. Only two 
of the ten cases were brought by individuals for personal 
injuries.\12\ If the Majority believes so strongly in the 
efficacy of this forum shopping provision, why are they 
unwilling to apply it across the board?
---------------------------------------------------------------------------
    \11\ America's Litigious Businesses, September 2004, study on file 
with Judiciary Committee.
    \12\ It is worth noting that Public Citizen's survey of the 100 
most recent decisions by federal judges finding Rule 11 violations 
found that businesses were almost twice as likely as personal injury 
plaintiffs to be sanctioned for engaging in frivolous litigation.
---------------------------------------------------------------------------

                               CONCLUSION

    We are happy to work with the Majority in reigning in 
frivolous lawsuits, but surely we can go after the frivolous 
cases without harming the ability of civil rights actions to be 
brought. We are willing to consider the issue of forum 
shopping, if it can be documented, but surely we can do better 
than passing legislation which so explicitly benefits foreign 
corporations at the expense of their U.S. counterparts and so 
massively tilts the playing field in favor of defendants. We 
urge the Majority to reconsider this ill-timed and ill-
considered legislation.
                                   John Conyers, Jr.
                                   Robert C. Scott.
                                   Maxine Waters.
                                   Tammy Baldwin.
                                   Jerrold Nadler.
                                   Melvin L. Watt.
                                   Sheila Jackson Lee.
                                   Robert Wexler.
                                   Anthony D. Weiner.
                                   Linda T. Sanchez.