H. Rept. 109-123 - 109th Congress (2005-2006)
June 14, 2005, As Reported by the Judiciary Committee

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House Report 109-123 - LAWSUIT ABUSE REDUCTION ACT OF 2005




[House Report 109-123]
[From the U.S. Government Printing Office]



109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    109-123

======================================================================



 
                  LAWSUIT ABUSE REDUCTION ACT OF 2005

                                _______
                                

 June 14, 2005.--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

                    ADDITIONAL AND DISSENTING VIEWS

                        [To accompany H.R. 420]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 420) to amend Rule 11 of the Federal Rules of Civil 
Procedure to improve attorney accountability, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     3
Background and Need for the Legislation..........................     5
Hearings.........................................................    45
Committee Consideration..........................................    45
Vote of the Committee............................................    45
Committee Oversight Findings.....................................    47
New Budget Authority and Tax Expenditures........................    47
Congressional Budget Office Cost Estimate........................    47
Performance Goals and Objectives.................................    48
Constitutional Authority Statement...............................    49
Section-by-Section Analysis and Discussion.......................    49
Changes in Existing Law Made by the Bill, as Reported............    50
Markup Transcript................................................    51
Additional Views.................................................   109
Dissenting Views.................................................   111

                             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 
2005''.

SEC. 2. ATTORNEY ACCOUNTABILITY.

    Rule 11(c) of the Federal Rules of Civil Procedure is amended--
            (1) 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 pay the 
        other party or parties 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.'';
            (2) in paragraph (1)(A)--
                    (A) by striking ``Rule 5'' and all that follows 
                through ``corrected.'' and inserting ``Rule 5.''; and
                    (B) by striking ``the court may award'' and 
                inserting ``the court shall award''; and
            (3) 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.''.

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 substantially 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 substantially 
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;
            (2) the alleged injury or circumstances giving rise to the 
        personal injury claim allegedly occurred;
            (3) the defendant's principal place of business is located, 
        if the defendant is a corporation; or
            (4) the defendant resides, if the defendant is an 
        individual.
    (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. PRESUMPTION OF RULE 11 VIOLATION FOR REPEATEDLY RELITIGATING 
                    SAME ISSUE.

    Whenever a party attempts to litigate, in any forum, an issue that 
the party has already litigated and lost on the merits on 3 consecutive 
prior occasions, there shall be a rebuttable presumption that the 
attempt is in violation of Rule 11 of the Federal Rules of Civil 
Procedure.

SEC. 8. ENHANCED SANCTIONS FOR DOCUMENT DESTRUCTION.

    (a) In General.--Whoever influences, obstructs, or impedes, or 
endeavors to influence, obstruct, or impede, a pending court proceeding 
through the intentional destruction of documents sought in, and highly 
relevant to, that proceeding--
            (1) shall be punished with mandatory civil sanctions of a 
        degree commensurate with the civil sanctions available under 
        Rule 11 of the Federal Rules of Civil Procedure, in addition to 
        any other civil sanctions that otherwise apply; and
            (2) shall be held in contempt of court and, if an attorney, 
        referred to one or more appropriate State bar associations for 
        disciplinary proceedings.
    (b) Applicability.--This section applies to any court proceeding in 
any Federal or State court that substantially affects interstate 
commerce.

                          Purpose and Summary

    The Lawsuit Abuse Reduction Act of 2005 (``LARA''), H.R. 
420, was introduced by Rep. Lamar Smith. H.R. 420 will restore 
the teeth to Federal Rule of Civil Procedure 11 it 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 a case would have national economic 
consequences that affect interstate commerce. The bill would 
also prevent forum shopping, the nefarious 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. 420 would prevent forum shopping by 
requiring that personal injury cases be brought only in the 
plaintiff's place of residence, where the plaintiff was 
allegedly injured, where the defendant's principal place of 
business is located, or where the defendant resides.
    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) apply Rule 11's provisions 
to state cases a state judge finds affect interstate commerce; 
(5) require that personal injury cases be brought only where 
the plaintiff resides, where the plaintiff was allegedly 
injured, where the defendant's principal place of business is 
located, or where the defendant resides; (6) apply a ``three 
strikes and you're out'' rule to attorneys who commit Rule 11 
violations in Federal district court; (7) impose mandatory 
civil sanctions for document destruction intended to obstruct a 
pending court proceeding; and (8) provide that if a party 
attempts to relitigate a losing claim more than three 
consecutive times, there shall be a rebuttable presumption that 
Rule 11 has been violated.
    H.R. 420 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 of 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, in Section 5, 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.'' The 
development of civil rights claims is thereby explicitly 
protected under the bill's Rule 11 provisions.

                Background and Need for the Legislation

    H.R. 420 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 CULTURAL AND 
                          SOCIAL 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.
---------------------------------------------------------------------------
    Salon.com has chronicled the threat frivolous lawsuits pose 
to a successful program designed to get children to exercise 
more by walking or bike riding to school. According to 
Salon.com:

        [A] new program is rising to the top in the bike-walk 
        hierarchy. It's called Safe Routes to School, a rapidly 
        expanding 4-year-old effort that coordinates 
        transportation, health and education agencies to get 
        children walking and biking to school. Statewide Safe 
        Routes programs are already underway in California, 
        Washington and Wisconsin, and the pending 
        reauthorization of the highway and transit bill, TEA-3, 
        contains a $1 billion appropriation for a Federal Safe 
        Routes to School program.

        ``It has the potential to become one of the best ways 
        to improve conditions for walking and biking,'' said 
        Clark, describing the broad cross-section of Safe 
        Routes supporters, including parents, including parents 
        and teachers, health agencies and urban planners. 
        ``There's an unassailable coalition.''

        Sharon Roerty, director of community programs at the 
        National Center for Bicycling and Walking in Bethseda, 
        Md., concurs. ``Safe Routes to School means a better 
        walking and biking environment for everyone,'' she 
        said. ``We picked schools because that's a motherhood 
        and apple pie. But it could be a senior center; it 
        could be a train station.''

        But if Safe Routes to School is a case study in 
        successful grass-routes organizing, the story behind it 
        also unfolds as a classic--and damning--parable of 
        contemporary American culture .. . . Wendi Kallins, 
        project manager for the Marin County SR2S program, 
        which has become a national model for the burgeoning 
        movement, says parents routinely cite safety as the 
        main reason they prevent their kids from walking or 
        biking to school. But more often than not, parents' 
        safety arguments are like falling down the rabbit hole; 
        plunge deeper, and it gets curiouser and curiouser. 
        Fifty percent of the children hit by cars near schools 
        are hit by vehicles driven by parents of other 
        students, according to the National Highway Traffic 
        Safety Administration. Researchers for the Marin County 
        program found that up to 30 percent of morning traffic 
        is caused by parents driving their children to school. 
        (These figures have since been validated in other parts 
        of the country.) . . .

        Fast forward to the 21st century, where liability 
        insurance for kids who walk or bike to school has 
        become one of the major challenges facing SR2S 
        advocates. In 2002, the Environmental Protection Agency 
        funded a $96,000 Portland project to develop a Walking 
        School Bus--in which groups of kids walk designated 
        routes to school under adult supervision--at a local 
        elementary school. Organizers spent months mapping safe 
        routes, conducting outreach to parents, and running 
        criminal background checks on senior citizens 
        volunteers, only to have the project collapse in the 
        absence of liability coverage for kids who might become 
        injured or go missing. A senior-citizen-led walking 
        school bus in Larkspur, Calif. Met with a similar fact, 
        according to Kallins.

        ``The fact that one would have to even consider kindly 
        senior citizens being sued for walking kids to school 
        says a lot about out culture,'' she observed.\15\
---------------------------------------------------------------------------
    \15\ Linda Baker, ``Walk to School, Yes, But Don't Forget Your 
Lawyer,'' Salon.com (October 13, 2004).
---------------------------------------------------------------------------
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.' '' \16\ ``I'm only a 
        human being,'' she says. ``I'm an educated physician 
        but the miracles are out of my hands.'' \17\
---------------------------------------------------------------------------
    \16\ Stuart Taylor, Jr. and Evan Thomas, ``Civil Wars'' Newsweek 
(December 15, 2003) at 43-44.
    \17\ 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.\18\
---------------------------------------------------------------------------
    \18\ 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.\19\
---------------------------------------------------------------------------
    \19\ 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.'' \20\
---------------------------------------------------------------------------
    \20\ 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.\21\
---------------------------------------------------------------------------
    \21\ Id. 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.\22\
---------------------------------------------------------------------------
    \22\ 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.\23\
---------------------------------------------------------------------------
    \23\ 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.'' \24\
---------------------------------------------------------------------------
    \24\ 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.'' 
\25\
---------------------------------------------------------------------------
    \25\ Ann DiMatteo, ``Families Sue Over Unfair Twirl Tryouts,'' The 
New Haven Register, May 18, 2001.
---------------------------------------------------------------------------
    A student was barred from participating in her high 
school's cheerleading tryouts ``as punishment for passing a 
profane note on a . . . school bus in 2003.'' In response, her 
father hired a lawyer and filed a lawsuit ``saying the 
punishment violated his daughter's constitutional rights.'' An 
appeals court dismissed the lawsuit, agreeing with school 
officials that students ``do not have a constitutional right to 
participate in extra-curricular activities.'' \26\
---------------------------------------------------------------------------
    \26\ Kelly Melhart, ``Court Dismisses Suit over Punishment,'' Fort 
Worth-Star Telegram (April 19, 2005).
---------------------------------------------------------------------------
    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.'' \27\
---------------------------------------------------------------------------
    \27\ Dave Sommers, ``Legal Pitch,'' The Trentonian, May 1, 2001.
---------------------------------------------------------------------------
    ABC News reports 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.'' \28\
---------------------------------------------------------------------------
    \28\ 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.\29\ Yet another lawsuit 
was filed against Major League Baseball for injuries resulting 
from being hit by a practice ball before Game One of the 2000 
World Series.\30\
---------------------------------------------------------------------------
    \29\ Philip K. Howard, The Collapse of the Common Good: How 
America's Lawsuit Culture Undermines Our Freedom (2001) at 46.
    \30\ Zach Haberman, ``Fan Blinded by Ball Sues Yanks for $5M,'' The 
New York Post (April 11, 2005).
---------------------------------------------------------------------------
Playgrounds
    The lawsuit culture is even changing the traditional 
American landscape: playgrounds are increasingly removing 
seesaws for fear of liability.\31\ According to Newsweek:
---------------------------------------------------------------------------
    \31\ 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.\32\
---------------------------------------------------------------------------
    \32\ 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.'' \33\
---------------------------------------------------------------------------
    \33\ 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.'' \34\ A culture of legal fear is actually 
reducing the opportunities of American children to burn 
calories in playgrounds.
---------------------------------------------------------------------------
    \34\ 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.\35\
---------------------------------------------------------------------------
    \35\ 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.\36\ 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.'' \37\
---------------------------------------------------------------------------
    \36\ See ``Fine Filers of Frivolous Lawsuits,'' The Detroit News 
(February 24, 2004).
    \37\ Julia Moskin, ``Crave Thin Mints?'' The New York Times (March 
14, 2004).
---------------------------------------------------------------------------
Santa Clause
    Even Santa Claus lives under a constant threat of legal 
harassment. As the Los Angeles Times quoted one Santa Claus, 
``When I started doing this years ago, I never even thought 
about liability . . . But Santas have a pretty good chance of 
getting sued . . .'' \38\
---------------------------------------------------------------------------
    \38\ J.R. Moehringer, ``Ho! Ho! Is More Like Uh-Oh,'' The Los 
Angeles Times (December 23, 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.\39\
---------------------------------------------------------------------------
    \39\ 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.\40\
---------------------------------------------------------------------------
    \40\ 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.\41\ Another 
poll found that 73% of Americans support requiring sanctions 
against attorneys who file frivolous lawsuits.\42\
---------------------------------------------------------------------------
    \41\ See American Tort Reform Association, ``National Poll on Tort 
Reform'' (February 27, 2003).
    \42\ 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,\43\ and both problems are fueled by 
frivolous lawsuits.
---------------------------------------------------------------------------
    \43\ Bruce D. Phillips, ``Small Business Problems and Priorities'' 
(National Federation of Independent Business Research Foundation, June 
2004).
---------------------------------------------------------------------------
    When Business Week wrote an extensive article on what the 
most effective legal reforms would be, Business Week stated 
that what's needed is ``Penalties That Sting.'' As Business 
Week recommends, ``Give judges stronger tools to punish 
renegade lawyers. Before 1993, it was mandatory for judges to 
impose sanctions such as public censures, fines, or orders to 
pay for the other side's legal expenses on lawyers who filed 
frivolous lawsuits. Then the Civil Rules Advisory Committee 
(CRAC), an obscure branch of the courts, made penalties 
optional. This needs to be reversed . . . by Congress.'' \44\
---------------------------------------------------------------------------
    \44\ Mike France, ``Special Report--Tort Reform: How to Fix the 
Tort System,'' Business Week (March 14, 2005) at 76.
---------------------------------------------------------------------------
    The Class Action Fairness Act, which recently became 
law,\45\ prohibits forum shopping when the case is styled as a 
class action. The same policy should apply to individual 
lawsuits as well, and LARA would fill that gap in policy. As 
The Wall Street Journal said in a recent editorial, ``One 
suggestion is blending class action reform with the Lawsuit 
Abuse Reduction Act (LARA), a related measure that also passed 
the House last year. LARA would also reduce forum shopping and 
frivolous personal injury claims and fine lawyers who bring 
them.'' \46\
---------------------------------------------------------------------------
    \45\ Public Law No. 109-2.
    \46\ ``Tort Reform Roadmap,'' The Wall Street Journal (editorial) 
(January 27, 2005) at A12.
---------------------------------------------------------------------------

 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.'' \47\
---------------------------------------------------------------------------
    \47\ 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.\48\
---------------------------------------------------------------------------
    \48\ 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.'' \49\ The small businesses studied in the report 
account for 98% of the total number of businesses with 
employees in the United States.\50\
---------------------------------------------------------------------------
    \49\ 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'').
    \50\ Id.
---------------------------------------------------------------------------
    As Bernie Marcus, co-founder and former chairman of The 
Home Depot, has described, ``An unpredictable tort system casts 
a shadow over every plan and investment. It is devastating for 
start-ups. The cost of even one ill-timed abusive lawsuit can 
bankrupt a growing company and cost hundreds of thousands of 
jobs. CEOs and their boards are forced to lower their 
aspirations and hold back on innovations to manage defensively. 
This is holding our nation back from competing effectively in 
the global marketplace and offshore competition is seriously 
cutting into market share for U.S. companies.'' \51\
---------------------------------------------------------------------------
    \51\ Washington Legal Foundation, ``Conversations With . . .'' 
(Fall 2004).
---------------------------------------------------------------------------
    Doctors and patients suffer. Before the 1960s, only one 
physician in seven had ever been sued in their entire 
lifetime,\52\ whereas today's rate is about one in seven 
physicians sued per year.\53\
---------------------------------------------------------------------------
    \52\ See ``Opinion Survey of Medical Professional Liability,'' JAMA 
164:1583-1594 (1957).
    \53\ 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.\54\ The researchers found that, of the 47 medical 
malpractice claims they studied that resulted in 
litigation,\55\ ``[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.'' \56\ 
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.\57\ Of the 47 claims filed that 
the researchers analyzed, less than half demonstrated any 
actual negligence, and many demonstrated no discernable 
injury.\58\
---------------------------------------------------------------------------
    \54\ 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.'').
    \55\ See id. at 7-1.
    \56\ See id. at 7-33.
    \57\ See id. at 7-33.
    \58\ 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.\59\
---------------------------------------------------------------------------
    \59\ 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.''

        
 According to Reuters, ``A lawsuit against . . 
        . U.S. weather forecasters . . . over the South Asian 
        tsunami disaster is fueling calls for greater curbs on 
        what critics say are frivolous cases brought by lawyers 
        out to make a quick buck. The suit, brought on behalf 
        of a group of tsunami victims, `perfectly illustrates' 
        the need for U.S. laws to hold lawyers liable for the 
        economic damages they inflict on those they sue, said 
        legal scholar Lester Brickman.'' \60\ The petition was 
        filed in Federal court in Manhattan.\61\
---------------------------------------------------------------------------
    \60\ Gail Appleson, ``Tsunami Suit Shows Need to Curb Lawyers, 
Critics Say,'' Reuters (March 8, 2005).
    \61\ Id.

        
 Austin Aitken filed a lawsuit against NBC's 
        ``Fear Factor'' television program. Austin Aitken told 
        the Associated Press that he watches ``Fear Factor'' 
        often and had no problem with past installments in 
        which the reality show's participants ate worms and 
        insects in pursuit of a $50,000 prize--but eating rats 
        went ``too far.'' Aitken says he became ``dizzy and 
        lightheaded'' and vomited after watching contestants 
        eat rats. He also ran into a doorway because he was 
        disoriented, ``causing suffering, injury and great 
        pain.'' Aitken's lawsuit asks for $2.5 million as 
        compensation. ``I just put any figure,'' he told the 
        Associated Press.\62\
---------------------------------------------------------------------------
    \62\ ``Viewer Sues NBC Over Rat-Eating Fear Factor,'' Associated 
Press (January 6, 2005).

        
 U.S. District Judge Loretta Preska had to say 
        about the current state of Federal litigation: 
        ``Plaintiffs here have lost their way; they need to 
        consult a map or a compass or a Constitution because 
        Plaintiffs have come to the judicial branch for relief 
        that may only be granted by the legislative branch. 
        This action is one of dozens of similar bootless 
        actions filed in twenty-three district courts across 
        the United States on behalf of uninsured and indigent 
        patients, wherein Plaintiffs argue, without basis in 
        law, that private non-profit hospitals are required to 
        provide free or reduced-rate services to uninsured 
        persons . . . This orchestrated assault on scores of 
        nonprofit hospitals, necessitating the expenditure of 
        those hospitals' scares resources to beat back 
        meritless legal claims, is undoubtedly part of the 
        litigation explosion that has been so well-documented 
        in the media . . . For the foregoing reasons, the 
        Defendants' motions to dismiss the above-captioned 
        actions are granted in their entirety with prejudice. 
        The Clerk of the Court shall mark these actions closed 
        and all pending motions denied as moot.'' \63\
---------------------------------------------------------------------------
    \63\ Kolari v. New York-Presbyterian Hospital, 2005 WL 710452 
(S.D.N.Y.), at *1-*2, *14.

        
 Barbara 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.\64\
---------------------------------------------------------------------------
    \64\ 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).

        
 According 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.'' \65\
---------------------------------------------------------------------------
    \65\ Kevin Corcoran, ``Court: Don't Blame Cell-Phone Maker for 
Crash,'' The Indianapolis Star (June 5, 2004).

        
 In 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.'' \66\ Justice Saylor pointed out in his 
        concurring opinion ``the common sense notion that it is 
        necessary to properly chew hard foodstuffs prior to 
        swallowing.'' \67\
---------------------------------------------------------------------------
    \66\ Grady v. Frito-Lay, Inc., 839 A.2d 1038, 1042 (8th Cir. 2003) 
(citing Grady v. Frito-Lay, Inc., 2000 WL 33436367, at *2) (Pa.Com.Pl. 
April 3, 2000)).
    \67\ Id. at 1053 (Saylor, J., concurring).

        
 After 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.\68\ 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.'' \69\
---------------------------------------------------------------------------
    \68\ In re: Aircraft Accident at Little Rock, Arkansas on June 1, 
1999, 231 F.Supp. 852, 879 (E.D.Ark. 2002).
    \69\ Id. at 878-79.

        
 After 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.\70\ The court upheld the decision of the trial 
        court that ruled ``[t]he danger is open and obvious.'' 
        \71\
---------------------------------------------------------------------------
    \70\ Holmes v. Turtle Stop, Inc., 62 P.3d 1165 (2000).
    \71\ Cy Ryan, ``Court Says Warning About Hot Coffee Unnecessary,'' 
The Las Vegas Sun (July 11, 2000).

        
 A 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.\72\
---------------------------------------------------------------------------
    \72\ See Randy Kenner, ``Lawsuit on Hot Pickle Draws Attention 
Around the Globe,'' Knoxville News-Sentinel (October 10, 2000) at A1.

        
 On 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.\73\ 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.'' 
        \74\
---------------------------------------------------------------------------
    \73\ See Pelman v. McDonald's Corp., S.D.N.Y. 02 Civ. 7821 (RWS), 
at 34-35 (September 3, 2003).
    \74\ Pelman v. McDonald's Corp., 237 F.Supp.2d 512, 518 (S.D.N.Y. 
2003).

        
 The 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.'' \75\
---------------------------------------------------------------------------
    \75\ Overton v. Anheauser-Busch Co., 517 N.W.2d 308, 309 (Mich. 
App. 1994).

        
 In 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.\76\
---------------------------------------------------------------------------
    \76\ Tim Barker, ``Universal Fall Leads to Lawsuit,'' Orlando 
Sentinel (January 5, 2000) at C1.

        
 After 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.'' 
        \77\ 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.'' \78\
---------------------------------------------------------------------------
    \77\ Brown v. All-Tech Investment Group, 2003 WL 23315394 (Ga. 
App.) at *5.
    \78\ Id. at *7, n.5.

        
 After a decade of litigation, Texas' 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.\79\
---------------------------------------------------------------------------
    \79\ Honda of America Manufacturing, Inc. v. Norman, 104 S.W.3d. 
600 (2003) (Tex.App. 1st.).

        
 The 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.'' \80\
---------------------------------------------------------------------------
    \80\ See ``Storm Death Is Not Weatherman's Fault,'' New York Post 
(March 29, 1999) at 84.

        
 A 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.'' \81\
---------------------------------------------------------------------------
    \81\ Associated Press, ``Man Drops Suit Filed Against Airline After 
He Drank Booze, Fell,'' USA Today (April 4, 2004).

        
 Several 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 . . .'' \82\ 
        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.'' \83\
---------------------------------------------------------------------------
    \82\ Chuck Shepherd, ``News of the Weird,'' The Orlando Weekly 
(August 30, 2001).
    \83\ Teri Figueroa, ``Jury Rejects Claim by Man in Attack on Dog by 
Library Cat,'' The North County Times (January 20, 2004).

        
 In 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.\84\
---------------------------------------------------------------------------
    \84\ Terry Kinney (the Associated Press) ``Commissioner Sues 
Bengals, NFL'' (January 31, 2003).

        
 After 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.\85\
---------------------------------------------------------------------------
    \85\ Kevin O'Hanlon, ``Court: Faulty Tire Didn't Cause Murder,'' 
the Associated Press (August 8, 2003).

        
 According to the Albany Times Union, ``The 
        spectacle of American spending always gets a little 
        silly in the holiday season, but shoppers over the next 
        few weeks will be hard-pressed to match the performance 
        last year of Antoinette Millard. She ran up bills of 
        almost $1 million in New York luxury stores like 
        Cartier and Barneys, and, according to court papers, 
        Millard is now suing American Express for improperly 
        soliciting her to sign up for a big-spender's credit 
        card, her purchasing weapon of choice.'' \86\
---------------------------------------------------------------------------
    \86\ Steve Lohr, ``Buying Easy, Paying Hard,'' Times Union 
(December 5, 2004) at A1.

        
 The Court of Appeals of Indiana had this to 
        say about a recent lawsuit brought by a man who sued 
        his cell phone company because he got in an accident 
---------------------------------------------------------------------------
        while using it in his car. The court stated:

              LWith respect to Cingular, the complaint alleged: 
        ``That at the time of this collision the defendant 
        Meagher was utilizing a telephone furnished by Cingular 
        Wireless. That Cingular Wireless was negligent in 
        furnishing a cellular phone to Meagher when it knew, or 
        should have known, that it would be used while the user 
        operated a motor vehicle.'' . . . A cellular phone does 
        not cause a driver to wreck a car. Rather, it is the 
        driver's inattention while using the phone that may 
        cause an accident . . . For example, many items may be 
        used by a person while driving, thus making the person 
        less attentive to driving. It is foreseeable to some 
        extent that there will be drivers who eat, apply make 
        up, or look at a map while driving and that some of 
        those drivers will be involved in car accidents because 
        of the resulting distraction. However, it would be 
        unreasonable to find it sound public policy to impose a 
        duty on the restaurant or cosmetic manufacturer or map 
        designer to prevent such accidents. It is the driver's 
        responsibility to drive with due care. Similarly, 
        Cingular cannot control what people do with the phones 
        after they purchase them. To place a duty on Cingular 
        to stop selling cellular phones because they might be 
        involved in a car accident would be akin to making a 
        car manufacturer stop selling otherwise safe cars 
        because the car might be negligently used in such a way 
        that it causes an accident . . . Ultimately, sound 
        public policy dictates that the responsibility for 
        negligent driving should fall on the driver. 
        Legislation has already been drafted to address the 
        issue of cellular phone use while driving and to place 
        the responsibility on the driver to refrain from doing 
        so. We are confident that the legislature is taking 
        appropriate measures to protect public safety, and that 
        is both its right and duty.'' \87\
---------------------------------------------------------------------------
    \87\ Williams v. Cingular Wireless, No. 82A01-0312-CV-476 (Ct. App. 
Ind. June 4, 2004), at 2, 7-9.
---------------------------------------------------------------------------

 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.'' \88\ One 
warning label on a toilet brush states ``Do not use for 
personal hygiene.'' \89\ 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.'' 
\90\ And a cardboard car sun shield that keeps sun off the 
dashboard warns ``Do not drive with sun shield in place.'' \91\
---------------------------------------------------------------------------
    \88\ As one commentator has remarked, ``yet another popular 
sledding hill'' closed in Methuen, Massachusetts because nobody wants 
to ``assume the risk of paying damages for anyone who gets hurt. Of 
course, in a world with common sense, [we] wouldn't have to worry about 
it.'' Taylor Armerding, ``Liability, Litigation Make Sled Tracks 
Disappear,'' Gloucester Daily Times (December 28, 2004).
    \89\ David N. Goodman, ``Toilet Brush Warning Wins Consumer 
Award,'' The Associated Press (January 6, 2005).
    \90\ 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).
    \91\ 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 
constituents 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 1990's, 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,\92\ 
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.\93\
---------------------------------------------------------------------------
    \92\ 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.
    \93\ Id. at 1.
---------------------------------------------------------------------------
    The costs of America's lawsuit culture are staggering. As 
chronicled by Sebastian Mallaby in The Washington Post:

        The most complete study of the tort system's cost comes 
        from the consulting firm Tillinghast-Towers Perrin. 
        Tillinghast's clients are mainly insurers, which are at 
        loggerheads with the trial bar, so you may mistrust its 
        data. Nonetheless, Tillinghast has published seven 
        updates to its original 1985 study, refining its 
        methodology along the way. Its numbers are the best 
        available. And they are stunning . . . the really 
        shocking thing is where the billions went. Injured 
        plaintiffs--the fabled little guys for whom the system 
        is supposedly designed--got less than half the money. 
        According to Tillinghast's 2002 data, plaintiffs' 
        lawyers swallowed 19 percent of the $233 billion. 
        Defense lawyers pocketed an additional 14 percent, and 
        other administrative costs, mainly at insurance firms, 
        accounted for a further 21 percent. The legal-
        administrative complex thus guzzled fully 54 percent of 
        the money in the tort system, or $126 billion. That's 
        43 times as much as the Federal Government has budgeted 
        this year to combat the global AIDS pandemic. No other 
        system for compensating misfortune has such outrageous 
        administrative costs. To guard against the possibility 
        of sickness, people buy medical insurance. The health 
        insurance industry, justly regarded as a paper-clogged 
        nightmare, has administrative costs of 14 percent. To 
        guard against the danger of disability, we have the 
        Social Security program. The overhead for the Social 
        Security disability system is around 3 percent. If you 
        want a really good number to set against the 54 percent 
        overhead in the tort system, just take a look at 
        Medicare. Its overhead is about 2 percent. So the tort 
        system's administrative costs are a scandal . . . 
        Measured as a share of GDP, America's tort system is 
        more than twice as expensive as it was in 1960, twice 
        as expensive as the current systems in France or 
        Canada, and three times as expensive as the system in 
        Britain. A reasonable goal for the American tort system 
        is to halve it.\94\
---------------------------------------------------------------------------
    \94\ Sebastian Mallaby, ``The Trouble with Torts,'' The Washington 
Post (January 10, 2005) at A17. See also U.S. Tort Costs: 2004 Update: 
Trends and Findings on the Cost of the U.S. Tort System, Towers Perrin 
Tillinghast (2004) (``Looking ahead, we anticipate growth in U.S. tort 
costs to range from 5% to 8% in 2005, with a midpoint of 6.5% We expect 
a similar increase in 2006.'').

---------------------------------------------------------------------------
    As columnist Stuart Taylor, Jr., has observed:

        The most recent NCSC [National Center for State Courts] 
        report states that its (incomplete) data ``indicate a 
        40 percent increase in tort filings'' from 1975 to 
        2002. Census figures indicate that the population 
        increase from 1975 to 2002 was about 33 percent. So 
        tort filings per capita have not declined by 8 percent 
        since 1975; they have increased somewhat . . . And 
        although the tort system's inflation-adjusted direct 
        costs per capita did decline modestly during the 
        1990's, they soared by a stunning 14.4 percent in 2001 
        and another 13.3 percent in 2002, to an estimated 2002 
        total of $233 billion. The tort system consumes 2.2 
        percent of GDP in the U.S.--almost four times the 
        percentage in 1950; more than triple the 0.6 percent in 
        the United Kingdom; and more than double the 0.8 
        percent in Japan, France, and Canada.\95\
---------------------------------------------------------------------------
    \95\ Stuart Taylor, Jr., `` `False Alarm' by Stephanie Mencimer 
[Washington Monthly, Oct. 2004]--A Response by Stuart Taylor, Jr. 
[Newsweek, National Journal],'' available at http://
www.overlawyered.com/pages/taylormencimerwashingtonmonthly.html.

    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.'' \96\ 
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.'' 
\97\ The direct costs of medical malpractice claims jumped by 
an average of 11.9 percent a year from 1975 to 2002.\98\
---------------------------------------------------------------------------
    \96\ Economic Report of the President (February 2004) at 203.
    \97\ Council of Economic Advisers, ``Who Pays for Tort Liability 
Claims? An Economic Analysis of the U.S. Tort Liability System'' (April 
2002) at 1.
    \98\ 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.\99\
---------------------------------------------------------------------------
    \99\ 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.'' \100\ The small 
businesses studied in the report account for 98% of the total 
number of businesses with employees in the United States.\101\
---------------------------------------------------------------------------
    \100\ 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'').
    \101\ 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.\102\
---------------------------------------------------------------------------
    \102\ 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.\103\
---------------------------------------------------------------------------
    \103\ 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.'' \104\ The same commentators offer the 
following illustration:
---------------------------------------------------------------------------
    \104\ 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.\105\
---------------------------------------------------------------------------
    \105\ Id. at 4.

    Personal injury lawyers can always extort money from 
innocent victims by filing nuisance lawsuits for their 
settlement value. H.R. 420 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. 420: 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, 2004.
Section 2 of LARA: Attorney Accountability
    As President Bush has stated, ``We have a responsibility to 
confront frivolous litigation head on.'' \106\ The Lawsuit 
Abuse Reduction Act of 2005 (``LARA''), H.R. 420, would do just 
that by providing for appropriate sanctions against frivolous 
lawsuits.
---------------------------------------------------------------------------
    \106\ CBS: Evening News (February 18, 2005).
---------------------------------------------------------------------------
    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%).\107\
---------------------------------------------------------------------------
    \107\ 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,\108\ the Supreme Court approved the proposed changes in 
ministerial fashion and without substantive comment in April, 
1993.
---------------------------------------------------------------------------
    \108\ 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.'' \109\ 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.'' 
\110\
---------------------------------------------------------------------------
    \109\ Id. at 11.
    \110\ 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,\111\ 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.\112\ We need to restore those 
positive effects once again.
---------------------------------------------------------------------------
    \111\ 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).
    \112\ 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.\113\
---------------------------------------------------------------------------
    \113\ 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:

        
 Allow 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. 
        420 would require monetary penalties against parties 
        who file frivolous lawsuits that cause economic harm to 
        the victims of 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.\114\ H.R. 420 would do just that.
---------------------------------------------------------------------------
    \114\ See John Shapard et. al., Federal Judicial Center, Report of 
a Survey Concerning Rule 11, Federal Rules of Civil Procedure at 5.

        
 Reverse 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.'' \115\ 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.'' \116\ And Senator 
        Edwards' 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.'' \117\ H.R. 420 would do 
        exactly that.
---------------------------------------------------------------------------
    \115\ John Edwards, ``Juries: `Democracy in Action,' '' Newsweek 
(December 15, 2003) at 53.
    \116\ NBC News, ``Meet the Press'' (May 5, 2002) (transcript).
    \117\ John Stossel, ``Lawyers and the Little Guy,'' ABCNews.com 
(``Give Me a Break'' commentary on ABC News' 20/20) (July 23, 2004).

        
 Reverse 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.'' \118\ 
        H.R. 420 would get rid of the free pass' lawyers have 
        to file frivolous lawsuits under today's Rule 11.
---------------------------------------------------------------------------
    \118\ H.R. Rep. No. 104-62, at 11-12 (1995).

    It is important to remember that nothing in H.R. 420, the 
Lawsuit Abuse Reduction Act, changes the current standard by 
which frivolous lawsuits are judged. That is, under H.R. 420, 
the standard a judge will use to determine whether a case is 
frivolous will remain as it has been, namely a determination 
---------------------------------------------------------------------------
that:

        
 the 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;

        
 the 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;

        
 the 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

        
 the 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 allows 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.'' The development of 
civil rights claims is thereby explicitly protected in 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,\119\ 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.\120\)
---------------------------------------------------------------------------
    \119\ 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).
    \120\ 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 
substantially 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. As one commentator has stated, ``Products liability 
cases have surged since 2001 to an anticipated 25,700 cases in 
2004 and now make up nearly 10 percent of all Federal civil 
filings. In particular, the estimated 24,100 cases dealing with 
personal injuries continues to grow and now account for 94 
percent of all products liability cases.'' \121\
---------------------------------------------------------------------------
    \121\ Kevin Stehr, ``Spot the Litigation Trends,'' Legal Times 
(October 7, 2004).
---------------------------------------------------------------------------
    H.R. 420'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.'' \122\ 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.\123\ H.R. 420 addresses a problem directly 
analogous to the prime example James Madison used when 
describing the need for the Constitution's Commerce Clause.
---------------------------------------------------------------------------
    \122\ The Federalist Papers, Federalist No. 22 (Madison) at 267-68 
(Clinton Rossiter ed., 1961).
    \123\ 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,\124\ 
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.
---------------------------------------------------------------------------
    \124\ 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 
substantially 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.\125\ 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.'' \126\ 
Section 3 of LARA will deter personal injury lawyers from 
making ridiculous claims for astronomical damages.
---------------------------------------------------------------------------
    \125\ See Cass Sunstein and Reid Hastie, Punitve Damages: How 
Juries Decide (University of Chicago Press 2002) at 62.
    \126\ 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.'' \127\
---------------------------------------------------------------------------
    \127\ 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.\128\
---------------------------------------------------------------------------
    \128\ ``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 substantially 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 substantially 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 
``substantially 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.\129\
---------------------------------------------------------------------------
    \129\ 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.'' The development of civil rights 
claims is thereby explicitly protected in the bill's provisions 
governing the application of Rule 11 in cases with substantial 
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.\130\ Here is what Scruggs said about what he 
calls ``magic jurisdictions:''
---------------------------------------------------------------------------
    \130\ 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.'' \131\
---------------------------------------------------------------------------
    \131\ 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.\132\ A recent poll found 
that 46% of judges said donations influenced their judicial 
decisions.\133\
---------------------------------------------------------------------------
    \132\ See generally, American Tort Reform Association, ``Bringing 
Justice to Judicial Hellholes'' (2003).
    \133\ Editorial, ``Getting Politics Out of the Courts,'' Business 
Week (September 27, 2004) at 140 (``In a poll of 894 elected judges 
conducted in 2001and 2002 by a nonpartisan watchdog group, 46% said 
donations influenced their judicial decisions.'').
---------------------------------------------------------------------------
    After Texas enacted legislation restricting forum shopping 
there, personal injury lawyers began eying its neighbor, 
Oklahoma, as the next best place to bring their lawsuits. The 
smoking gun on this issue is an undated ``Dear ATLA Colleague'' 
letter sent by Oklahoma attorney Stratton Taylor to the 
Association of Trial Lawyers of America. Mr. Taylor is also 
President Pro Tempore Emeritus of the Oklahoma State Senate, 
and a current member of the state legislature. In his letter, 
Senator Taylor leads, ``With recent events that have occurred 
in Texas, you may be looking to file cases in Oklahoma.'' \134\ 
Only Congress can protect all Americans from unfair forum 
shopping no matter where it occurs.
---------------------------------------------------------------------------
    \134\ Letter from Stratton Taylor to ``ATLA Colleague'' (undated) 
(on file with the House Committee on the Judiciary).
---------------------------------------------------------------------------
    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.'' \135\
---------------------------------------------------------------------------
    \135\ 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.\136\ 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.
---------------------------------------------------------------------------
    \136\ These anti-forum shopping provisions would not do anything to 
preclude lawsuits against foreign companies that are not already 
precluded by the Due Process Clause of the Constitution under current 
law. On October 8, 2004, Rep. Lamar Smith, in the Congressional Record, 
made the following statement dispelling false allegations to the 
contrary regarding a version of this legislation that passed the House 
during the 108th Congress in the form of H.R. 4571:

      Mr. Speaker, September 14 2004, the House debated and 
      passed H.R. 4571, the Lawsuit Abuse Reduction Act, a bill I 
      authored to help prevent frivolous lawsuits and the 
      notorious practice of forum shopping from ruining America's 
      small businesses. In the midst of floor debate on H.R. 
      4571, the Congressional Research Service issued a self-
      described ``rush memorandum'' dated September 14, 2004, to 
      the minority staff of the House Judiciary Committee, which 
      stated ``H.R. 4571 does provide an option for filing a 
      lawsuit where a business has a principal place of business 
      . . . However, if a defendant's principal place of business 
      was not in the United States, then this option could not be 
      exercised in a United States court. Consequently, it would 
      appear that in certain circumstances, a United States 
      citizen or resident injured in this country would not have 
      a judicial forum in the United States in which to seek 
      relief.'' This statement left the misleading impression 
      that H.R. 4571, were it to become law, would somehow make 
      it more difficult to bring some personal injury lawsuits in 
      the United States. Not surprisingly, the misleading 
      impression left by the CRS memorandum was exploited by 
      those on the opposite side of the aisle in the midst of 
      debate on H.R. 4571, and later by the press. For example, a 
      report in CongressDaily/A.M. describing debate on H.R. 4571 
      stated ``Many Democrats . . . cited a Congressional 
      Research Service memorandum advising lawmakers that the 
      bill could prevent U.S. citizens from having their cases 
      heard in a U.S. court if the defendant's main place of 
      business is located in a foreign country. Rep. Jay Inslee, 
      D-Wash., sarcastically called the legislation `the Foreign 
      Corporation Protection Act.` '' Those statements are deeply 
      misleading, and here's why. In fact, nothing in H.R. 4571 
      would prevent cases from being brought against foreign 
      defendants that are not already precluded under current 
      law. I wrote to CRS requesting a clarification of current 
      law, and I received the following response: ``Under the Due 
      Process Clause, a foreign corporation that had its 
      principal place of business overseas, engaged in little or 
      no economic activity in the United States, and did not 
      otherwise subject itself to the jurisdiction of the United 
      States, could not be subject to the jurisdiction of the 
      various state courts. If such a corporation engaged in a 
      tortious activity such as manufacturing a defective 
      product, then a plaintiff would be unable to bring an 
      action in a state court forum for such tortious activity, 
      even if the product caused an injury in the United States. 
      In such a case, an injured party would be required to seek 
      compensation in the courts of another country.'' This makes 
      clear that while some Members on the other side of the 
      aisle claimed that H.R. 4571, if enacted, would preclude 
      certain lawsuits from being brought that could be brought 
      under current law, the Due Process Clause of the 
      Constitution has precluded under current law, and would 
      continue to preclude under H.R. 4571, some plaintiffs from 
      bringing an action in a state court forum against a foreign 
      defendant for tortious activity in certain circumstances, 
      even if the product caused an injury in the United States. 
      The bottom line is that H.R. 4571 would do nothing to 
      change current law in that regard. Indeed, no legislation 
      could change current law in that regard since the 
      constitutional requirements of the Due Process Clause 
      cannot be changed by legislation. In fact, the venue 
      statute of the gentleman from Washington Mr. Inslee's own 
      state provides that ``An action . . . for the recovery of 
      damages for injuries to the person or for injury to 
      personal property may be brought, at the plaintiffs option, 
      either in the district in which the cause of action, or 
      some part thereof, arose, or in the district in which the 
      defendant, or, if there be more than one defendant, where 
      some one of the defendants, resides at the time the 
      complaint is filed.'' That venue standard is for all 
      practical purposes the same as that provided in H.R. 4571. 
      H.R. 4571 provides that a personal injury lawsuit could be 
      brought in any state where the person bringing the claim 
      resides at the time of filing or resided at the time of the 
      alleged injury, any state where the alleged injury or 
      circumstances giving rise to the personal injury claim 
      allegedly occurred, or where the defendant's principal 
      place of business is located. Insofar as opponents of H.R. 
      4571 have a complaint regarding the inability to bring 
      certain lawsuits against foreign corporations in the United 
      States, their complaint is with the Constitution's Due 
      Process Clause, and not with H.R. 4571, which simply 
      reflects the same standard that prevails among the state's 
      venue laws, subject of course to the Due Process Clause of 
      the Constitution. If a foreign corporation's contacts with 
      the United States are so minimal as to make it 
      unconstitutional under the Constitution's Due Process 
      Clause to subject them to suit in the United States 
      regardless of whether the venue criteria of H.R. 4571--or 
      of any State venue statute--are met, there is nothing a 
      legislature can do by statute to remedy that situation. To 
      help set the record straight, I am submitting for the 
      record both my letter to CRS requesting a clarification, 
---------------------------------------------------------------------------
      and the CRS memorandum I received in response.

      150 Cong. Rec. E1839-01 (October 6, 2004) (attaching 
      September 16, 2004 letter from Rep. Lamar Smith to Kenneth 
      R. Thomas, Legislative Attorney, American Law Division, 
      Congressional Research Service, and Mr. Thomas' letter in 
      response of October 4, 2004).
    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,\137\ 
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.'' \138\ 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.\139\
---------------------------------------------------------------------------
    \137\ 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'').
    \138\ The Federalist Papers, Federalist No. 22 (Madison) at 267-68 
(Clinton Rossiter ed., 1961).
    \139\ 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:

        
 Madison County, Illinois. Twice, the Chicago 
        Tribune crowned Madison County a ``jackpot 
        jurisdiction.'' \140\ 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.'' \141\ 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.'' \142\ 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.'' \143\ 
        That same judge has also said ``I don't know if it's a 
        Judicial Hellhole, but just figure it out. 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.'' \144\
---------------------------------------------------------------------------
    \140\ 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.
    \141\ Editorial, ``The Judges of Madison County,'' The Chicago 
Tribune (September 6, 2002) at 22.
    \142\ David Bailey (Reuters), ``Illinois County Court a Corporate 
`Hellhole,' '' (October 5, 2003).
    \143\ Id.
    \144\ 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.\145\
---------------------------------------------------------------------------
    \145\ 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.\146\ 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.\147\
---------------------------------------------------------------------------
    \146\ See ``Asbestos Case Leads to $5.1 Million, Sanction,'' 
National Law Journal (December 2, 2002) at A4.
    \147\ See Griffin B. Bell, ``Asbestos & the Sleeping 
Constitution,'' 31 Pepp.L. Rev. 1, 8 (2003).

          LMadison County's newspapers have called Madison 
        County ``lawyer heaven,'' \148\ a ``jackpot 
        jurisdiction,'' a ``hotbed of megabucks litigation,'' a 
        ``local slot machine,'' and ``the most magic of all'' 
        magic jurisdictions.\149\
---------------------------------------------------------------------------
    \148\ Editorial, ``Lawsuit Heaven,'' St. Louis Post-Dispatch 
(January 13, 2003) at B6.
    \149\ Greg Burns, ``Lawyers Bring an International Class Action to 
Rural Madison County . . . Why? Because It's the Lawsuit Capital,'' The 
Chicago Tribune (March 8, 2004) at 1; Christi Parsons, ``Downstate 
County is a `Plaintiff's Paradise,' '' The Chicago Tribune (June 17, 
2002) at 1; Amity Shlaes, ``Commentary, Big Judgments, Bigger Mistakes: 
Legal Windfalls in Madison County Demonstrate the Need to Limit Forum 
Shopping of Class Action Lawsuits,'' The Chicago Tribune (June 29, 
2004) at 15; Editorial, ``A Madison County Jackpot,'' The Chicago 
Tribune (April 2, 2003) at 22.

        
 Jefferson 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.'' \150\ 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.\151\
---------------------------------------------------------------------------
    \150\ David Pasztor, ``As Quinn Laid to Rest, Mourners Contemplate 
Irony of His Slaying,'' The Austin American-Statesman (June 16, 2002) 
at A1.
    \151\ See Andrea Wright, ``Beaumont, Texas, Area Loses Doctors to 
High Cost of Malpractice Insurance,'' Knight-Ridder Tribune Business 
News (November 6, 2001).

        
 22nd 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.\152\ In this small, rural county, the 
        number of plaintiffs far exceeds the number of 
        residents.\153\ The national media, including the Los 
        Angeles Times,\154\ The New York Times,\155\ and the 
        Washington Times,\156\ 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.\157\
---------------------------------------------------------------------------
    \152\ Transcript, ``Jackpot Justice,'' 60 Minutes (November 25, 
2002).
    \153\ 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.'').
    \154\ 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.
    \155\ See Robert Pear, ``Mississippi Gaining as Lawsuit Mecca,'' 
The New York Times (August 20, 2001) at A1.
    \156\ See Tim Lemke, ``Best Place to Sue?'' The Washington Times 
(June 30, 2002) at A1.
    \157\ 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.\158\ 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.'' \159\
---------------------------------------------------------------------------
    \158\ See Jerry Mitchell, ``Jefferson County Ground Zero for 
Cases,'' The Clarion-Ledger (June 17, 2001) at A1.
    \159\ 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.\160\
---------------------------------------------------------------------------
    \160\ 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.\161\
---------------------------------------------------------------------------
    \161\ 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).

        
 West 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.\162\ 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.'' \163\
---------------------------------------------------------------------------
    \162\ See West Virginia Chamber of Commerce, Perryman Study, 
``Negative Impact On The Current Civil Justice System On Economic 
Activity In West Virginia'' (February 2003).
    \163\ Court Watch, West Virginia Chamber of Commerce (July 2003).

        
 Philadelphia, 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.'' \164\ 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.\165\ 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.\166\
---------------------------------------------------------------------------
    \164\ 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.
    \165\ 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).
    \166\ See id. at 32.

        
 City of St. Louis, Missouri. St. Louis City 
        Circuit Court is reportedly ``the place to be'' if you 
        are a plaintiff.\167\ Plaintiffs move cases to St. 
        Louis City because ``St. Louis City is a better 
        venue,'' according to one St. Louis plaintiffs' 
        attorney.\168\ 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.'' \169\
---------------------------------------------------------------------------
    \167\ 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).
    \168\ Id.
    \169\ See State ex rel. Linthicum, 57 S.W.3d 855, 859 (Mo. 2001) 
(Wolff, J., concurring in part, dissenting in part).

        
 Eagle 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.'' \170\
---------------------------------------------------------------------------
    \170\ Greg Jefferson, ``Eagle Pass Remains Known as Plaintiff's 
Attorney Paradise,'' The San Antonio Express News (November 2, 2003).

        
 Hampton County, South Carolina. Examples of 
        the forum shopping that is rampant in Hampton County 
        include the following. Michigan-based General Motors 
        and Ohio-based Cooper Tire faced a lawsuit in Hampton 
        County simply because their products are sold in the 
        county; the plaintiff lived 90 miles away and the 
        accident occurred 350 miles away in Tennessee.\171\ In 
        another case, a Beaufort County resident sued 
        Continental Airlines because she was injured during a 
        rough landing on a flight between Savannah, Georgia, 
        and New Jersey, claiming that the airline does business 
        in Hampton County because it sells tickets over the 
        Internet.\172\
---------------------------------------------------------------------------
    \171\ See Michael Freedman, ``Home Court Advantage,'' Forbes (June 
10, 2002) at 74.
    \172\ See Editorial, ``Wide-open Venue Law Undermines Confidence in 
Court,'' The State (April 10, 2003) at A16.
---------------------------------------------------------------------------
Amendments Adopted at Committee
    Three amendments adding additional provisions to the H.R. 
420 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. Nadler, imposes 
mandatory civil sanctions that are commensurate with those 
available under Rule 11 of the Federal Rules of Civil 
Procedure, in addition to other civil sanctions otherwise 
applicable, for the intentional destruction of documents sought 
in \173\ a pending civil court proceeding, and highly relevant 
to such proceeding, with the intent to obstruct such 
proceeding. The amendment applies its rule to proceedings in 
Federal court, and in state courts where the court proceeding 
substantially affects interstate commerce.
---------------------------------------------------------------------------
    \173\ The term ``sought in'' as used in the amendment means sought 
pursuant to the rules of the relevant Federal or state court 
proceeding.
---------------------------------------------------------------------------
    A third amendment, offered by Mr. Scott, provides that 
whenever a party presents to a Federal court, or to a State 
court in a proceeding that substantially affects interstate 
commerce, a pleading, written motion, or other paper, that 
includes a claim, defense, or other legal contention that the 
party has already litigated and lost on the merits in any forum 
in final decisions not subject to appeal on 3 consecutive 
occasions, there shall be a rebuttable presumption that the 
presentation of such paper is in violation of Rule 11 of the 
Federal Rules of Civil Procedure.

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, the 
version of H.R. 420 the House of Representatives passed during 
the 108th Congress.\174\
---------------------------------------------------------------------------
    \174\ Letter from Leonidas Ralph Mecham, Secretary, United States 
Judicial Conference, to Chairman F. James Sensenbrenner (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.'' 
\175\ 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%).\176\ 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.'' \177\
---------------------------------------------------------------------------
    \175\ Judicial Conference Letter, at 1.
    \176\ 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).
    \177\ 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.'' \178\ In response, first, any unmeritorious Rule 11 
motion could itself result in sanctions (and thereby deterred) 
under Rule 11.\179\ 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 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.\180\
---------------------------------------------------------------------------
    \178\ Id. at 2.
    \179\ 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).
    \180\ 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.'' \181\ In response, it is entirely 
appropriate that an attorney advise withdrawing claims a client 
wants to make when those claims are frivolous.
---------------------------------------------------------------------------
    \181\ 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.'' \182\ 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.
---------------------------------------------------------------------------
    \182\ 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.'' \183\ 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.
---------------------------------------------------------------------------
    \183\ 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.'' \184\ 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 substantially 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 ``substantially 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.
---------------------------------------------------------------------------
    \184\ 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.'' \185\ However, Congress has never 
relinquished its constitutional authority to create and alter 
the rules of Federal court procedure,\186\ 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.
---------------------------------------------------------------------------
    \185\ Id. at 1.
    \186\ See U.S. Const. Art. I, Sec. 8, cl. 9; Art. III, Sec. 1, cl. 
1; Art. III, Sec. 2, cl. 2.
---------------------------------------------------------------------------

         RESPONSE TO THE FEDERAL JUDICIAL CENTER'S 2005 SURVEY

    The Federal Judicial Center recently issued a survey of 
U.S. district court judges (``FJC 2005 Survey'') regarding Rule 
11 and the problem of frivolous lawsuits.\187\
---------------------------------------------------------------------------
    \187\ David Rauma and Thomas E. Willging, Report of a Survey of 
United States District Judges' Experiences and Views Concerning Rule 
11, Federal Rules of Civil Procedure (Federal Judicial Center 2005) 
(hereinafter ``FJC 2005 Survey'').
---------------------------------------------------------------------------
    As explained above, the Lawsuit Abuse Reduction Act would 
largely restore Federal Rule of Civil Procedure 11 to what it 
was before it was made toothless in 1993. Rule 11, prior to the 
adoption of weakening amendments in 1993 which eliminated 
mandatory and serious sanctions against those who filed 
frivolous lawsuits, 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 
(the same organization that requested the FJC 2005 Survey) 
undertook a review of Rule 11 at the time 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, based on 
their experience under both a weaker and stronger Rule 11, that 
a stronger 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 stronger 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%).\188\ Of the 751 judges surveyed in 1990, 583 
responded, roughly twice times as many as responded to the 
FJC's 2005 Survey.
---------------------------------------------------------------------------
    \188\ 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).
---------------------------------------------------------------------------
    In the Federal Judicial Center's latest survey, only 278 
judges responded to, and half of the judges surveyed (and over 
half of the judges that responded to the survey) had no 
experience at all with the stronger version of Rule 11. As the 
FJC 2005 Survey states, ``the Center E-mailed questionnaires to 
two random samples of 200 district judges each . . . One sample 
comprised solely judges appointed to the bench before January 
1, 1992 . . . [t]he other sample comprised solely judges 
appointed to the bench after January 1, 1992.'' \189\ The FJC 
report keeps secret the dates on which the respondent judges 
first came to serve on the bench, so we have no way of knowing 
whether any of those judges had any significant experience as 
judges under the stronger Rule 11 that was in effect the decade 
before 1993. Appendix A of the FJS 2005 Survey states that 
``all judges in the first group [of 200 out of 400 surveyed] 
would have had at least 1 year on the bench before the 1993 
amendments to Rule 11 went into effect.'' \190\ That provides 
little comfort that any significant number of the judges 
surveyed had any significant experience under the stronger Rule 
11. So the survey is fundamentally flawed in that we have no 
reason to believe it included any significant number of judges 
who had any significant experience under the stronger Rule 11.
---------------------------------------------------------------------------
    \189\ FJC 2005 Survey, at 2.
    \190\ Id. at 16 (Appendix A).
---------------------------------------------------------------------------
    Further, the FJC 2005 Survey found that even of the Federal 
judges surveyed, 55% indicated that the purpose of Rule 11 
should be both deterrence and compensation,\191\ and the 
Lawsuit Abuse Reduction Act would fulfill both purposes.
---------------------------------------------------------------------------
    \191\ FJC 2005 Survey at 2.
---------------------------------------------------------------------------
    Of course, Federal judges themselves do not suffer in any 
direct way the costs of frivolous, abusive lawsuits. Those who 
do suffer those costs, including the large financial costs of 
nuisance lawsuits filed for their settlement value--namely the 
small business community--overwhelmingly support the Lawsuit 
Abuse Reduction Act. The National Federation of Independent 
Business, for example, has made passing the Lawsuit Abuse 
Reduction Act their top legislative priority. The small 
business community rejects the notion today the amount of 
frivolous lawsuits filed are ``just right.'' In just a few 
months, a coalition of over 100 organizations, called the 
Lawsuit Abuse Reform Coalition (``LARC''), came together to 
support LARA's common sense reforms.
    When sanctions for filing frivolous lawsuits are not 
mandatory, as they are not mandatory now, those who are the 
victims of frivolous lawsuits have no incentive to litigate the 
frivolous nature of the claims against them because there is 
currently no guarantee that even if the claims against them are 
found to be frivolous they will be compensated for the harm 
caused by those frivolous claims. What happens instead is that, 
today, the victims of frivolous lawsuits are routinely extorted 
to settle the case for certain sums just below those what would 
be necessary to litigate the case to judgment, at which point 
the case drops out of the dockets of the very judges who were 
surveyed by the FJC.
    Judges are unlikely to view frivolous litigation as a 
problem because such cases rarely reach the bench. An 
overwhelming number of cases settle before trial. When a 
frivolous claim is filed, one of two things occur under the 
current Rule 11: either the small business challenges the 
plaintiff and the plaintiff simply withdraws the claim and 
walks away (as they are allowed to do under the current Rule 
11); or the small business settles rather than proceed with a 
motion for sanctions because it is unlikely that the court will 
fully reimburse it for the cost of defending against the 
frivolous claim, and the cost of defending against the claim is 
more than the expense of settlement.
    The current situation favors judges, not small businesses 
who are harmed by the litigation. Under the current Rule 11, 
judges are relieved of their obligation to consider whether or 
not a case is frivolous. They do not need to hold a hearing on 
whether the case is frivolous and impose sanctions because, as 
a matter of practice, Rule 11 requires frivolous lawsuits to be 
withdrawn (with no reimbursement to the victim of the suit) or 
settled (for just under the cost of defending against it). 
While this is convenient for judges, it is not fair to small 
businesses.
    Everyone who sits back for a moment and reflects will 
understand that a limitless variety of frivolous lawsuits clog 
our courts in ways they did not in decades gone be. Judges do 
not feel the painful costs of frivolous lawsuits, and as they 
have sat as judges over the last decade they have only seen the 
standards of how frivolous lawsuits should be treated erode 
over time, starting with the explicitly forgiving nature of the 
toothless Rule 11 that was enacted in 1993. It is time courts 
were made to take the harm caused by frivolous lawsuits 
seriously again--by making sanctions for filing frivolous 
lawsuits mandatory, not discretionary, on the part of the 
judge--and to empower the victims of frivolous lawsuits with 
the certainty that they will be compensated for the frivolous 
lawsuits they suffer under. Only the Lawsuit Abuse Reduction 
Act can help free all Americans from the fear they feel today 
under the constant threat of frivolous lawsuits.
    Finally, the Federal judiciary has a history of opposing 
any legal reforms it does not itself propose. For example, the 
Federal Judicial Center has also opposed the Class Action 
Fairness Act,\192\ which overwhelmingly passed Congress and 
which became law earlier this year.\193\
---------------------------------------------------------------------------
    \192\ See Letter from Ralph Mecham, Secretary, Judicial Conference 
of the United States (Mar. 26, 2003).
    \193\ The Class Action Fairness Act passed the Senate by a vote of 
72 to 26, and the House by a vote of 279 to 149. It became Public Law 
No. 109-2.
---------------------------------------------------------------------------

                                Hearings

    The Committee on the Judiciary held no hearings on H.R. 420 
during the 109th Congress.

                        Committee Consideration

    On May 25, 2005, the Committee met in open session and 
ordered favorably reported the bill H.R. 420 with an amendment 
by a recorded vote of 19 yeas to 11 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. 420.
    1. Mr. Conyers offered an amendment that would have 
provided that the Act would not apply to manufacturers, 
sellers, or trade associations that, on or after the date of 
enactment of the Act, shifts or transfers employment positions 
or facilities to a location outside the United States. By a 
rollcall vote of 11 yeas to 17 nays, the amendment was 
defeated.

                                                   ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................
Mr. Lungren.....................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Bachus......................................................
Mr. Inglis......................................................                              X
Mr. Hostettler..................................................                              X
Mr. Green.......................................................
Mr. Keller......................................................                              X
Mr. Issa........................................................                              X
Mr. Flake.......................................................
Mr. Pence.......................................................                              X
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Feeney......................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Conyers.....................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................
Ms. Waters......................................................              X
Mr. Meehan......................................................              X
Mr. Delahunt....................................................
Mr. Wexler......................................................
Mr. Weiner......................................................              X
Mr. Schiff......................................................              X
Ms. Sanchez.....................................................              X
Mr. Smith (Washington)..........................................
Mr. Van Hollen..................................................              X
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             11              17
----------------------------------------------------------------------------------------------------------------

    2. Motion to report H.R. 420 with an amendment in the 
nature of a substitute was agreed to by a rollcall vote of 19 
yeas and 11 nays.

                                                   ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................              X
Mr. Smith (Texas)...............................................              X
Mr. Gallegly....................................................              X
Mr. Goodlatte...................................................
Mr. Chabot......................................................              X
Mr. Lungren.....................................................              X
Mr. Jenkins.....................................................              X
Mr. Cannon......................................................              X
Mr. Bachus......................................................              X
Mr. Inglis......................................................              X
Mr. Hostettler..................................................              X
Mr. Green.......................................................
Mr. Keller......................................................              X
Mr. Issa........................................................              X
Mr. Flake.......................................................
Mr. Pence.......................................................              X
Mr. Forbes......................................................              X
Mr. King........................................................              X
Mr. Feeney......................................................              X
Mr. Franks......................................................              X
Mr. Gohmert.....................................................              X
Mr. Conyers.....................................................                              X
Mr. Berman......................................................                              X
Mr. Boucher.....................................................
Mr. Nadler......................................................                              X
Mr. Scott.......................................................                              X
Mr. Watt........................................................                              X
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................
Ms. Waters......................................................                              X
Mr. Meehan......................................................                              X
Mr. Delahunt....................................................
Mr. Wexler......................................................
Mr. Weiner......................................................                              X
Mr. Schiff......................................................                              X
Ms. Sanchez.....................................................                              X
Mr. Smith (Washington)..........................................
Mr. Van Hollen..................................................                              X
Mr. Sensenbrenner, Chairman.....................................              X
                                                                 -----------------------------------------------
    Total.......................................................             19              11
----------------------------------------------------------------------------------------------------------------

                      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. 420, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 3, 2005.
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. 420, the ``Lawsuit 
Abuse Reduction Act of 2005.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Gregory 
Waring (for Federal costs), who can be reached at 226-2860, and 
Melissa Merrell (for the State and local impact), who can be 
reached at 225-3220.
            Sincerely,
                                       Douglas Holtz-Eakin.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 420--Lawsuit Abuse Reduction Act of 2005.
    H.R. 420 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. 420 would not affect 
direct spending or revenues.
    H.R. 420 contains an intergovernmental mandate as defined 
in the Unfunded Mandates Reform Act (UMRA) 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 ($62 million in 2005, adjusted annually 
for inflation). The bill contains no new private-sector 
mandates as defined in UMRA.
    The CBO staff contacts for this estimate are Gregory Waring 
(for Federal costs), who can be reached at 226-2860, and 
Melissa Merrell (for the State and local impact), who can be 
reached at 225-3220. This estimate was approved by Peter H. 
Fontaine, Deputy 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. 
420 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) apply Rule 11's 
provisions to state cases a state judge finds substantially 
affects interstate commerce; (5) require that personal injury 
cases be brought only where the plaintiff resides, where the 
plaintiff was allegedly injured, where the defendant's 
principal place of business is located, or where the defendant 
resides; (6) apply a ``three strikes and you're out'' rule to 
attorneys who commit Rule 11 violations in Federal district 
court; (7) impose mandatory civil sanctions for document 
destruction intended to obstruct a pending court proceeding; 
and (8) provide that if a party attempts to relitigate a losing 
claim more than three consecutive times, there shall be a 
rebuttable presumption that Rule 11 has been violated.

                   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, section 8, clause 3 of the 
Constitution.

               Section-by-Section Analysis and Discussion

    The following discussion describes the bill as reported by 
the 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; and require 
monetary sanctions, including attorneys' fees and compensatory 
costs, against any party making a frivolous claim and causing 
economic harm to the victim of a frivolous lawsuit.
    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 substantially 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, or where the defendant 
resides. 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. Presumption of Rule 11 Violation for Repeatedly 
Relitigating Same Issue. This section provides that whenever a 
party presents to a Federal court, or to a State court in a 
proceeding that substantially affects interstate commerce, a 
pleading, written motion, or other paper, that includes a 
claim, defense, or other legal contention that the party has 
already litigated and lost on the merits in any forum in final 
decisions not subject to appeal on 3 consecutive occasions, 
there shall be a rebuttable presumption that the presentation 
of such paper is in violation of Rule 11 of the Federal Rules 
of Civil Procedure.
    Sec. 8. Enhanced Sanctions for Document Destruction. This 
section provides that provides for mandatory civil sanctions 
that are commensurate with those available under Rule 11 of the 
Federal Rules of Civil Procedure, in addition to other civil 
sanctions otherwise applicable, for the intentional destruction 
of documents sought in a pending civil court proceeding, and 
highly relevant to such proceeding, with the intent to obstruct 
such proceeding. The amendment applies to proceedings in 
Federal court, and in state courts when the proceedings 
substantially affect interstate commerce.

         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 pay the 
other party or parties 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]. If warranted, the 
                court [may] 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.

                           Markup Transcript



                            BUSINESS MEETING

                        WEDNESDAY, MAY 25, 2005

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:02 a.m., in 
Room 2138, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee will come to order. A 
working quorum is present.
    [Intervening business.]
    Chairman Sensenbrenner. Pursuant to notice, I now call up 
the bill H.R. 420, the ``Lawsuit Abuse Reduction Act of 2005,'' 
for purposes of markup and move its favorable recommendation to 
the House. Without objection, the bill will be considered as 
read and open for amendment at any point.
    [The bill, H.R. 420, follows:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    
    Chairman Sensenbrenner. The chair recognizes the gentleman 
from Texas, Mr. Smith, the sponsor of the legislation, to 
explain the bill.
    Mr. Smith. Thank you, Mr. Chairman.
    Mr. Chairman, H.R. 420 will deter frivolous litigation. Our 
country's values and its economy are under attack from 
unnecessary lawsuits. Americans sue over the slightest offense. 
Schoolteachers, doctors, Little League coaches, Girl Scout 
troop leaders often fear that the slightest offense to an angry 
parent or patient will result in years of litigation. In 
addition to intimidating members of our Nation's communities, 
frivolous lawsuits harm our economy and threaten to bankrupt 
business owners as well. The alarming spread of frivolous 
lawsuits has made a mockery of our legal system. 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.
    Many Americans have legitimate legal grievances and deserve 
their day in court. Justice should not be denied to those who 
deserve it. However, some lawyers game the system, which drives 
up the cost of doing business and drives down the integrity of 
the judicial system.
    For example, the CEO of San Antonio's Methodist Children's 
Hospital was sued after he stepped into a patient's hospital 
room and asked how the patient was doing. A jury cleared him of 
any wrongdoing.
    In a New Jersey Little League game, a player lost sight of 
a flyball because of the sun. He was injured when the ball hit 
him in the eye. The coach was forced to hire a lawyer after the 
boy's parents sued, and the coach was forced to settle the case 
for $25,000.
    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 finally threw out the case, writing that there is 
``a common-sense notion that it is necessary to properly chew 
hard foodstuffs prior to swallowing.''
    Today almost any party can bring any suit in practically 
any jurisdiction 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 file 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. While plaintiffs have nothing to lose and 
everything to gain by working the system this way, defendants, 
on the other hand, often stand to lose everything. They can 
unfairly lose their careers, their businesses, and their 
reputations. This is not justice.
    But the good news is that there is a remedy. Change Federal 
Rule of Civil Procedure 11. The Lawsuits Abuse Reduction Act 
does just that. It 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. 420, 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 attorneys fees of the party who was the victim of the 
frivolous claim.
    Also, if a State judge determines that a frivolous lawsuit 
has a significant impact on interstate commerce, the judge 
could sanction the litigants by using rule 11.
    Finally, Mr. Chairman, 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.
    Mr. Chairman, the Lawsuit Abuse Reduction Act is sensible 
reform that will help restore confidence in our economy, our 
communities, and in our justice system as well.
    And Mr. Chairman, I will yield back the balance of my time.
    Chairman Sensenbrenner. The gentleman from Michigan, Mr. 
Conyers.
    Mr. Conyers. Thank you very much.
    The reason I ask what are the reasons that so many 
organizations oppose this bill, including the United States 
Judicial Conference, the National Association for the 
Advancement of Colored People, the Alliance for Justice, Public 
Citizen, People for the American Way, the American Association 
of People with Disabilities, the Lawyers Committee for Civil 
Rights in Law, the American Bar Association, the National 
Conference on State Legislatures, National Partnership for 
Women, the National Women's Law Center, the Center for Justice 
and Democracy, Consumers Union, the National Association of 
Consumer Advocates, and the NAACP Legal Defense Fund--well, 
it's because this legislation would have an adverse impact on 
the ability of civil rights plaintiffs to seek recourse in the 
courts. And by requiring a mandatory sanctions regime that 
would apply in these kinds of cases, H.R. 420 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 stem from abuses by defendants in 
civil rights cases, namely, civil rights defendants were 
choosing to harass civil rights plaintiffs by filing a series 
of rule 11 motions intended to slow down and impede cases that 
clearly had merit.
    Now, although 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, 
and local civil rights law, 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 could be 
a daunting and complex issue for most of the courts and clearly 
does not cover all civil rights cases in any event.
    Section 4. The forum-shopping 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 some contact, as 
most State long-arm statutes, so called, provide, the bill only 
permits the suit to be brought where the defendant's principal 
business is located. In the case of a foreign corporation that 
obviously wouldn't exist inside the United States.
    So if a United States citizen is harmed by a product 
produced or manufactured by a foreign competitor, under this 
measure proposed, the harmed citizen would likely have no 
recourse against a foreign corporation, whereas he or she would 
have recourse against a comparable United States company.
    This is unfair to both our citizens and to our corporations 
that are in competition, and so that's why we have this long 
list--and I didn't mention them all--or organizations who don't 
have an ax to grind, who are not being partisan, who are trying 
to give us their point of view, and I'm happy to have had this 
chance to let you know how many people are hoping that the 
majority of us will turn back the Lawsuit Abuse Reduction Act 
of 2005.
    Thank you, Mr. Chairman.
    Chairman Sensenbrenner. Without objection, all Members' 
opening statements will appear in the record at this point.
    Are there amendments? Gentleman from Florida.
    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. 420 offered by Mr. Keller of 
Florida. At the end of the bill add the following new section.
    Mr. Keller. Mr. Chairman, I ask unanimous consent that the 
amendment be considered as read.
    Chairman Sensenbrenner. Without objection, so ordered, and 
the gentleman from Florida is recognized for 5 minutes.
    [The amendment follows:]
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    Mr. Keller. Thank you, Mr. Chairman. This is a three-
strikes-and-you're-out amendment. I'd like to explain it, give 
a brief history of it, and talk about why it's needed.
    The three-strikes-and-you're-out amendment, essentially 
says this. If a Federal judge determines that an attorney has 
violated rule 11 in that Federal District Court three times, 
the attorney shall be suspended from practicing law in that 
Federal District Court for 1 year. It is the identical language 
that was used in the last Congress. At Mr. Berman's request 
during the last markup, we added language to this provision 
that says the attorney may appeal the suspension and that the 
suspension shall be stayed during the appeal. This is the 
identical language that I'm offering today, the same language 
that passed this Committee by a 20 to 6 vote, and passed the 
House as part of the Lawsuit Abuse Reduction Act.
    Let me walk through just a brief history of the three-
strikes-and-you're-out concept, and I have a chart over to my 
right that some of you will be able to see, others on the TV. 
Let me tell you who supports it. First, George W. Bush. On 
February 9, 2000 he issued a campaign press release where he 
said, quote, ``As President I will bring common sense to our 
courts and curb frivolous lawsuits. If a lawyer files three 
junk lawsuits he'll lose the right to appear in Federal Court 
for 3 years, three strikes and you're out.''
    The Austin American Statesman, the local newspaper, the 
next day on February 10, 2000 said, quote, ``Bush's plan 
includes stiffer penalties for lawsuits determined by judges to 
be frivolous, including a three strikes you're out rule for 
lawyers who repeatedly file such claims.''
    This enjoys bipartisan support. Former Senator John 
Edwards, himself a personal injury attorney for many years 
before of course becoming a U.S. Senator and Democratic nominee 
for Vice President, said to Newsweek on December 15, 2003: 
Frivolous lawsuits waste good people's time and hurt the real 
victims. Lawyers who bring frivolous cases should face tough 
mandatory sanctions with a three strikes penalty.
    Senator John Kerry, the Democrat nominee for President, 
told the Associated Press 1 month before the election on 
October 10, 2004: Lawyers who file frivolous cases would face 
tough mandatory sanctions including a three-strikes-and-you're-
out provision that forbids lawyers who file three frivolous 
cases from bringing another suit for the next 10 years.
    Yesterday, Tuesday, May 24 at approximately 3:00 p.m., I 
personally met with the President of the United States in his 
residence at the White House. And I handed him this quote that 
you see on the chart, and asked him, ``Mr. President, do you 
still stand by this and support three-strikes-and-you're-out?'' 
He told me, yes, he stands by the three-strikes-and-you're-out 
concept, yes, he supports three-strikes-and-you're-out, and 
yes, that language of three-strikes-and-you're-out will not be 
vetoed.
    Action by Congress on this identical amendment was as 
follows last time. This Committee on September 8 approved it 20 
to 6; 100 percent of Republicans present voted for it, several 
Democrats voted for it including Mr. Berman, Ms. Lofgren and 
Mr. Schiff. It then comfortably passed the U.S. House of 
Representatives, a part of the underlying Lawsuit Abuse 
Reduction Act, with 16 Democrats voting for it.
    In a nutshell let me explain why it's needed. Under 
existing rule 11 law, if a court determines that there's a rule 
11 violation, the court may impose a sanction and may determine 
the type of sanction. Under Chairman Lamar Smith's base bill, 
there is a good improvement. Under this bill the judge shall 
impose a sanction if there's a violation, but he may determine 
what those sanctions are. He may award expenses which could be 
50 cents sanction for postage and photocopying expenses. He may 
award attorneys' fees which is substantially more, or he may 
determine that a verbal reprimand is sufficient to deter 
repetition of the bad conduct and no compensation is needed.
    The base bill needs additional teeth. 50 cents or a verbal 
reprimand won't get some attorneys' attention. A three-strikes-
and-you're-out penalty will. The goal of the three-strikes-and-
you're-out legislation is to prevent frivolous lawsuits from 
being filed in the first place. The three-strikes-and-you're-
out concept to crack down on frivolous lawsuits is a common 
sense bipartisan idea that deserves our support again today. 
It's supported by President Bush, Senator Edwards, Senator 
Kerry, this Committee and the U.S. House, and I ask my 
colleagues once again to vote yes on the three-strikes-and-
you're-out amendment.
    Mr. Chairman, before yielding back I ask unanimous consent 
to include in the record the articles and press release I 
referenced earlier from President Bush, Senator John Edwards 
and Senator Kerry regarding three-strikes-and-you're-out.
    Chairman Sensenbrenner. Without objection.
    [The information follows:]
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    Chairman Sensenbrenner. The gentleman from Virginia, Mr. 
Scott.
    Mr. Scott. Thank you. Move to strike the last word, Mr. 
Chairman.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, this is one of the--this mandatory 
provision on line 11 is the troubling part. The change in 
present law is simply that if a 1-year suspension in practice 
is the appropriate sanction, the judge can issue whatever 
sanction he wants under a contempt of court citation. If a 1-
year suspension doesn't make any sense, then this mandatory 
minimum requires it. The judge has great latitude, Mr. 
Chairman, on what he can do to someone who is in contempt of 
court. He doesn't need a mandatory suspension as part of that.
    I would hope that we would defeat this amendment, allow the 
judge to use common sense and not force the judge to impose 
sanctions when the sanctions in fact violate common sense. This 
amendment would force the judge to violate common sense if it's 
an inappropriate punishment, and therefore it's inappropriate 
and I yield back the balance of my time.
    Ms. Jackson Lee. Mr. Chairman--would you yield?
    Mr. Scott. I yield to the gentlelady from Texas.
    Ms. Jackson Lee. I thank the distinguished gentleman.
    Let me just say that I take issue. I'd like to read in full 
context the statements of Senator Kerry and Senator Edwards, 
but I think that--I'm not sure where the 6 votes came from, but 
I think that this is a slap in the face of justice, and I'd 
hope my colleagues would consider opposing this amendment.
    I agree with my colleague from Virginia that the judges 
already have the discretion, and frankly, that anyone who has 
practiced in Federal courts will now, that judges don't 
tolerate frivolous cases and have their own ways of sanction. 
This added extra burden simply closes the door of the 
courthouse to people who are the least empowered.
    I would ask the gentleman rhetorically, and I'd be 
delighted--it's not my time--is whether or not we have 
frivolous defenses. I frankly believe that we should have equal 
time. Frivolous plaintiffs and petitioners, frivolous defenses, 
and they occur on many occasion.
    So I'd ask my colleagues to consider the devastating aspect 
of this as it relates to an equal access to the courthouse and 
as well that this is redundant and repetitive because judges 
already have the authority. I yield back.
    Mr. Scott. Reclaiming my time, and I would like to take the 
opportunity, Mr. Chairman, to offer into the record a 
resolution from the Conference of Chief Justices and a letter 
from the Judicial Conference of the United States, which says--
which refers to a report that they did that makes it clear that 
the vast majority of Federal judges believe that the proposed 
changes to rule 11 will not help deter litigation abuses but 
will increase satellite litigation costs and delays. They point 
out that the bill will amend rule 11 to restore the 1983 
version of the rule 11 by removing a court's discretion to 
impose sanctions on a frivolous filing, and by eliminating rule 
11's--the present rule's safe harbor provisions.
    The Judicial Conference opposed the Lawsuit Abuse Reduction 
Act of 2004, the predecessor to H.R. 420. The Conference based 
its position on the problems caused by the 1983 version of rule 
11, which H.R. 420 would restore. The Conference noted these 
problems: one, the problems were creating a significant 
incentive to file unmeritorious rule 11 motions by providing a 
possibility of monetary penalty, endangering potential--
engendering potential conflict of interest between clients and 
their lawyers who advised withdrawal of particular claims, but 
despite the client's preferences; exacerbation of tensions 
between lawyers; and providing little incentive and perhaps a 
distinct disincentive to abandon or withdrawal and thereby 
admit error on pleadings or a claim after determining that it 
was no longer supported by the facts.
    Finally, the judges' experience of the 1993 version of the 
rule 11, which would point to marked decline in rule 11 
satellite litigation without any noticeable increase in the 
number of frivolous filings, H.R. 420 would effectively 
reinstate the 1983 version of the rule proved so contentious 
and wasted so much time and energy of the bench and bar.
    I'd ask unanimous consent that these two letters, Mr. 
Chairman, be entered into the record.
    Chairman Sensenbrenner. Without objection.
    [The information follows:]
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    Mr. Scott. And I yield back the balance of my time.
    Mr. Weiner. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from New York, Mr. 
Weiner.
    Mr. Weiner. Mr. Chairman, I'd be inclined to support Mr. 
Keller's thrust, except I'm concerned that--I'm not quite sure 
I understand why this isn't going to lead to a whole spate of 
additional litigation around these rule 11 proceedings. If all 
of these things now have a mandatory penalty and the base bill 
takes away discretion from a judge, you are going to have--and 
this was described briefly by Mr. Scott--it seems to me that 
you're going to have all kinds of litigation within litigation 
over rule 11 proceedings. Whereas now that a judge can 
essentially say what Ms. Jackson Lee suggested, ``This is 
baloney, I'm dismissing this claim because it's frivolous. 
Let's move on.'' Or allow a safe harbor where a lawyer could 
withdraw a claim if they had second thoughts about it.
    It seems we are taking mandatory sanctions and then making 
them even more final with Mr. Keller's proposed amendment, and 
I think it's just going to lead people just to dig in and 
litigate to the Nth degree every one of these rule 11 
proceedings. And I'm not sure that that's going to do anything 
other than just clog up the courts with a whole different set 
of litigation.
    Now, if we didn't have H.R. 420 in front of us and Mr. 
Keller said, ``I want to follow the quotes that are on that 
board from some other famous people,'' and say, ``Listen, let's 
have a three-strikes-and-you're-out,'' I would be inclined to 
say, you know what? That's not a bad idea. If you have 
discretion, and when people are showing that discretion, they 
continually rule that at a particular attorney is operating 
outside of rule 11, that seems like okay. But if you have a 
scenario like this, I think what's going to wind up happening 
with the bill, even without Mr. Keller's amendment, is you are 
going to have all kinds of litigation based on rule 11 
proceedings.
    And you know what? We have a certain level of experience 
with this in the pre-1993 rules, where we kind of experimented 
with this ethos to see how it would work, and I think the 
country decided, you know what, this isn't working so great; 
let's go back to the idea of giving some discretion to judges.
    The irony is just too sweet for me. You know, here it is 
the Republicans in the Senate and the President of the United 
States are putting in all of these judges that suit their 
political ideology, and now they're saying, we don't trust them 
at all to make any of these decisions. We're going to put in 
guys that we like. We're going to say how great they are, their 
great jurisprudence they've demonstrated, what great 
temperament they have, and at every possibility we, with 
mandatory minimums or provisions like this that take away any 
discretion from a judge to run his or her courtroom, we seem to 
be saying we don't trust them to do a very good job.
    Why don't we create good judges? Why don't we have good 
laws as best we can, and then let's let these judges kind of 
figure out the way to deal with the sanctions within their 
courtroom, because they might know much better than we, and I 
tell you something, I think that the Keller amendment is going 
to reinforce what is a defect in this bill, which is that we 
take away discretion from the people that should have it, and 
we take away the right of someone sitting on the bench to have 
an expeditious proceeding, and that doesn't even--we're not 
even touching on the whole idea of like, you know, everything 
is novel to begin with, every new case creates a certain level 
of novelty to begin with.
    And if people were afraid to bring novel claims, then we 
wouldn't--perhaps no one would have thought to sue for civil 
rights violations, no one would have thought to sue for the 
tobacco lobby or others that turned out to be ground-breaking 
proceedings that now everyone believes are not frivolous at 
all, but actually make some sense.
    So let's give back the responsibility for the courts to the 
judges and----
    Mr. Cannon. Would the gentleman yield?
    Mr. Weiner. Yeah. Let me just make one rhetorical flourish 
if you don't mind.
    I also think that we should acknowledge as elected 
officials that a couple of hundred thousand people vote for us, 
that we think they're smart enough to figure out. Why is it 
that we assume they're too dumb to figure anything else out? 
Why is the only decision we think they're right about is the 
one that put us in Congress, and we don't trust the idea that 
you can have a jury that knows what they're doing or a judge 
that knows what they're doing?
    And I'll be glad to yield to my friend from Utah.
    Mr. Cannon. I thank the gentleman. Three quick points. In 
the first place, in response to Ms. Jackson Lee's question, as 
I understand this bill, it does deal with defenses, frivolous 
defenses as well as other things.
    Mr. Weiner, I'm deeply concerned about the same kinds of 
things you're concerned about, and suspect that this will 
actually lead to a great deal of litigation, I think you said 
litigation to the Nth degree, and that is--that's a 
possibility. The problem is that judges have had the discretion 
to do fines under rule 11 for a very long time, and almost none 
have happened. And so I'm concerned about getting to a point 
where we motivate them to be thinking about this and then 
rethink the rule at some time in the future. But there are many 
frivolous lawsuits that don't have a response.
    And then finally, I would just point out to the gentleman 
that we're actually not worried about the new judges that this 
Administration would appoint, but the judges that have been 
appointed in the past, some by both Administrations of both 
parties. Thank you.
    Mr. Weiner. If I can have unanimous consent of an 
additional minute just to respond?
    Chairman Sensenbrenner. Without objection.
    Mr. Weiner. Let me just say it's--I guess so then it was 
last year's citizens that weren't smart enough to figure out, 
but this year's have finally sorted it out in electing all of 
us.
    But let me just say this. You know, there is a couple of 
ways that you can look at the idea that there aren't a lot of 
sanctions under rule 11. Call me crazy. One of the ways might 
be that a judge in a courtroom decided, you know what, this 
wasn't a frivolous case? You have different interpretations of 
the outcome. You have different interpretations of the 
evidence. But you do have judges that might say there aren't 
that many frivolous cases.
    Now it could just be--call me crazy--that there aren't as 
many frivolous lawsuits as you and the President and some would 
have us believe, and that's further argument for why we don't 
need this bill, and I'll be glad to----
    Chairman Sensenbrenner. The time of the gentleman has once 
again expired.
    The gentleman from California, Mr. Berman.
    Mr. Berman. Thank you, Mr. Chairman. If I could try to put 
a different kind of garnish on this rhetorical flourish.
    I actually think strengthening rule 11 is the right way to 
go. The majority party wants to go every which way in the name 
of dealing with, quote, ``frivolous lawsuit.'' They want to 
remove State causes of action. They want to put arbitrary 
limits on damages. They want to preempt courts from 
jurisdiction. It seems to me the concept of rule 11 and 
strengthening it is the right way to deal with what I am sure 
are frivolous lawsuits, frivolous defenses, frivolous motions. 
The Keller amendment makes sense to me in the form that it's 
written now because in the end of the day it may be a mandatory 
three strikes, but it is the judge who in his or her discretion 
will decide whether or not rule 11 has been violated, and 
consequences will only flow from those judicial findings.
    And by the way, for the people who file frivolous rule 11 
motions, they are subject to a rule 11 motion. So there is a 
deterrent to frivolous rule 11 motions.
    What I disagree with and what I think the majority party 
and my friend the gentleman from Texas are doing here, is they 
are--instead of focusing on strengthening rule 11 and creating 
a system of sanctions for violations of rule 11, all of a 
sudden they're grabbing all kinds of other things. We should be 
regulating conduct in the Federal courts. To go into State 
cases that happen to affect interstate commerce, which is--and 
the only reason you have that limitation is because 
constitutionally the bill would be presumably flawed 
constitutionally if you didn't put such a limit in. And to get 
into every single State legislature's, State judicial council's 
effort to regulate the filing of frivolous State actions and 
frivolous State motions makes no sense to me whatsoever.
    And to regulate what the sanction should be and how many 
sanctions there are at the State level makes no sense to me at 
all, that that's an appropriate area for the States. Once again 
the party of State's rights is federalizing everything they can 
think of for no reason.
    And then getting into what State venue rules for personal 
injury cases, why in heaven's name are we doing that? What is 
the purpose. I came in late. Maybe in the original arguments 
there was a series of fact-based justifications for the Federal 
Congress intruding on State venue rules, but I don't think so.
    I'll vote for the Keller amendment because I think it makes 
sense, but I'm sure thinking this bill as a whole is a massive 
intrusion on historic State court prerogatives, and I also will 
predict that this bill in this form will never survive in the 
other body, and secondly, that you'll have missed an 
opportunity to deal with strengthening rule 11 as the logical 
deterrent to frivolous action instead of all these efforts to 
wipe away jurisdiction and preempt--provide Federal preemption, 
all the other overreaches that the majority party seems to make 
on these issue, and you're going to lose the opportunity to 
deal with what to me makes the most sense, which is providing a 
meaningful rule 11 for Federal actions.
    I yield back.
    Chairman Sensenbrenner. The question is on the amendment--
the gentleman from Florida, Mr. Wexler?
    Mr. Wexler. Just seems to be a little bit of a discrepancy 
and I was wondering if I could ask Mr. Keller if he could clear 
it up. The gentleman from Utah indicated that it was his belief 
that the amendment does apply equally--I don't want to 
paraphrase him, but I believe he said he believes the amendment 
does apply equally to three frivolous defenses as it would to 
three frivolous claims by plaintiffs.
    Mr. Keller. Would the gentleman yield?
    Mr. Wexler. Yes.
    Mr. Keller. Yes. Rule 11, section (b)(2) is unchanged by my 
amendment, and yes, it applies to defenses as well, so a 
defense attorney who repeatedly files frivolous defenses would 
also be subject to the same suspension.
    Mr. Wexler. Under the same set of rules?
    Mr. Keller. Same set, identical.
    Mr. Wexler. Okay. Thank you.
    Mr. Gohmert. Mr. Chairman, if I could move to strike the 
last word very----
    Chairman Sensenbrenner. The gentleman from Texas recognized 
for 5 minutes.
    Mr. Gohmert. This will be very brief. Rule 11 says if a 
pleading, motion or other paper is signed in violation of this 
rule, it applies to pleadings filed in the lawsuit, to motions. 
I appreciate the gentleman from New York's repeated invitation 
to call him crazy, but---- [Laughter.]
    But if one looks at this, you realize it applies to defense 
motions. He had a concern that it would create more litigation 
when someone was sanctioned for filing a frivolous suit the 
third time or frivolous pleading the third time, and the fact 
is that anybody that files one of those in a case that's 
clearly frivolous will subject themselves to further sanction.
    And I can tell you from State court discovery rules, where 
it took me three times of sanctioning people for discovery 
abuse to where people didn't do it any more. And it cut out 
tremendous amount of frivolous motions, and they were from both 
plaintiff and defense side. This will help cut out unnecessary 
filings from both sides. And I support this amendment and 
original motion.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from Florida, Mr. Keller. All those in 
favor will say aye.
    Opposed no?
    The ayes appear to have it. The ayes have it. The amendment 
is agreed to.
    For what purpose does the gentleman from Texas, Mr. Smith, 
seek recognition?
    Mr. Smith of Texas. Mr. Chairman, I have an amendment at 
the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 420 offered by Mr. Smith of 
Texas. Page 2, strike line 2 and all that follows through line 
12 on page 3, and insert the following. Section 2----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read, and the gentleman from Texas is recognized 
for 5 minutes.
    [The amendment follows:]
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    Mr. Smith of Texas. Mr. Chairman, this amendment will 
improve the bill in several ways. First, it makes a technical 
fix in the wording of section 2 to clarify that appropriate 
sanctions against the filer of a frivolous lawsuit may include 
an order to pay the other party or parties for their reasonable 
expenses incurred as a direct result of the filing of their 
frivolous lawsuit.
    Second, the amendment excludes discovery requests and 
responses from being sanctioned under rule 11. Some sanctions 
for discovery abuse are already available under current law in 
Federal Rule 37. To include discovery abuse under rule 11 
sanctions would be duplicative in many instances and cause 
unnecessary confusion.
    Third, it will amend section 3 of the bill so that 
mandatory sanctions will apply to frivolous lawsuits that a 
State judge determines, quote, ``substantially affects,'' end 
quote, interstate commerce. This change was made to track the 
language used in the most recent Supreme Court decisions 
regarding Congress's interstate commerce powers.
    Last, section 4 is amended to clarify that if a defendant 
is an individual person rather than a corporation, that 
defendant may be sued where they reside among the other 
appropriate sites for a lawsuit as provided in the underlying 
bill.
    Mr. Chairman, I would also like to have unanimous consent 
to add the names of over 120 organizations that have endorsed 
this underlying bill, most recently the American Medical 
Association.
    [The information follows:]
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    Chairman Sensenbrenner. Without objection.
    Mr. Smith of Texas. Mr. Chairman, finally, just to 
alleviate the concerns of some of my colleagues and also to set 
the record straight, I'd like to just read a short finding of a 
1990 poll that was taken by the Federal Judicial Center. This 
was a survey of 751 Federal judges, and it found that an 
overwhelming majority of Federal judges believed, based on 
their experience under both a weaker and a stronger rule 11, 
that a stronger rule 11 did not impede development of the law, 
95 percent; the benefits of the rule outweighed any additional 
requirement of judicial time, 72 percent; the stronger version 
of rule 11 had a positive effect on litigation in the Federal 
courts, 81 percent; and the rule should be retained in its then 
current form, 80 percent. Note that of the 751 judges surveyed 
in 1990, 583 responded in this very positive way.
    Mr. Scott. Would the gentleman yield? What year was that?
    Mr. Smith of Texas. That was 1990. And if I can anticipate 
maybe the next question that's coming, Mr. Chairman, and as 
long as I have time remaining, let me say that the Federal 
Judicial Center's recent 2005 survey of U.S. district court 
judges will be misused by opponents of legal reform as the 
evidence of frivolous lawsuits are not a problem. However, the 
survey of the Federal Judicial Center shows nothing of the 
sort, and let me give a little bit of historical background 
here.
    The Lawsuit Abuse Reduction Act would largely restore 
Federal Rule of Civil Procedure 11 to what it was before 1993. 
Prior to the adoption of weakening amendments in that year, 
which eliminated mandatory and serious sanctions against those 
who file frivolous lawsuits, rule 11 was widely popular among 
Federal judges, and it served to significantly limit lawsuit 
abuse. And in regard to the 2005 survey, the most recent one, 
only 278 judges responded to that Federal Judicial Center's 
latest survey. Half of the judges surveyed and over half of the 
judges that responded to the survey had no experience with the 
stronger version of rule 11. They had nothing to compare it to.
    I would also say that that survey--and this skewed the 
results--included specifically a sample of over 200 district 
judges who were appointed to the bench after January 1, 1992. 
So that skewed the results as well.
    Mr. Chairman, I will yield back----
    Mr. Berman. Would the gentleman yield?
    Mr. Smith of Texas.--the balance of my time.
    Mr. Berman. Would the gentleman yield?
    Mr. Smith of Texas. Mr. Chairman, I will yield to the 
gentleman from California, Mr. Berman.
    Mr. Berman. Did either the 1990 survey or the 2005 survey 
indicate that the Federal judges believed that Federal Rule 11, 
which only applied to Federal cases, should be mandated on 
every State in the country and all State courts involving any 
lawsuit----
    Mr. Smith of Texas. I'll reclaim my time----
    Mr. Berman.--affecting interstate commerce?
    Mr. Smith of Texas.--and say to the gentleman from 
California, the survey questions were pretty clear and the 
results of the judges' feelings were pretty clear, too. There 
was no question that resulted in less than about an 80 percent 
positive reaction to rule 11----
    Mr. Berman. I'll take that as an answer that they did not--
--
    Mr. Smith of Texas. I don't know whether they polled on 
that specific question or not.
    Mr. Scott. Will the gentleman yield? Will the gentleman 
yield?
    Mr. Smith of Texas. I'll be happy to yield to the gentleman 
from Virginia, yes.
    Mr. Scott. Maybe I missed something. You said the 1990 
survey--if it was taken in 1990, they wouldn't have had an 
opportunity to compare the 1983 version to the 1993 version. 
The 2005 survey presumably allows them to compare both the 1983 
and '93. The overwhelming preference was to leave----
    Chairman Sensenbrenner. The time of the gentleman has 
expired. Without objection, he will be given an additional 
minute.
    Mr. Scott. Thank you. The overwhelming preference is to 
leave things as they are, having been improved in 1993. 
Wouldn't the 1995 survey, with a lot of judges presumably 
having experience with both rules, be more valuable?
    Mr. Smith of Texas. Let me reclaim my time. That's exactly 
the point I was making a while ago. In the 1995 survey, by 
specific direction, there were 200 judges that had no 
experience whatsoever with the former strong interpretation of 
rule 11, and that's why that result was totally skewed, and 
that's why the earlier survey was much more accurate. And I 
yield back the balance of my time.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from Texas, Mr. Smith. Those in favor 
will say aye? Opposed, no?
    The ayes appear to have it. The ayes have it. The amendment 
is agreed to.
    Are there further amendments? The gentleman from New York, 
Mr. Nadler.
    Mr. Nadler. Thank you. Mr. Chairman, I have an amendment at 
the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    Mr. Nadler. This is the one that says ``ban on 
concealment.''
    The Clerk. Amendment to H.R. 420, offered by Mr. Nadler of 
New York. At the end of the bill, add the following new 
section: Section-Ban on Concealment of Unlawful Conduct. (1) In 
General.--In any case concerning rule 11----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read, and the gentleman from New York will be 
recognized for 5 minutes.
    [The amendment follows:]
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    Mr. Nadler. Thank you. Mr. Chairman, this is--this is 
similar to--it's a modified version of the amendment I've 
offered the last few years, which the Chairman supported not 
last year but the year before last. Very often in civil 
litigation, the company may have an unsafe product or an unsafe 
procedure, and rather than go to trial, the company settles 
with the plaintiff. The company usually pays the plaintiff a 
certain amount of money because the plaintiff was injured by 
this unsafe product. Many times the condition of the settlement 
is that the records will be sealed and no one will ever talk 
about it. So both the plaintiff and the defendant go to the 
judge and say, Your Honor, we have a settlement to the case, 
and we both ask that you seal the record, and the judge will 
order the record sealed because both cases have asked--both 
sides have asked for it.
    Unfortunately, this often perpetuates a situation where the 
unsafe product is continued to be marketed and nothing changes 
because the company making the unsafe profit--product has, in 
effect, bought into a cover-up. This type of settlement in 
secrecy often 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.
    Now, it is different from last year's amendment. Last 
year's amendment required that a judge in the case concerning 
rule 11 must make a finding of fact where a gag order is 
requested, and if he finds that the privacy interests 
outweigh--that the privacy interest outweighs the public 
interest, then the judge must allow the gag order and the 
secrecy.
    Here it says--in this amendment we've said that the court 
may not order that a court record be sealed or subjected to a 
protective order unless the court makes a finding of fact that 
identifies the interest that justifies the order and determines 
that that interest outweighs any interest in the public health 
and safety that the court determines would be served by not 
sealing or restricting the court record.
    So we've made the amendment somewhat more restrictive than 
last year's amendment after some discussions with Mr. Smith. 
This does not prohibit the sealing of the record. This simply 
says that if you want the record sealed, the judge takes a look 
at the interest why you say the record should be sealed, and at 
any public interest for public health and safety, limited to 
public health and safety, and he makes a determination which 
outweighs the other. And I think it's in the public interest, 
and I would hope that the amendment could be supported.
    Mr. Smith of Texas. Would the gentleman yield?
    Mr. Nadler. I will.
    Mr. Smith of Texas. Mr. Chairman, I just want to say that I 
think the gentleman from New York makes a number of good 
points, or at least a sufficiently number of good points so 
that he and I can come to an agreement on an amendment that 
might be acceptable to the Chairman between now and the floor. 
And so I appreciate the gentleman withdrawing the amendment and 
look forward to working him--with him in good faith to a good 
resolution.
    Mr. Nadler. Well, thank you. Reclaiming my time, Mr. Smith 
makes the assumption that I will withdraw the amendment. It is 
indeed a good assumption. On that understanding that we'll work 
on it between now and the floor, I will withdraw the amendment, 
and I thank the gentleman.
    Chairman Sensenbrenner. And before the amendment is 
withdrawn, let the Chair state that he's amenable to helping 
the two gentlemen work it out.
    Mr. Nadler. I appreciate that, sir.
    Chairman Sensenbrenner. The amendment is withdrawn.
    Are there further amendments? The gentleman from Virginia, 
Mr. Scott.
    Mr. Scott. Mr. Chairman, I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 420, offered by Mr. Scott of 
Virginia. At the end of the bill, add the following new 
section: Section-presumption of Rule 11 Violation for 
Repeatedly Relitigating Same Issue. Whenever a party attempts 
to----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read, and the gentleman from Virginia is 
recognized for 5 minutes.
    [The amendment follows:]
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    Mr. Scott. Mr. Chairman, a lot has been said about the 
increase in frivolous lawsuits. I offer this amendment to 
ensure that we truly rein in frivolous lawsuits without harming 
the ability of legitimate cases to be brought and to actually 
ascertain whether we're serious about frivolous lawsuits.
    A few months ago, a national spotlight was focused on a 
case in which the defendant had successfully defended himself--
his case 19 separate times and survived multiple court reviews, 
all with judgments in his favor. However, the plaintiffs 
continued to retry the same case, forcing the defendant to 
repeatedly defend himself and expend huge amounts of time and 
money for his defense.
    Mr. Chairman, that case is perhaps the best example of why 
this amendment should be adopted. When a case has been decided 
on the merits numerous times and each time the plaintiff 
receives an adverse decision, at some point the decision should 
be taken as conclusive. Bringing the case yet another time in 
another court is simply an abuse. It is a waste of the court's 
time and resources, and it is unfair to the person who has 
repeatedly won the case, and yet is again required to defend 
it, expending even more time and money.
    Therefore, I propose that after three consecutive adverse 
decisions on the merits, a person attempting to file yet 
another claim on the same issue be saddled with a rebuttable 
presumption of a rule 11 violation.
    Now, it's important to note that this presumption is 
rebuttable because we want to allow common sense in appropriate 
circumstances. But if we are going to prevent lawsuit abuse, we 
ought not allow an innocent victim to be subjected to 
unnecessary and repeat litigation time and time again.
    I urge my colleagues to support this amendment.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Scott. I yield back.
    Chairman Sensenbrenner. The gentleman from Texas, Mr. 
Smith.
    Mr. Smith of Texas. Mr. Chairman, first of all, let me 
compliment the gentleman from Virginia for a particularly 
creative amendment. It is so creative, in fact, that it has 
caught the Chairman's attention, and he recommends that we 
accept the amendment, and I will go along with his 
recommendation.
    Mr. Chairman, I yield back the balance of my time.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from Virginia, Mr. Scott. Those in 
favor will say aye? Those opposed, no?
    The ayes appear to have it. The ayes have it, and the 
amendment is agreed to.
    Are there further amendments? If there are--the gentleman 
from New York, Mr. Nadler.
    Mr. Nadler. Yes, I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the other 
amendment at the desk.
    The Clerk. Amendment to H.R. 420, offered by Mr. Nadler. At 
the end of the bill, add the following new section: Section-
Enhanced Sanctions for Document Destruction. (a) In General.--
Whoever influences, obstructs, or impedes, or endeavors to 
influence, obstruct, or impede, a pending court proceeding 
through the intentional destruction of documents sought in, and 
high relevant to, that proceeding--(1) 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; and (2) shall be held in----
    Mr. Smith of Texas. Mr. Chairman, I'll reserve a point of 
order.
    Chairman Sensenbrenner. Okay. A point of order is reserved. 
Without objection, the amendment is considered as read and 
subject to the reservation.
    [The amendment follows:]
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    Chairman Sensenbrenner. The gentleman from New York is 
recognized for 5 minutes.
    Mr. Nadler. Thank you, Mr. Chairman.
    Mr. Chairman, in this bill that deals with lawsuit abuse, 
this is a type of abuse in lawsuits that can be very 
destructive. When corporations knowingly destroy documents and 
take actions to hide evidence of their wrongful conduct, they 
must be held accountable. Delays during litigation provide 
ample opportunities for wrongdoers to destroy documents that 
are essential to proving the claims against them. Because this 
conduct can result in the complete inability to hold these 
defendants accountable for their wrongful acts, parties that 
engage in such flagrantly bad conduct, destroying relevant and 
incriminating documents, must be severely sanctioned.
    The document destruction amendment to H.R. 420 would 
provide mandatory sanctions to anyone who hinders a court 
proceeding by intentionally destroying documents relating to 
that proceeding.
    Consider some of the examples where, once a corporation 
became aware of the claims against it and the information 
sought by the claimant, they knowingly destroyed documents, for 
example, Enron. Enron allowed corporate executives to sell 
stock options at huge profit while prohibiting employees from 
diversifying their 401(k) investments and conspired to hide 
financial information. This resulted in the $1.3 billion loss 
to thousands of employees. Despite engaging in this conduct, 
company executives shredded documents and destroyed evidence of 
their actions in an attempt to avoid culpability.
    Arthur Andersen. The accounting company Arthur Andersen was 
caught destroying documents in a class action case filed in 
Texas against Enron by retirees of Enron who were losing their 
pensions. Retirees had to endure a discovery delay of near one 
and a half years because of the special rules that apply to 
securities lawsuits. It was during this delay that Arthur 
Andersen deliberately destroyed key documents necessary for the 
employees to prove their case.
    WorldCom. In the case of WorldCom, the Securities and 
Exchange Commission learned from their experiences with the 
Enron case and hired a corporate monitor in order to reduce the 
chance that key documents would be destroyed. ```On day one, we 
filed the lawsuit against WorldCom, and on day two, we forged 
an agreement for a corporate monitor,' Mr. Breslin said. We 
wanted to react to some of our experiences at Enron. We wanted 
to make sure there was no document destruction in WorldCom and 
no excessive compensation paid to executives at the same 
time.'' That's a quote from the New York Law Journal of October 
7 of last year.
    So in all these cases we see deliberate destruction of 
documents while the SEC's spending a lot of money because they 
expect deliberate destruction of documents, and we ought to--
obviously deliberate destruction of relevant documents in a 
lawsuit is subversive of justice, subversive of the rights of 
the other party, whether they be plaintiff or defendant. It can 
go either way. And so this amendment to increase the sanctions, 
to put real teeth into the sanctions against the destruction of 
relevant court documents would seem to be indicated and would 
seem to fit squarely within this bill on frivolous lawsuits.
    I therefore urge my colleagues to adopt the amendment. I 
yield back.
    Chairman Sensenbrenner. Does the gentleman from Texas 
insist upon his point of order?
    Mr. Smith of Texas. Mr. Chairman, I do.
    Chairman Sensenbrenner. The gentleman will state his point 
of order.
    Mr. Smith of Texas. Thank you, Mr. Chairman.
    Mr. Chairman, this amendment is too broad because it simply 
goes beyond rule 11. Therefore, it's not germane, and I insist 
on my point of order despite the fact that the amendment is 
well intended.
    Chairman Sensenbrenner. Will the gentleman repeat what he 
just said?
    Mr. Smith of Texas. The mike is on. Mr. Chairman, I want to 
make the point again that this amendment is non-germane because 
the substance of the amendment goes beyond rule 11. It deals 
with rule 37 and, therefore, it's too broad, therefore, it's 
not germane, and for that reason I insist on my point of order, 
as well intended as the amendment might be.
    Chairman Sensenbrenner. The gentleman from New York.
    Mr. Nadler. I seem to recall that there are aspects of this 
bill that go beyond rule 11.
    Mr. Berman. Would the gentleman yield?
    Mr. Nadler. Certainly.
    Mr. Berman. How could any amendment to a bill that takes 
every State court action and subjects it to Federal rules about 
rule 11 be--how could any amendment be too broad for that bill?
    Mr. Smith of Texas. If the gentleman will yield, once 
again, there is nothing in the underlying bill that deals with 
rule 37. But to answer the gentleman's question, his own point 
was way too broad. It doesn't deal with every State court. It 
only deals with State courts that had that substantial 
connection to interstate commerce. So just as the gentleman's 
statement was too broad, so is the amendment too broad, and for 
that reason non-germane.
    Chairman Sensenbrenner. The Chair is prepared to rule. In 
the opinion of the Chair, the amendment offered by the 
gentleman from New York is not germane for two reasons:
    First of all, the bill proposes to amend rule 11 of the 
Federal Rules of Civil Procedure. The amendment offered by the 
gentleman from New York makes no reference to rule 11 of the 
Federal Rules of Civil Procedure; rather, it makes reference to 
rule 37 of the Federal Rules of Civil Procedure.
    Secondly, the underlying bill is applicable to Federal 
court actions and State court actions that affect interstate 
commerce. The amendment offered by the gentleman from New York 
does not have the restriction on State court actions that apply 
to interstate commerce, but all State court actions.
    For the reasons the Chair has stated, the point of order is 
sustained.
    Are there further amendments?
    Mr. Conyers. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Michigan.
    Mr. Nadler. Mr. Chairman?
    Mr. Conyers. I yield.
    Mr. Nadler. Mr. Chairman, I ask for--I appeal the ruling of 
the Chair.
    Chairman Sensenbrenner. The question is----
    Mr. Smith of Texas. Mr. Chairman I'll----
    Chairman Sensenbrenner. The gentleman from Texas.
    Mr. Smith of Texas. I'll move to table the motion, Mr. 
Chairman.
    Chairman Sensenbrenner. The question is on tabling the 
motion to appeal the decision of the Chair. Those in favor of 
tabling will say aye? Opposed, no?
    The ayes appear to have it. The ayes have it. The appeal is 
tabled.
    Mr. Conyers. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Michigan.
    Mr. Conyers. I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 420, offered by Mr. Conyers. 
Page 6, after line 5, insert the following new section (and 
redesignate succeeding sections accordingly). Section 5. 
Limitation. The provisions of this act do not apply----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    

    Chairman Sensenbrenner. The gentleman from Michigan will be 
recognized for 5 minutes.
    Mr. Conyers. Thank you, Mr. Chairman.
    This amendment provides that the provisions of this act 
will not apply to an action against a manufacturer, seller, or 
trade association that, after this measure is passed, shifts or 
transfers employment positions or facilities to a location 
outside of the United States. It's an anti-outsourcing 
amendment to the measure. I offer this to prevent companies 
that outsource American jobs overseas from benefiting from the 
liability protections in the legislation. And this provision 
would send a clear, unambiguous signal that if one is selling a 
product or service made in the U.S.A. and wanted to continue to 
receive the extralegal liability protections in this country, 
then the company cannot continue to outsource jobs. And I think 
we at least owe this much to American workers everywhere.
    This amendment allows ourselves to state that we can't 
continue to reward those countries that outsource jobs abroad 
with tax benefits, with Government contracts, and with new 
legal benefits. Companies, for example, Travelocity, that close 
their United States-based facilities and outsource jobs abroad 
cause workers their jobs and their livelihood and contribute to 
the ever-rising unemployment rate.
    Furthermore, these actions perpetrate a fraud on our 
citizens. They think they're buying products made in the United 
States, but the product is really frequently made overseas.
    Do we really want to reward those companies by increasing 
their liability protections? And so we, in order to get a grip 
on the subject of outsourcing, before our economy is 
permanently damaged, which it already has been--we've lost 
approximately $4 billion in American wages, and this is 
expected to increase to a staggering $136 billion over the next 
15 years.
    And so I urge my colleagues to join me in protecting 
Americans and American jobs and not reward outsourcing 
companies with increased liability protections. Please accept 
this amendment, and I return my time.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from Michigan, Mr. Conyers. Those in 
favor will say aye? Opposed, no?
    The noes appear to have it. The noes have it. The amendment 
is not agreed to.
    Are there----
    Mr. Conyers. Yes, a record vote.
    Chairman Sensenbrenner. A record vote is requested. The 
question is on agreeing to the Conyers amendment. 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?
    [No response.]
    The Clerk. Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no. Mr. Smith?
    Mr. Smith of Texas. No.
    The Clerk. Mr. Smith, no. Mr. Gallegly?
    Mr. Gallegly. No.
    The Clerk. Mr. Gallegly, no. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    [No response.]
    The Clerk. Mr. Lungren?
    Mr. Lungren. No.
    The Clerk. Mr. Lungren, no. Mr. Jenkins?
    Mr. Jenkins. No.
    The Clerk. Mr. Jenkins, no. Mr. Cannon?
    Mr. Cannon. No.
    The Clerk. Mr. Cannon, no. Mr. Bachus?
    [No response.]
    The Clerk. Mr. Inglis?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no. Mr. Green?
    [No response.]
    The Clerk. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no. Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no. Mr. Flake?
    [No response.]
    The Clerk. Mr. Pence?
    Mr. Pence. No.
    The Clerk. Mr. Pence, no. Mr. Forbes?
    Mr. Forbes. No.
    The Clerk. Mr. Forbes, no. Mr. King?
    Mr. King. No.
    The Clerk. Mr. King, no. Mr. Feeney?
    Mr. Feeney. No.
    The Clerk. Mr. Feeney, no. Mr. Franks?
    Mr. Franks. No.
    The Clerk. Mr. Franks, no. Mr. Gohmert?
    Mr. Gohmert. No.
    The Clerk. Mr. Gohmert, no. Mr. Conyers?
    Mr. Conyers. Aye.
    The Clerk. Mr. Conyers, aye. Mr. Berman?
    Mr. Berman. Aye.
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler, aye. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye. Mr. Watt?
    [No response.]
    The Clerk. Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    [No response.]
    The Clerk. Ms. Waters?
    [No response.]
    The Clerk. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Mr. Weiner?
    Mr. Weiner. Aye.
    The Clerk. Mr. Weiner, aye. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye. Ms. Sanchez?
    Ms. Sanchez. Aye.
    The Clerk. Ms. Sanchez, aye. Mr. Smith?
    [No response.]
    The Clerk. Mr. Van Hollen?
    [No response.]
    The Clerk. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Members in the chamber who wish to 
cast or change their votes? The gentleman from South Carolina, 
Mr. Inglis.
    Mr. Inglis. No.
    The Clerk. Mr. Inglis, no.
    Chairman Sensenbrenner. Further Members who wish to cast--
the gentleman from Massachusetts, Mr. Meehan?
    Mr. Meehan. Aye.
    The Clerk. Mr. Meehan, aye.
    Chairman Sensenbrenner. Further Members who wish to cast or 
change their vote? If not, the clerk will report. The gentleman 
from North Carolina, Mr. Watt.
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Chairman Sensenbrenner. The gentlewoman from California, 
Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye.
    Chairman Sensenbrenner. The gentleman from Maryland, Mr. 
Van Hollen.
    Mr. Van Hollen. Aye.
    The Clerk. Mr. Van Hollen, aye.
    Chairman Sensenbrenner. Further Members who wish to cast or 
change their vote?
    Mr. Nadler. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from New York, Mr. 
Nadler.
    Mr. Nadler. How am I recorded?
    The Clerk. Mr. Chairman, Mr. Nadler is an aye.
    Mr. Nadler. I'm recorded in the affirmative?
    The Clerk. Yes, sir.
    Mr. Nadler. Thank you.
    The Clerk. Mr. Chairman.
    Chairman Sensenbrenner. The clerk will report.
    The Clerk. Mr. Chairman, there are 11 ayes and 17 noes.
    Chairman Sensenbrenner. And the amendment is not agreed to.
    Are there further amendments? If there are no further 
amendments--the gentleman from New York.
    Mr. Nadler. I will have in about a minute, as soon as it 
comes back from the typist, an amendment.
    Well, I can--Mr. Chairman, I can move to strike the last 
word in the meantime.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes. Maybe he can tell us about his amendment before----
    Mr. Nadler. Yes, the amendment is identical to the 
amendment I introduced a few moments ago on draft--on 
prohibiting--on sanctioning destruction of relevant court 
documents, with two changes. One, in accordance with the ruling 
of the Chair, it limits its application to Federal courts and 
State courts that substantially affect interstate commerce, the 
exact language of Mr. Smith's amendment, and, therefore, would 
not be out of order on that count. And, secondly, it talks 
about sanctions in rule 11 rather than rule 37. Rule 11 
sanctions are not as broad as rule 37 sanctions, but they're 
sufficient for the job, we think. So that would eliminate the 
other grounds for ruling the amendment out of order.
    Substantively, it's the same amendment and we'll now have 
to address the substance of the amendment. This amendment says 
that we will apply sanctions to a party in a lawsuit--and I see 
the amendment has just arrived.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Nadler. Yes, I will.
    Chairman Sensenbrenner. Are there further amendments? The 
gentleman from New York.
    Mr. Nadler. Thank you. This amendment----
    Chairman Sensenbrenner. Does the gentleman from New York 
have an amendment at the desk?
    Mr. Nadler. I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 420, offered by Mr. Nadler. At 
the end of the bill, add the following new section: Section-
Enhanced Sanctions for Document Destruction. (a) In General----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
    <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
    

    Chairman Sensenbrenner. The gentleman from New York will be 
recognized for 5 minutes.
    Mr. Nadler. Thank you, Mr. Chairman. As you can see, it 
makes two changes in the previous amendment, rule 11 sanctions 
instead of rule 37 sanctions, and limits it to State courts 
that substantially affect interstate commerce.
    So we should now debate the substance of the bill, since 
the two grounds ruling it--of the amendment, the two grounds 
ruling it out of order are no longer applicable.
    The substance is very simple. Someone who is sued or for 
that matter is a plaintiff in a lawsuit should not deliberately 
and knowingly destroy relevant documents that the other party 
will have a right to see in order to frustrate proof.
    This was done, as I said, in the Enron situation, in 
WorldCom, Arthur Anderson, and we've all read of situations. 
This is a fraud on the court. It's a fraud on the other side. 
It's against justice. I can't imagine why anyone would support 
deliberate destruction of relevant court documents by people 
who knowingly destroy them because they know that they are 
relevant. And this simply says that they should be sanctioned 
under rule 11 and in addition to whatever obviously not quite 
effective enough sanctions we have under current law.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Nadler. I yield back.
    Chairman Sensenbrenner. The gentleman from Texas.
    Mr. Smith of Texas. Mr. Chairman, on your recommendation, 
which is to accept the amendment, I will do so as well, but I 
wouldn't want to encourage individuals from the other side to 
think this is going to be a habit any time soon.
    Chairman Sensenbrenner. Will the gentleman yield?
    Mr. Smith of Texas. Yes. I'll be happy to yield.
    Chairman Sensenbrenner. Well, if the gentleman will yield, 
I will concur that this is not a habit-forming amendment.
    Mr. Nadler. We appreciate that, sir.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Smith of Texas. Yes, I yield back.
    Chairman Sensenbrenner. The question is on agreeing to the 
amendment offered by the gentleman from New York, Mr. Nadler. 
Those in favor will say aye.
    Opposed no.
    The ayes appear to have it. The ayes have it. The amendment 
is agreed to.
    Are there further amendments? If there are no further 
amendments, a reporting quorum is present.
    The question occurs on the motion to report the bill H.R. 
420 favorably as amended. All in favor will say aye.
    Opposed no.
    The ayes appear to have it. The ayes have it, and 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----
    Mr. Conyers. Record vote, sir.
    Chairman Sensenbrenner. Oh. Okay. Those in favor of 
reporting the bill favorably as amended will as your names are 
called answer aye. Those opposed no, and the Clerk will call 
the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Coble?
    Mr. Coble. Aye.
    The Clerk. Mr. Coble, aye. Mr. Smith?
    Mr. Smith of Texas. Aye.
    The Clerk. Mr. Smith, aye. Mr. Gallegly?
    Mr. Gallegly. Aye.
    The Clerk. Mr. Gallegly, aye. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot, aye. Mr. Lungren?
    Mr. Lungren. Aye.
    The Clerk. Mr. Lungren, aye. Mr. Jenkins?
    Mr. Jenkins. Aye.
    The Clerk. Mr. Jenkins, aye. Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye. Mr. Bachus?
    [No response.]
    The Clerk. Mr. Inglis?
    Mr. Inglis. Aye.
    The Clerk. Mr. Inglis, aye. Mr. Hostettler?
    Mr. Hostettler. Aye.
    The Clerk. Mr. Hostettler, aye. Mr. Green?
    [No response.]
    The Clerk. Mr. Keller?
    Mr. Keller. Aye.
    The Clerk. Mr. Keller, aye. Mr. Issa?
    Mr. Issa. Aye.
    The Clerk. Mr. Issa, aye. Mr. Flake?
    [No response.]
    The Clerk. Mr. Pence?
    Mr. Pence. Aye.
    The Clerk. Mr. Pence, aye. Mr. Forbes?
    Mr. Forbes. Aye.
    The Clerk. Mr. Forbes, aye. Mr. King?
    Mr. King. Aye.
    The Clerk. Mr. King, aye. Mr. Feeney?
    [No response.]
    The Clerk. Mr. Franks?
    Mr. Franks. Aye.
    The Clerk. Mr. Franks, aye. Mr. Gohmert?
    Mr. Gohmert. Aye.
    The Clerk. Mr. Gohmert, aye. Mr. Conyers?
    Mr. Conyers. No.
    The Clerk. Mr. Conyers, no. Mr. Berman?
    Mr. Berman. No.
    The Clerk. Mr. Berman, no. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. No.
    The Clerk. Mr. Nadler, no. Mr. Scott?
    Mr. Scott. No.
    The Clerk. Mr. Scott, aye. Mr. Watt?
    Mr. Watt. No.
    The Clerk. Mr. Watt, no. Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    [No response.]
    The Clerk. Ms. Waters?
    Ms. Waters. No.
    The Clerk. Ms. Waters, no. Mr. Meehan?
    Mr. Meehan. No.
    The Clerk. Mr. Meehan, no. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. No.
    The Clerk. Mr. Schiff, no. Ms. Sanchez?
    Ms. Sanchez. No.
    The Clerk. Ms. Sanchez, no. Mr. Smith?
    [No response.]
    The Clerk. Mr. Van Hollen?
    Mr. Van Hollen. No.
    The Clerk. Mr. Van Hollen, no.
    The Clerk. Mr. Chairman?
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman, aye.
    Chairman Sensenbrenner. Members in the chamber who wish to 
cast or change their vote. The gentleman from Florida, Mr. 
Feeney?
    Mr. Feeney. Aye.
    The Clerk. Mr. Feeney, aye.
    Chairman Sensenbrenner. Further Members who wish to cast 
or--the gentleman from Alabama, Mr. Bachus.
    Mr. Bachus. Aye.
    The Clerk. Mr. Bachus, aye.
    Chairman Sensenbrenner. Further Members who wish to cast or 
change their vote. If not the Clerk will report.
    The Clerk. Mr. Chairman, there are 19 ayes and 10 noes.
    Chairman Sensenbrenner. And the motion to--the gentleman 
from New York, Mr. Weiner.
    Mr. Weiner. How am I recorded?
    The Clerk. Mr. Chairman, Mr. Weiner is not recorded.
    Mr. Weiner. No, Mr. Chairman.
    The Clerk. Mr. Weiner, no.
    Chairman Sensenbrenner. The Clerk will report again.
    The Clerk. Mr. Chairman, there are 19 ayes and 11 noes.
    Chairman Sensenbrenner. And the motion to report favorably 
as amended 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 staff is 
directed to make any technical and conforming changes and all 
Members will be given 2 days as provided by the House rules in 
which to submit additional dissenting supplemental or minority 
views.
    [Intervening business.]
    Chairman Sensenbrenner. The Chair would like to thank the 
Members and staff for their patience. We have completed a very 
ambitious agenda today. There will be no markup tomorrow 
because the agenda has been completed, and the Committee stands 
adjourned.
    [Whereupon, at 3:43 p.m., the Committee was adjourned.]
                            Additional Views

    Mr. Chairman, I would like to submit for the record the 
votes I would have made had I not been unavoidably absent from 
the markup proceeding on H.R. 420, May 25, 2005.
    On rollcall #10, the Conyers Amendment #010 to H.R. 420 I 
would have voted no.
    On rollcall #11 the Motion to Report H.R. 420 I would have 
voted aye.

                                   Mark Green.
                            Dissenting Views

    We oppose H.R. 420 because it will not reduce frivolous 
lawsuits but will increase the costs of litigation at the state 
and Federal level, significantly increase the complexity of all 
cases, set back the cause of civil rights, and confuse entirely 
Federal and state law concerning personal jurisdiction and 
venue. This sweeping overhaul of our civil justice system 
predicated on the thinnest conceivable record, with no hearing 
and on 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 Conference of Chief Justices, 
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. The legislation is also 
opposed by several law professors who specialize in civil 
procedure, including Thomas Rowe of Duke Law School, 
Christopher Fairman at Ohio State University, Moritz College of 
Law, and Jonathan Siegel at George Washington University Law 
School.
    For the reasons set forth herein, we respectfully dissent.

                       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. See 28 U.S.C. 
Sec. Sec. 2071-2077 (2004).
    \2\ Currently, no withdrawal right exists for court-initiated 
sanctions.
    \3\ Such violations are already subject to mandatory sanctions 
under Rule 26 (g) 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 suits 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 
pursing 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.''

         I. MANDATORY SANCTIONS WILL HARM CIVIL RIGHTS ACTIONS:

    By requiring a mandatory sanctions regime that would apply 
to civil rights cases, H.R. 420 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 by 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.'' \4\ Another 
study showed that ``civil rights case 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.'' \5\
---------------------------------------------------------------------------
    \4\ John Shepard et al., Fed. Jud. Ctr., Report of a Survey 
Concerning Rule 11, Federal Rules of Civil Procedure 11 (1995). The 
Federal Judicial Center is the educational and research arm of the 
Federal judiciary. See 28. U.S.C. Sec. 620 (2004).
    \5\ 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 filing of legitimate civil rights 
claims. . . . Furthermore, there is ample evidence to suggest 
that plaintiffs and civil rights plaintiffs in particular, were 
far more likely than defendants to be the targets of Rule 11 
motions and the recipients of sanctions.'' \6\
---------------------------------------------------------------------------
    \6\ Ending Illegitimate Advocacy: Reinvigorating Rule 11 Through 
Enhancement of the Ethical Duty to Report, 62 OHSLJ 1555, 1568 (2001).
---------------------------------------------------------------------------
    As Professor Theodore Eisenberg, Professor Law, Cornell 
University testified before the House Judiciary Committee 
during the hearing on H.R. 4571 in the 108th Congress, ``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.'' \7\
---------------------------------------------------------------------------
    \7\ Uncertain and Certain Litigation Abuses, 2004: Hearings on 
Safeguarding Americans from a Legal Culture of Fear: Approaches to 
Limiting Lawsuit Abuse, Before the House 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.'' \8\
---------------------------------------------------------------------------
    \8\ 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.
    Finally, H.R. 420 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. FEDERAL JUDGES OPPOSE THESE CHANGES TO RULE 11:

    The Federal judiciary--the individuals most affected by 
these changes to Rule 11--oppose changes to Rule 11 that would 
make sanctions mandatory rather than discretionary. On May 17, 
2005, the Judicial Conference of the United States wrote a 
letter to Chairman Sensenbrenner stating, in no uncertain 
terms, that ``the proposed changes to Rule 11 will not help 
deter litigation abuses, but will increase satellite 
litigation, costs, and delays.'' \9\ The letter includes a 
report by the Federal Judicial Center: ``Report of a Survey of 
United States District Judges' Experiences and Views Concerning 
Rule 11, Federal Rules of Civil Procedure.'' The report, 
prepared at the request of the Judicial Conference's Advisory 
Committee on Civil Rules, surveyed trial judges who apply the 
rules. The survey included judges who have had experience under 
both the 1983 version and the 1993 version, as well as judges 
with experience under the 1993 version only.\10\ As the letter 
states, the report ``shows a remarkable consensus among Federal 
district judges supporting existing Rule 11 and opposing its 
amendment.'' \11\
---------------------------------------------------------------------------
    \9\ Letter from Leonidas Ralph Mecham, Secretary, U.S. Judicial 
Conference, to Honorable F. James Sensenbrenner, Jr., Chairman, House 
Committee on the Judiciary, May 17, 2005.
    \10\ Id. at 2.
    \11\ Id. (emphasis added).
---------------------------------------------------------------------------
    Specifically, ``the survey's findings include the following 
highlights:

        
 More than 80 percent of the 278 district 
        judges surveyed indicate that ``Rule 11 is needed and 
        it is just right as it now stands'';

        
 87 percent prefer the existing Rule 11 to the 
        1983 version or the version proposed by legislation 
        (e.g., H.R. 4571 or H.R. 420);

        
 85 percent strongly or moderately support 
        Rule 11's safe harbor provisions;

        
 91 percent oppose the proposed requirement 
        that sanctions be imposed for every Rule 11 violation;

        
 84 percent disagree with the proposition that 
        an award of attorney fees should be mandatory for every 
        Rule 11 violation;

        
 85 percent believe that the amount of 
        groundless civil litigation has not grown since the 
        promulgation of the 1993 rule, with 12 percent noting 
        that such litigation has not been a problem, 19 percent 
        noting that such litigation decreased during their 
        tenure on the Federal bench, and 54 percent noting that 
        such litigation has remained relatively constant; and

        
 72 percent believe that addressing sanctions 
        for discovery abuse in rule 26(g) and 37 is better than 
        in Rule 11.'' \12\
---------------------------------------------------------------------------
    \12\ Id. at 3.

    As the Federal Judicial Center's study shows, ``federal 
district judges [are] united [in] opposition to amending Rule 
11.'' \13\
---------------------------------------------------------------------------
    \13\ Id.
---------------------------------------------------------------------------

    III. THE FORUM SHOPPING PROVISION WILL UNFAIRLY BENEFIT FOREIGN 
      CORPORATIONS TO THE DISADVANTAGE OF THEIR U.S. COMPETITORS:

    Section 4 of the bill would recast state and Federal court 
jurisdiction and venue in personal injury cases. 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.\14\ 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.
---------------------------------------------------------------------------
    \14\ 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 affect on 
interstate commerce. This point is highlighted in a letter analyzing 
the bill from Professor Christopher Fairman of the Ohio State 
University, Moritz College of Law. In his letter, Professor Fairman 
states that ``the venue provision of section 4 has absolutely no 
constitutional anchor. Quite simply, Congress does not have the 
authority under the Constitution to impose a venue statute on personal 
injury litigants who file their claims in state court.''
---------------------------------------------------------------------------
    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 is often the case, any suit 
against the foreign company would be banned by H.R. 420. 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.

     IV. SECTION 4 WILL PLACE VICTIMS AT A SIGNIFICANT LITIGATION 
            DISADVANTAGE COMPARED WITH CORPORATE DEFENDANTS:

    It is difficult to consider H.R. 420 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.'' 
There is no legal precedent for a court having such open-ended 
authority to dismiss lawful actions. The problems and 
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, the plaintiff, the defendant or 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. Moreover, beyond this ambiguity, mandating 
dismissal would seem to be an extreme and costly remedy as 
compared to simply transferring the case to another court.
    Section 4 suffers from an overall ambiguity in drafting. 
First, it is unclear whether 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 that would inappropriately 
transfer a case to a second court a case, leaving that the 
parties no recourse. However, 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. Further adding to confusion, 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 delay because it 
requires the state court to make another time consuming and 
costly determination before accepting or dismissing the case. 
Again, while these delays may not burden a defendant, 
plaintiffs, who may be in drastic need of medical attention and 
expenses, are deprived of timely adjudication of their claims.
    Moreover, 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.\15\ 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.\16\ If the Majority believes so strongly in the 
efficacy of this forum shopping provision, they should be 
willing to apply it across the board.
---------------------------------------------------------------------------
    \15\ America's Litigious Businesses, September 2004, study on file 
with Judiciary Committee.
    \16\ 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

    Says one briefing book for House Republicans: ``attacking 
trial lawyers is admittedly a cheap applause line, but it 
works. It's almost impossible to go too far when it comes to 
demonizing lawyers.'' \17\ H.R. 420, The ``Lawsuit Abuse 
Reduction Act of 2005,'' is single-mindedly obsessed with a 
litigation crisis that simply does not exist. All empirical 
evidence suggests that the number of lawsuits are declining, 
that jury awards are shrinking, and that the costs of 
litigation to small businesses and to the overall American 
economy are slight if at all significant. H.R. 420 would 
confuse Federal jurisdiction jurisprudence, have a chilling 
effect on civil rights litigation, and enact sweeping changes 
to the Federal judiciary with little discussion or 
deliberation. For these reasons, we respectfully dissent.
---------------------------------------------------------------------------
    \17\ Frank Lutz, Language of the Twenty-First Century (1997)
---------------------------------------------------------------------------

              DESCRIPTION OF AMENDMENTS OFFERED AT MARKUP

    During the markup four amendments were offered by 
Democratic Members:
1. Nadler Amendment
    Description of Amendment: The amendment would prohibit a 
court from ordering a court record sealed or subjected to a 
protective order, or otherwise to restrict access to taht 
record, unless the court makes a finding of fact that 
identifies the interest that justifies the order and determines 
that the interest outweighs any interest in the public health 
and safety that the court determines would be served by not 
sealing or restricting the court record.
    Vote on Amendment: The amendment was withdrawn after 
Representative Nadler and Representative Smith agreed to work 
on the language before the bill comes up before the full House.
2. Scott Amendment
    Description of Amendment: The amendment would rein in 
frivolous lawsuits without harming the ability of legitimate 
cases to be brought. The amendment proposed that after three 
consecutive adverse decisions on the merits, a person 
attempting to file yet another claim on the same issue be 
saddled with a rebuttable presumption of a Rule 11 violation. 
The amendment would have applied to the Terri Schiavo case, in 
which multiple courts ruled against the plaintiffs.
    Vote on Amendment: The amendment was agreed to by voice 
vote.
3. Nadler Amendment
    Description of Amendment: The amendment provides that 
whoever influences, obstructs or impedes, or endeavors to 
influence, obstruct or impede, a pending court proceeding 
through the intentional destruction of documents sought in and 
highly relevant to that proceeding shall (1) be punished with 
mandatory civil sanctions and (2) be held in contempt of court 
and, if an attorney, referred to one or more appropriate State 
bar associations for disciplinary proceedings. The amendment 
applies to any court proceeding in Federal or State court.
    Vote on Amendment: The amendment was agreed to by voice 
vote.
4. Conyers Amendment
    Description of Amendment: The amendment would exempt from 
the provisions of the Act actions against a manufacturer, 
seller, or trade association that, on or after the date of 
enactment, shifts or transfers employment positions of 
facilities to a location outside the United States. The 
amendment was designed to ensure that companies that relocate 
offshore do not receive the benefit of the liability 
limitations in the Act.
    Vote on Amendment: The amendment was defeated by a party-
line vote of 17-11. Ayes: Representatives Conyers, Berman, 
Nadler, Scott, Watt, Waters, Meehan, Weiner, Schiff, Sanchez, 
Van Hollen. Nays: Representatives Sensenbrenner, Coble, Smith, 
Gallegly, Lungren, Jenkins, Cannon, Inglis, Hostettler, Keller, 
Issa, Pence, Forbes, King, Feeney, Franks, Gohmert.

                                   John Conyers, Jr.
                                   Howard L. Berman.
                                   Jerrold Nadler.
                                   Robert C. Scott.
                                   Melvin L. Watt.
                                   Sheila Jackson Lee.
                                   Maxine Waters.
                                   Martin T. Meehan.
                                   William D. Delahunt.
                                   Robert Wexler.
                                   Anthony D. Weiner.
                                   Linda T. Sanchez.
                                   Chris Van Hollen.