Lawsuit Abuse Reduction Act of 2004

Mr. Speaker, pursuant to House Resolution 766, I call up the bill (H.R. 4571) to amend Rule 11 of the Federal Rules of Civil Procedure to improve attorney accountability, and for other purposes, and ask for its immediate consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, recently President Bush said, ``We must protect small business owners and workers from the explosion of frivolous lawsuits that threaten jobs across America.'' Even Senator Kerry claims to support national legislation in which ``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.'' Well, help is on the way.

H.R. 4571, the Lawsuit Abuse Reduction Act, would restore mandatory sanctions and monetary penalties under Federal rule 11 of the Federal Rules of Civil Procedure for filing frivolous lawsuits and abusing the litigation process. It would also extend these same protections to cover State cases that a State judge determines to have interstate effects, and it would prevent forum shopping by requiring personal injury cases to be brought only where the plaintiff lives or was allegedly injured, or where the defendant's principal place of business is located.

H.R. 4571 will also apply a ``three strikes and you're out'' rule to attorneys who commit multiple rule 11 violations in Federal district court and impose mandatory civil sanctions for willful and intentional document destruction intended to obstruct the pending court proceeding. The bill would apply to lawsuits brought by individuals as well as businesses, and it expressly precludes the application of the bill to civil rights cases if applying the bill to such cases would bar or impede the assertion or development of new claims or remedies under Federal, State, or local civil rights law.

Today, frivolous lawsuits are legalized extortion. Without the threat of certain punishment for filing frivolous lawsuits, innocent people and small businesses will continue to face the harsh economic reality that simply paying off frivolous claims through monetary settlements is always cheaper than litigating the case until no fault is found.

No part of American society rests easy in a legal culture of fear. Churches are discouraging counseling by ministers. Children have learned to threaten teachers with lawsuits. Youth sports are shutting down in the face of lawsuits for injury or even hurt feelings. Monkey bars and other once-common equipment are now endangered species at playgrounds. As a result, children stay at home and get fat, and their parents sue the restaurants that serve them. The Girl Scouts in metro Detroit alone have to sell 36,000 boxes of cookies each year just to pay for liability insurance, 36,000 boxes of cookies.

Good Samaritans are told to hit the road. When one man routinely cleared a trail after snowstorms, the county had to ask him to stop. The supervisor of district operations wrote, ``If a person falls, you are more liable than if you had never plowed at all. Crazy world. Unfortunately, the times we are in allow for a much more litigious environment than common sense would dictate.''

Because existing rules against frivolous lawsuits are ineffective, the right to sue has not only been exploited by lawyers; it has been turned into one of the most destructive business models in the American economy. Today, personal injury lawyers can gamble on taking cases on a contingency-fee basis because they only need to win one in 10 to score the big judgment that would make up for the losses in other cases. We all live with the consequences, including higher taxes and insurance rates; chaos in our schools; doctors going out of business, limiting Americans' access to health care.

Small businesses and workers may suffer the most. The Nation's oldest ladder manufacturer, the family-owned John S. Tilley Ladders Company near Albany, New York, recently 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 percent of sales a decade ago to 29 percent, even though the company had never lost an actual court judgment.

Sadly, the Federal rule designed to deter frivolous lawsuits was gutted over 10 years ago; and today, we live with the results. Shockingly, rule 11 of the Federal Rules of Civil Procedure does not require sanctions or even allow monetary penalties against parties who bring frivolous lawsuits. Without certain punishment for those who bring frivolous lawsuits, and the threat of monetary penalties to compensate the victims of frivolous lawsuits, there is little incentive for lawsuit victims to spend time and money seeking sanctions for lawsuit abuse.

Rule 11 also does not allow sanctions for the abuses of the discovery process. Rule 11 as currently written even allows lawyers to avoid sanctions entirely from making frivolous claims by withdrawing them within 3 weeks. Such a rule actually encourages frivolous lawsuits because personal injury attorneys can file harassing pleadings, secure in the knowledge that they have nothing to lose. If someone objects, they can simply retreat without penalty. H.R. 4571 closes all of these loopholes.

Forum shopping further encourages frivolous litigation. Lax rules regarding where a lawsuit can be brought have turned certain parts of the country into lawsuit factories, the only factories that lose jobs rather than creating them. One of the Nation's wealthiest personal injury attorneys described what he calls ``magic jurisdictions'' as follows: ``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. It's almost impossible to get a fair trial if you're a defendant in some of these places. 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.'' H.R. 4571 would prevent the unfair practice of forum shopping that currently allows personal injury lawyers to sue wherever the most favorable court is.

Congress cannot sit back and allow the personal injury lawyers to bankrupt the very concept of personal responsibility that has made America great. I urge my colleagues to support this bipartisan legislation that will protect both America's values and its vital small businesses.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 6 minutes to the gentleman from Texas (Mr. Smith).

Mr. Speaker, I yield 2 minutes to the gentleman from Ohio (Mr. Chabot).

Mr. Speaker, I yield myself 1 minute.

Mr. Speaker, the Judicial Conference has amnesia and they did not look back into the history of what happened between 1983 and 1993 when the rules that this bill proposes were in place.

In 1991, the Judicial Conference Advisory Committee on Civil Rule did a survey and reviewed Rule 11. At that time 751 Federal judges found that an overwhelming majority of them, 95 percent, believed Rule 11 did not impede development of the law; 72 percent believed that the benefits of the rule outweighed any additional requirement of judicial time; 81 percent believed that the 1983 version of Rule 11 had a positive effect on litigation in the Federal courts; and 80 percent believed that the rule should be retained in its then-current form. That is what the judges who were on the bench at the time this rule was in effect said.

The Judicial Conference ought to spend their time looking back at their own records and their own surveys rather than sending these types of letters advising us that what we are doing here is no good.

Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Florida (Mr. Keller).

Mr. Speaker, I yield 3 minutes to the gentlewoman from Pennsylvania (Ms. Hart).

Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. Gingrey).

Mr. Speaker, I yield myself 2 minutes.

Mr. Speaker, I respect greatly the gentleman from Massachusetts (Mr. Markey), but when he armed his cannon, he pointed it at the wrong target. This bill has nothing to do with assault weapons or tax breaks or oil prices or the 9/11 Commission or catching Osama bin Laden or casualties in Iraq or whether the North Koreans have a nuclear weapon or not; nor does it deal with legitimate meritorious lawsuits.

What it does deal with is frivolous lawsuits, frivolous lawsuits as defined by the same Federal Rule of Civil Procedure that was on the books for 10 years, between 1983 and 1993, that 80 percent of the Federal judges when they were surveyed believed should be retained in its then current form. This bill does not restrict the access to the courts to anybody who has got a meritorious claim.

But what it does do is that it sanctions those lawyers who file frivolous lawsuits and deter them from filing frivolous lawsuits again. If we did not have sanctions against people, people would ignore the law. If there were no sanctions for driving 50 miles an hour over the speed limit or running a red light, I think it would be pretty dangerous for all of us when we went home. Because the sanctions that are currently in rule 11 have no deterrent effect against filing frivolous lawsuits, there are too many of them. We have heard about them in this debate.

What this bill does is simply go back to what happened prior to 1993, prevents forum shopping and says that, if a lawyer files repeated frivolous filings in the court three times, they are out. We have got to do that if we want to have our courts be used for the administration of justice rather than being a cover for those who wish to file frivolous papers.

Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Smith).

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, the gentleman from Texas (Mr. Smith) clearly stated that there is an exemption in this bill on civil rights law and this bill does not apply to the development of new civil rights laws. Further, the survey of the judges that I have referred to in the past, 95 percent of the 751 federal judges believe that the old Rule 11, which the gentleman from Virginia complains of, did not impede the development of the law. That is, 19 judges out of 20 said that the assertion that the gentleman from Virginia made was not correct in their opinion. That is why this bill is a good one and it ought to be passed.

Mr. Speaker, I yield back the balance of my time.

Amendment In The Nature Of A Substitute Offered By Mr. Turner of Texas

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in strong opposition to this substitute amendment which guts the bill.

Where to begin? I will begin with the title of the first section of the substitute. It is entitled ``Three Strikes and You're Out.'' But it is not true when we read the substitute. In fact, the substitute provides that following three violations of this provision, the court ``shall refer each such attorney to one or more appropriate State bar associations for disciplinary proceedings.'' Three strikes and you are still in.

The Democratic substitute does not say that the attorney shall be suspended from the practice of law. That is what the base bill says. The bill says that after three strikes ``The Federal District court shall suspend that attorney from the practice of law in that Federal District Court.''

The base bill follows through on its ``three strikes and you're out'' promise. The Democratic substitute says ``three strikes and you have a foul ball.''

But it gets worse. Not only are the filers of frivolous lawsuits not out after three strikes under the Democratic substitute, but the Democratic substitute even changes what a strike is under existing law. Currently Rule 11 contains four criteria that can lead to a Rule 11 violation. The Democratic substitute references only three, kind of like shrinking the strike zone.

Currently, Rule 11 allows sanctions against frivolous filers whose denials of factual contentions are not ``warranted on the evidence'' or are not ``reasonably based on the lack of information and belief.'' The Democratic substitute removes this protection from the victims of frivolous lawsuits under existing law. The Democratic substitute for the first time without penalty allows defendants to file papers with the court that include factual denials of allegations against them that are not warranted by the evidence and not reasonably based. In other words, misleading and unfactual filings end up getting a get-out-of- jail-free card under the Democratic substitute.

Instead, the substitute provides additional protection for defendants filing frivolous defenses that are not warranted by the evidence and not reasonably based. This is a step backward for victims of frivolous lawsuits under both State and Federal law.

Further, the base bill provides that those who file frivolous lawsuits can be made to pay all of the costs and attorneys' fees that are ``incurred as a direct result of filing of the pleading, motion, or other paper, that is the subject of the violation.'' The Democratic substitute does not include that critical language, which is necessary to make clear that those filing frivolous lawsuits must be made to pay the full costs imposed on their victim by the frivolous lawsuit.

The Democrat substitute also imposes complicated mandates on each State's judicial districts, requiring them to ``develop and implement a civil justice expense and delay reduction plan.'' The Democratic substitute requires States to implement these mandates under exceedingly complex requirements that span all the way from pages 10 to page 15 of the Democratic substitute and requires things like ``systematic, differential treatment of civil cases that tailors the level of individualized and case specific management,'' whatever that means. At a minimum, this is overly burdensome, and may be unconstitutional.

The Democratic substitute requires that States ``develop and implement'' these plans when the Supreme Court has held that ``Congress may not simply commandeer the States by directly compelling them to enact and enforce a Federal regulatory program.'' That is in New York v. The United States 1992. That is exactly what the Democratic substitute does without any justification under the Commerce Clause of the Constitution.

The Democratic substitute also completely overrides State laws regarding the sealing of records in all cases, including proceedings in which State laws protect the privacy of sexual abuse victims, including children. And let me repeat this: if the Democratic substitute passes and becomes law, State laws relative to the sealing of court records on sexual abuse cases, including those against minors, can be open to public scrutiny. Shame on you. This blunderbuss provision in the Democratic substitute covers State divorce proceedings, and even all criminal cases, without a showing of why State procedures are inadequate.

The Democratic substitute also retains rule 11's current ``free pass'' provision, which allows lawyers to avoid sanctions for making frivolous claims simply by withdrawing those claims within 21 days after a motion for sanctions has been filed.

Now, let us look at that. A frivolous claim or frivolous filing has been made. You have 21 days after you make it to withdraw it. But meantime, the opposite party has got to go to the legal expense to make the motion to the court to show that the claim is frivolous. And who ends up paying the bill on that? Not the lawyer who filed the frivolous claim, but the defendant and the defendant's lawyers; and that provision actually encourages frivolous lawsuits by allowing unlimited numbers of frivolous pleadings to be filed without penalty. Talk about a loophole big enough to drive the Queen Mary through, that is it.

The Democratic substitute also does not include the bill's essential provisions to prevent the unfair practice of forum shopping.

In short, the Democratic substitute does not provide for three strikes and you are out. It provides for three strikes and you get referred to the State Bar Association that can continue to let the offending attorney practice law. The Democratic substitute even weakens existing law that protects plaintiffs from defendants that file frivolous denials that are not warranted by the evidence and are not reasonably based. The substitute also fails to provide that attorneys' fees be awarded to cover the full costs of responding to a frivolous lawsuit, and the substitute also burdens the States by directly compelling them to enact and enforce a Federal regulatory program. It overrides State procedures governing the confidentiality of documents in the course of legal proceedings. That is more than three strikes against the Democratic substitute, and it should be soundly defeated.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the gentleman from Florida (Mr. Keller).

Mr. Speaker, I yield myself 2 minutes.

Mr. Speaker, we have debated this issue extensively and the venue for these types of personal injury cases are, one, the district where the plaintiff resides; two, the district where the injury occurred; or three, where the principal place of business of the defendant is located. Any one of these three criteria would trigger the venue.

Now, it is elemental under the corporation law of all 50 States that if a corporation that is incorporated elsewhere and that includes in any one of the other 49 States or in a foreign country, wants to do business in a State, it has to get a certificate of authority and appoint an agent for the service of process. And that is what is done with practically every multinational corporation or interstate corporation that does bills in the United States.

If they do not do that, then they do not have limited liability protection of the corporation law that applies. So the entire argument that is made by the gentleman from Washington (Mr. Inslee) and the gentleman from Texas (Mr. Turner) is a complete red herring.

Now, the two gentlemen have quoted extensively from a Congressional Research Service memorandum that was dated today. And it begins, ``This rushed memorandum discusses this issue.'' Well, the CRS is wrong upon occasion. And in yesterday's extension of remarks in the Congressional Record, I inserted into the Record correspondence that indicated that a similar rushed memorandum of the Congressional Research Service on the Marriage Protection Act was erroneous in nature. Wrong once, maybe wrong again.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I am prepared to close if the gentleman from Texas will yield back.

Mr. Speaker, I yield myself the balance of the time.

Mr. Speaker, the John Kerry for President campaign has endorsed national legislation in which ``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.''

Unfortunately, the Democratic substitute did not listen to what the Kerry campaign said and does not forbid lawyers who file three or more frivolous lawsuits from bringing future lawsuits. The substitute only provides that on three strikes the offending attorney will be referred to a bar association, and no action need be taken by the bar to discipline the lawyer.

The base bill, H.R. 4571, on the other hand, currently provides that an attorney who files frivolous lawsuits will be suspended for at least a year and perhaps much longer if the court deems it appropriate.

I would ask all Members to reject the Democratic substitute. This quote that I have given from the Kerry for President campaign and those that the gentleman from Florida (Mr. Keller) has quoted of Senator Edwards in Newsweek magazine of last December, the Republican bill has got the type of bipartisan support that is needed to deal with this problem.

I would urge a ``no'' vote on the substitute and passage of the base bill.

Mr. Speaker, I rise in opposition to the motion to recommit.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 4571.

Mr. Speaker, the real outsourcing motion is the one which has been made by the gentlewoman from Connecticut (Ms. DeLauro). If this motion is adopted and this bill is enacted into law, it will cost American jobs. Anytime the cost of doing business in the United States goes up, the number of Americans with jobs will go down. This motion to recommit would increase the cost of doing business in this country and in the process lose American jobs.

I do not want to hear anybody who has argued in favor of this motion ever to come back and complain about the outsourcing of American jobs to foreign countries if this motion passes because this is the type of thing that will absolutely do that.

The motion to recommit defines the covered entities as those that have substantial business activities in this country, and hurting substantial business in American substantially hurts American workers. Stand up for American workers; vote down this motion to recommit. Stop the outsourcing of jobs by last-minute motions made on the floor with red herring arguments. Vote ``no'' on the motion to recommit.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself such time as I may consume, and I rise to speak against the bill

Mr. Speaker, I do not support the legislation because it will have a significant adverse effect on the ability of unpopular plaintiffs to seek recourse in our courts, and it will operate to benefit foreign corporate defendants at the expense of domestic counterparts and will skew the playing field against injured victims.

Now, a lot of organizations oppose the bill, and I would like to read from a letter from the Judicial Conference of the United States, the Chief Justice of the United States presiding, in a letter to the committee chairman.

It says that ``section 2 of the bill would reinstitute a rule eliminated in 1993 upon the recommendation of the Judicial Conference, approved by the Supreme Court, and after review by Congress, because of the serious problems it engendered during a 10-year period of operation. Section 2 also would amend rule 11 of the Federal Rules of Civil Procedure in a manner consistent with the longstanding Judicial Conference policy opposing direct amendment of the Federal rules by legislation.''

The letter goes on to say that the bill ``would directly amend civil rule 11 to remove a court's discretion to impose sanctions on a frivolous filing and eliminate the rule's `safe-harbor' provisions. The bill undoes amendments to rule 11 that took effect on December 1, 1993, and would bring back the provisions that were first introduced in 1983

and removed from the rule in 1993, after a decade of signally bad experiences with the operation and effects of the 1983 rule.''

The Judicial Conference of the United States goes on to state: ``Like H.R. 4571, the 1983 version of rule 11 required sanctions for every violation of the rule. It spawned thousands of court decisions and generated widespread criticism. The rule was abused by resourceful lawyers, and an entire `cottage industry' developed that churned tremendously wasteful satellite litigation that had everything to do with strategic gamesmanship and little to do with underlying claims. Rule 11 motions came to be met with countermotions that sought rule 11 sanctions for making the original rule 11 motion.

``Some of the serious problems caused by the 1983 amendments to rule 11 included:

``Creating a significant incentive to file unmeritorious rule 11 motions by providing a possibility of monetary penalty.''

It goes on to cite other problems that occurred that were cured in 1993. The letter goes on: ``The 1993 amendments to rule 11 were designed to strike a fair and equitable balance between competing interests, remedy the major problems with the rule, and allow courts to focus on the merits of the underlying cases rather than on rule 11 motions.''

It goes on to say that the ``experience with the amended rule since 1993 has demonstrated a marked decline in rule 11 satellite litigation without any noticeable increase in the number of frivolous filings. In June 1995, the Federal Judicial Center conducted a survey of 1,130 lawyers and 148 judges on the effects of the 1993 rule 11 amendments . . . The Center found general satisfaction with the amended rule. It also found that more than 75 percent of the judges and lawyers would oppose a provision that would require a court to impose a sanction when the rule is violated. A majority of the judges and lawyers, both plaintiffs' and defendants' lawyers, believed that groundless litigation was handled effectively by judges.

``Undoing the 1993 rule 11 amendments, even though no serious problem has been brought to the Judicial Conference rules committee's attention, would frustrate the purpose and intent of the Rules Enabling Act.''

It goes on to criticize the provisions in section 3, the mandatory application to State laws, and section 4, the provision on forum shopping.

Mr. Speaker, in addition to the Judicial Conference, other organizations oppose the legislation. The NAACP, the Public Citizen, the Alliance for Justice, People for the American Way, the American Association of People with Disabilities, the Lawyers' Committee for Civil Rights Under Law, the American Bar Association, the National Conference of State Legislatures, National Partnership for Women, National Women's Law Center, the Center for Justice and Democracy, Consumers Union, National Association of Consumer Advocates, USAction, U.S. PIRG, and the NAACP Legal Defense Fund all oppose the legislation.

Mr. Speaker, one of the additional problems with the bill is the chilling effect it may have on bringing important, legitimate, unpopular actions. This is due to the fact that much of the impetus of 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.

Although the bill states that the proposed rule 11 changes shall not be construed to ``bar or impede the assertion of new claims or remedies under Federal, State or local civil rights law,'' the language does not clearly and simply exempt civil rights and discrimination cases under current law, as should be the case. Determining what a new claim or remedy might be would just add to the litigation.

Certainly, it does not cover the fact that this bill and rule 11 do not offer an attorney the ability to appeal a rule 11 sanction. History has demonstrated that civil rights lawsuits are often extremely unpopular, particularly in certain parts of the country where some judges almost automatically consider civil rights cases as frivolous. In such courts, plaintiffs' attorneys could be unreasonably subject to sanctions, even suspensions, without appeal contrary to the purpose of rule 11.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume to comment that the letter from the Judicial Conference of the United States outlining the survey results, showed a majority of judges, lawyers, both plaintiffs and defense lawyers, believed that groundless litigation was handled effectively by the judges and preferred the 1993 amendment.

Mr. Speaker, I submit herewith the letter from the Judicial Conference for the Record.

Judicial Conference of

the United States,

Washington, DC, July 9, 2004.

Hon. F. James Sensenbrenner, Jr.,

Chairman, Committee on the Judiciary, House of

Representatives, 2138 Rayburn House Office Building,

Washington, DC.

Dear Mr. Chairman: On behalf of the Judicial Conference, I

write to urge you to reconsider your position on the

``Lawsuit Abuse Reduction Act of 2004'' (H.R. 4571). [Section

2 of the bill would reinstitute a rule eliminated in 1993

upon the recommendation of the Judicial Conference, approval

by the Supreme Court, and after review by Congress, because

of the serious problems it engendered during a ten-year

period of operation. Section 2 also would amend Rule 11 of

the Federal Rules of Civil Procedure in a manner inconsistent

with the longstanding Judicial Conference [policy opposing

direct amendment of the federal rules by legislation.]

Section 3 of H.R. 4571 would apply the revised federal Rule

11 to certain state court actions, while section 4 would

amend the venue standards governing the filing of tort

actions in both the federal and state courts: Sections 3 and

4 implicate federal-state comity interests and raise

important policy and practical concerns.

section 2

[Section 2 would directly amend Civil Rule 11 to remove a

court's discretion to impose sanctions on a frivolous filing

and eliminate the rule's ``safe-harbor'' provisions. The bill

undoes amendments to Rule 11 that took effect on December 1,

1993, and would bring back the provisions that were first

introduced in 1983 and removed from the rule in 1993, after a

decade of signally bad experiences with the operation and

effects of the 1983 rule.

Like H.R. 4571, the 1983 version of Rule 11 required

sanctions for every violation of the rule. It spawned

thousands of court decisions and generated widespread

criticism. The rule was abused by resourceful lawyers, and an

entire ``cottage industry'' developed that churned

tremendously wasteful satellite litigation that had

everything to do with strategic gamesmanship and little to do

with underlying claims. Rule 11 motions came to be met with

counter motions that sought Rule 11 sanctions for making the

original Rule 11 motion.

[Some of the other serious problems caused by the 1983

amendments to Rule 11 included:

(1) Creating a significant incentive to file unmeritorious

Rule 11 motions by providing a possibility of monetary

penalty;

(2) engendering potential conflict of interest between

clients and their lawyers, who advised withdrawal of

particular claims despite the clients' preference;

(3) exacerbating tensions between lawyers; and

(4) providing little incentive, and perhaps a distinctive

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.

The 1993 amendments to Rule 11 were designed to strike a

fair and equitable balance between competing interests,

remedy the major problems with the rule, and allow courts to

focus on the merits of the underlying cases rather than on

Rule 11 motions. The rule establishes a safe harbor,

providing a party 21 days within which to withdraw a

particular claim or defense before sanctions can be imposed.

If the party fails to withdraw an allegedly frivolous claim

or defense within the 21 days, a court may impose sanctions,

including assessing reasonable attorney fees.] The 1983 Rule

11 authorized a court to sanction discovery-related abuse

under Rule 11, Rule 26(g), or Rule 37, which created

confusion. Under the 1993 amendments to Rule 11, sanctioning

of discovery-related abuse was limited to Rules 26 and 37,

which provide for sanctions that include awards for

reasonable attorney fees.

The 1993 amendments to Rule 11 culminated a long, critical

examination of the rule begun four years earlier. The

Advisory Committee on Civil Rules (Advisory Committee)

reviewed a significant number of empirical examinations of

the 1983 Rule 11, including three separate studies conducted

by the Federal Judicial Center in 1985, 1988, and 1991, a

Third Circuit Task Force report on Rule 11 in 1989, and a New

York State Bar Committee report in 1987. The Advisory

Committee took note of several book-length analyses of Rule

11 case law.

The 1991 Federal Judicial Center survey noted that most

federal judges believed that the 1983 version of Rule 11 had

positive effects. But the study also noted that most judges

found several other methods more effective than Rule 11 in

handling such litigation and, most significantly, that about

one-half of the judges reported that Rule 11 exacerbates

behavior between counsel. After reviewing the literature and

empirical studies of problems caused by the 1983 amendments

to Rule 11, the Advisory Committee issued in 1990 a

preliminary call for general comment on the operation and

effect of the rule. The response was substantial, calling for

a change in the rule.

The Advisory Committee concluded that the cost-shifting in

Rule 11 created an incentive for too many unnecessary Rule 11

motions. Amendments to Rule 11 were drafted. The Supreme

Court promulgated and transmitted the amendments to Congress

in May 1993 after extensive scrutiny and debate by the bench,

bar, and public in accordance with the Rules Enabling Act

process (28 U.S.C. Sec. Sec. 2071-2077).

[Experience with the amended rule since 1993 has

demonstrated a marked decline in Rule 11 satellite litigation

without any noticeable increase in the number of frivolous

filings. In June 1995, the Federal Judicial Center conducted

a survey of 1,130 lawyers and 148 judges on the effects of

the 1993 Rule 11 amendments. About 580 attorneys and 120

judges responded to the survey. The Center found general

satisfaction with the amended rule. It also found that more

than 75 percent of the judges and lawyers would oppose a

provision that would require a court to impose a sanction

when the rule is violated. A majority of the judges and

lawyers, both plaintiffs' and defendants' lawyers, believed

that groundless litigation was handled effectively by judges.

Undoing the 1993 Rule 11 amendments, even though no serious

problem has been brought to the Judicial Conference rules

committees' attention, would frustrate the purpose and intent

of the Rules Enabling Act. Section 2 of H.R. 4571 would

effectively reinstate the 1983 version of Rule 11 that proved

so contentious and wasted so much time and energy of the bar

and bench. Section 2, indeed, in some ways seems to go beyond

the provisions that created serious problems with the 1983

rule. It may cause even greater mischief. Rule 11 in its

present form has proven effective and should not be revised.]

sections 3 and 4

[Section 3 would extend the new requirements of a mandatory

Rule 11 to all state court litigation that the state court

deems, on motion, to affect interstate commerce.] Two

features of this provision stand out. First, it would

directly regulate the practice and procedure of state courts,

mandating a federal standard for the imposition of sanctions

for the filing of frivolous or

ungrounded complaints and other papers in state court. At

present, states have been free to adopt their own rules of

practice, including a version of Rule 11, if a state so

chooses. Second, section 3 does not specify the actions to

which it would apply. Rather, it imposes on state judges a

broad generalized test to determine whether or not federal

Rule 11 would apply in a given case. If enacted, this section

could affect the cost and duration of a very large number of

civil actions in state courts.

[Section 4 seeks to prevent forum shopping by specifying

the places where a plaintiff may bring a ``personal injury''

claim by imposing a federal standard for determining the

venue of state law personal injury claims, in both state and

federal court. Such a federal standard would displace

existing state venue rules or statutes.] It would also

significantly alter the statutes in title 28, United States

Code, that now govern venue (section 1391) and transfer of

venue (section 1404) in the federal courts.

The Judicial Conference opposes the enactment of H.R. 4571

for the reasons stated above as to section 2. Sections 3 and

4 would make important changes in the administration of civil

justice in both federal and state courts. The Judicial

Conference has not had the opportunity to formally assess the

advisability or impact of these sections, but notes that they

may substantially affect federal-state comity interests and

raise important policy and practical concerns.

The Judicial Conference greatly appreciates your

consideration of its views: If you or your staff have any

questions, please contact Michael W. Blommer, Assistant

Director, Office of Legislative Affairs, Administrative

Office of the U.S. Courts, at (202) 502-1700.

Sincerely,

Leonidas Ralph Mecham,

Secretary.

Mr. Speaker, I yield 4 minutes to the gentleman from California (Mr. BERMAN).

(Mr. BERMAN asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 4 minutes to the gentleman from North Carolina (Mr. Watt).

Mr. Speaker, I yield 4 minutes to the gentlewoman from California (Ms. Waters).

Mr. Speaker, I yield 4 minutes to the gentlewoman from Texas (Ms. Jackson-Lee).

Mr. Speaker, I yield 4\1/2\ minutes to the gentleman from Massachusetts (Mr. Markey).

Mr. Speaker, I yield 2 minutes to the gentleman from Washington (Mr. Inslee).

(Mr. INSLEE asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, as it has been indicated, there is a serious question in some cases of whether or not the forum shopping is limited, one, to a situation where they cannot file anywhere. But I want to quote from a letter from several civil rights organizations. It states: ``More than a decade ago civil rights organizations, including several of the undersigned organizations, worked to amend Rule 11 because the old rule unfairly discouraged meritorious civil rights claims. Nationwide surveys about the former rule found that motions for sanctions were most frequently sought and granted in civil rights cases.'' This bill ``seeks to take us back to the changes made in 1993 to Rule 11 and force litigants to operate under the terms that we fear, like the former rule we worked so hard to amend, will be used to punish and deter valid claims of discrimination. But'' this bill ``goes even further. Not content with changing rules for Federal courts, the bill extends its reach to State courts,'' where the problem of biased judges would even be more acute.

I would point out again that there is no appeal to these cases and this does not apply to cases under existing law that many judges feel are frivolous.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I thank the gentleman for yielding me time.

Mr. Speaker, there is a significant difference in the civil rights exemption in the underlying bill and this amendment. This amendment is vastly superior because it exempts all civil rights cases, not just those cases that are based on new or evolving law. Many of the cases brought under present laws are treated with hostility. Civil rights cases are often unpopular and some judges do not like to see them.

In fact, the Alliance For Justice had a report on Judge Pickering's hearing and said, ``At his hearing, Judge Pickering was asked about his record of strongly favoring defendants in employment cases. Incredibly, Judge Pickering defended his record by opining that almost no employment discrimination cases that come before the Federal courts have merit.''

Obviously, the problem is made worse when you expand the possibility to State courts, where local judges in some areas may have a civil bias. That is why the civil rights lawyers oppose the underlying bill because they do not want those kind of judges empowered to essentially allow mandatory sanctions to prevent those kind of cases from being brought in the first place.

I would hope that we would adopt the language in the substitute, but we should defeat the bill.

Mr. Speaker, I thank the gentleman from Wisconsin (Mr. Sensenbrenner), the chairman of the Committee on the Judiciary, for yielding me this time.

Mr. Speaker, frivolous lawsuits bankrupt individuals, ruin reputations, drive up insurance premiums, increase health care costs, and put a drag on the economy. Frivolous lawsuits are brought, for example, where there is no evidence that shows negligence on the part of the defendant. These nuisance lawsuits make a mockery of our legal system.

Of course, many Americans have legitimate legal grievances, from someone wrongly disfigured during an operation to a company responsible for contaminating a community's water supply. No one who deserves justice should be denied justice. However, gaming of a system by a few lawyers drives up the cost of doing business and drives down the integrity of the judicial system.

Let me give some examples. The Chief Executive Officer of San Antonio's Methodist Children's Hospital was sued after he stepped into a patient's hospital room and asked how he was doing. Of course, a jury cleared him of any wrongdoing.

A Pennsylvania man sued the Frito-Lay company, claiming that Doritos chips were ``inherently dangerous'' after one stuck in his throat. After 8 years of costly litigation, the Pennsylvania Supreme Court threw out the case, writing that there is ``a common sense notion that it is necessary to properly chew hard foodstuffs prior to swallowing.''

In a New Jersey Little League game, a player lost sight of a fly ball because of the sun. He was injured when the ball struck him in the eye. The coach was forced to hire a lawyer after the boy's parents sued. The coach settled the case for $25,000.

Today, almost any party can bring any suit in almost any jurisdiction. That is because plaintiffs and their attorneys simply have nothing to lose. All they want is for the defendant to settle. This is legalized extortion. It is lawsuit lottery.

Some lawyers 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 jury.

Defendants, on the other hand, can unfairly lose their careers, their businesses and their reputations. In short, they can lose everything. This is not justice, and there is a remedy. The Lawsuit Abuse Reduction Act.

Mr. Speaker, this applies to both plaintiffs who file frivolous lawsuits merely to extort financial settlements and to defendants who unnecessarily prolong the legal process. If the judge determines a claim is frivolous, then they can order that person to pay the attorney's fees of the party who is the victim of their frivolous claim. This will make a lawyer think twice before he or she brings a lawsuit.

In addition, this legislation prevents forum shopping. It requires that personal injury claims be filed only where the plaintiff resides, where the injury occurred, or 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 excessive amounts.

One of the Nation's wealthiest trial lawyers, Dickie Scruggs, has told us exactly how this abuse occurs, and the chairman of the Committee on the Judiciary used this example a while ago, but, quite frankly, it is just too good not to repeat.

Here is what one of the king of torts says about forum shopping: ``What I call `the magic jurisdiction.' It's where the judiciary is elected with verdict money, the trial lawyers have established relationships with the judges that are elected; they've got large populations of voters who are in on the

deal, they're getting their piece in many cases. It's almost impossible to get a fair trial if you're a defendant in some of these places. 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.''

Mr. Speaker, I do not know how anyone can justify the continuation of this kind of abuse. One of these magic jurisdictions where trial lawyers flock is in my home State of Texas in Jefferson County. The Austin American Statesman noted that trial lawyers claim this is where ``juries pass down sizable judgments.'' Soaring medical liability insurance rates have followed, which has caused doctors to flee the area.

Mr. Speaker, forum shopping is a part of lawsuit abuses and we must pass legislation to stop it from occurring. The following organizations support H.R. 4571: American Tort Reform Association, National Association of Home Builders, National Association of Manufacturers, National Restaurant Association, National Federation of Independent Business, American Insurance Association, and the U.S. Chamber of Commerce.

Also, I might add, both Republican and Democratic presidential and vice presidential candidates are on record as wanting to stop frivolous lawsuits. So the Lawsuit Abuse Reduction Act is sensible reform that will help restore confidence to America's justice system.

Mr. Speaker, I want to add one point and address a concern that was raised by my friend from Virginia and that had to do with a letter he raised from the Judicial Conference. Well, the Judicial Conference does not exactly enhance their credibility when they take a position contrary to the judges that they purport to represent. And, in fact, in surveys taken by the Judicial Conference before the rule was changed in 1993, it found that 80 percent of the judges favored the rule that we seek to go back to. After the rule was changed and weakened, which we opposed, they took another survey and found a majority of judges, in fact almost a majority of trial lawyers, liked the original rule that we seek to go back to in this legislation.

So, Mr. Speaker, I urge my colleagues to support this bill.

Mr. Speaker, I thank the gentleman from Wisconsin for yielding me this time.

Mr. Speaker, let me respond to some of the concerns voiced by some of those who think they might oppose this bill. First of all, if a foreign corporation is involved, that does not prevent someone from having their day in court. The bill clearly says that it is where the plaintiff lives, and if one is a U.S. citizen, most likely they are going to live in the United States, or where the injury occurred, and the injury would have occurred in this country. So that takes care of their concerns there.

Another previous speaker from Massachusetts started off by talking about the ban on assault weapons. This bill has nothing to do with that, but we do attempt to ban frivolous lawsuits, and in that we are successful. But the gentleman from Massachusetts did make a good point, and I will embrace it entirely, and that is he acknowledged, which I thought was quite an admission, that today there are, in fact, even by his own standards, 11,000 frivolous lawsuits a year. He said they have come down. That is because of the asbestos lawsuits working their way through the various courts. Eleven thousand frivolous lawsuits filed today. I guarantee my colleagues that 99 percent of the American people think 11,000 frivolous lawsuits a year today is 11,000 frivolous lawsuits too many.

Another point I want to respond to, Mr. Speaker, was made by a gentleman who was concerned about the effect of this legislation on civil rights cases that might be filed. I want to assure him and others who might have that similar concern that if they look at section 5 of this bill, it reads: ``Nothing in this bill 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 reason it says ``new claims'' is because claims that already exist under current law obviously are not frivolous. There is a basis in law for filing those lawsuits. So we protect anybody who might file a civil rights lawsuit in this legislation. Furthermore, if there was some concern about that, one would think that it would have been raised in the full Committee on the Judiciary consideration of this bill. It was not mentioned and no amendments were offered on that point.

Lastly, Mr. Speaker, I also want to reassure not only my colleagues but those who might be listening to this debate that this is not a bill trying to

impugn the motives of all trial lawyers. In fact, the great majority of trial lawyers serve their profession and serve Americans honorably. We are talking about a very few attorneys who, quite frankly, abuse the system, who engage in legalized extortion, who file lawsuits for no other reason than they think someone can settle out of court and they are trying to extract money from them. That is the type of abuse we seek to stop in this bill, and that is the kind of abuse we intend to.

Finally, there are many pieces of legislation considered by this body where we can see where half of the American people might benefit, half might not benefit. But in this case we have at least 99 percent of the American people on one side and just a few lawyers on the other side. And it is very rare, I think, that we would have the vast majority of the American people so clearly favoring one cause, and that is the cause of trying to reduce frivolous lawsuits.

Mr. Speaker, I thank the chairman for yielding me this time.

Mr. Speaker, anyone who is worried about what frivolous lawsuits will do to them, their family, their friends, or their businesses ought to rush to oppose this Democratic substitute amendment. That is because it is an amendment that will do very little to prevent frivolous lawsuits.

The underlying bill makes several key changes that will deter lawyers from filing frivolous lawsuits. The substitute amendment before us strips all these away.

First, this legislation, the underlying legislation, allows the court to require an individual who files a frivolous lawsuit to pay attorneys' fees incurred as a result of the frivolous lawsuit. This provision obviously makes attorneys think twice before they file such a frivolous lawsuit. However, the Democratic substitute amendment does not include this key provision. In other words, there is no disincentive to file a frivolous lawsuit.

This also means that under the Democratic substitute, small business owners would still suffer from the cost of frivolous lawsuits. Individuals would still suffer because they would see their insurance premiums go up. They would see their health care costs rise. They would still see their reputations damaged, all because of wrongfully filed, frivolous lawsuits.

In other words, Mr. Speaker, this substitute amendment does not provide any relief to those who would get unfairly slapped with a frivolous lawsuit. Those victims would still have to pay their own legal fees.

Next, this substitute claims to have a ``three strikes and you are out'' provision. But if you look at it closely, as the chairman mentioned a while ago, there are no real consequences for the attorney who repeatedly files frivolous lawsuits.

Instead, the substitute merely requires a court to refer the offending attorney to his State bar association; and you can imagine that means that nothing is going to happen.

By contrast, the base bill requires that attorneys who fill frivolous claims face real consequence. Those attorneys can be barred from practicing in that Federal court for a year. That is a real disincentive to file frivolous lawsuits.

Also, the Democratic substitute we are considering now places heavy mandates on States. It requires a new regulatory scheme to deal with ``civil justice expense and delay'' issues. Mr. Speaker, I think that is a very nice but meaningless euphemism for frivolous lawsuits. The requirements would create a new bureaucratic nightmare instead of dealing with the real problem, which is of course frivolous lawsuits.

Finally, Mr. Speaker, the substitute amendment does nothing to address the problem of forum shopping and that is at least half the problem. We simply cannot continue to allow trial attorneys to flock to counties that will award unreasonably high verdicts to any plaintiff who walks in the door. This does too much damage to many Americans and it is, quite frankly, time to put a stop to this type of abuse.

Mr. Speaker, I urge my colleagues to oppose to substitute amendment and vote yes on the underlying bill which would deter lawsuit abuse.

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 766 and ask for its immediate consideration.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Massachusetts (Mr. McGovern), pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only.

The resolution before us is a well-balanced, modified closed rule that provides for 1 hour of debate equally divided and controlled by the chairman and ranking minority member of the Committee on the Judiciary. The rule waives all points of order against consideration of the bill and provides that the bill shall be considered as read for amendment. The rule provides that the amendment in the nature of a substitute recommended by the Committee on the Judiciary now printed in the bill shall be considered as adopted and also makes in order the amendment printed in the Committee on Rules report accompanying the resolution, if offered by the gentleman from Texas (Mr. Turner) or his designee. This amendment shall be considered as read and shall be debatable for 40 minutes equally divided and controlled by the proponent and the opponent.

Finally, this rule waives all points of order against the amendment printed in that report and provides for one motion to recommit with or without instructions.

Mr. Speaker, I rise today in strong support of the rule for H.R. 4571, the Lawsuit Abuse Reduction Act of 2004, as well as the underlying legislation. This bill offered by the gentleman from San Antonio, Texas (Mr. Smith), my good friend, is carefully constructed legislation that will create a disincentive for attorneys and plaintiffs to file many of the frivolous lawsuits that currently clog our court system and act as a drain on our Nation's economy.

Just 6 months ago almost to the day, I came to the floor to manage the rule for H.R. 339, the Personal Responsibility in Food Consumption Act. Later that day the House voted overwhelmingly by a vote of 267 to 139 to require courts to dismiss frivolous lawsuits seeking damages for injuries resulting from obesity and its intended health problems that are filed against the producers and sellers of food. Through passing this legislation today, we have another opportunity to help bring our tort system back to reality by amending the Federal Rules of Civil Procedure to impose greater attorney and client accountability for pursuing other frivolous or nuisance lawsuits.

Our current tort system costs American consumers well over $200 billion a year, the equivalent of a 5 percent tax on wages. Our courts today handle cases ranging from legitimate claims to those that are highly suspect and wasteful of time and resources. Some of these examples of lawsuit abuse include a woman in Knoxville, Tennessee, who sought $125,000 in damage against McDonald's, claiming a hot pickle dropped from a hamburger, burned her chin and caused her mental injury. Her husband also sued for $15,000 for loss of consortium. Or the case of the Girl Scouts of America in metro Detroit, who have to sell 36,000 boxes of cookies each year just to pay for their liability insurance. In fact, according to a former Girl Scout from the greater Philadelphia, Pennsylvania area, frivolous litigation is making it increasingly hard for them to even sell their cookies and their local convenience stores will no longer allow these girls to set up their booths anymore for fear of liability issues.

This economic drain, created by frivolous lawsuits on American productivity, is unacceptable and prevents the American economy from being as competitive as it should be with the rest of the world.

H.R. 4571 will help to discourage the filing of frivolous lawsuits by restating several important provisions to rule 11 of the Federal Rules of Civil Procedure that were changed in 1993 and add several new deterrents against baseless claims. In short, this legislation will make rule 11 sanctions against attorneys or parties who file frivolous lawsuits mandatory rather than discretionary. It will remove rule 11 safe harbor provisions that currently allow parties and their attorneys to avoid sanctions for making frivolous claims by withdrawing them within 21 days after motions for sanctions that have been filed. It implements a ``three strikes and you're out'' provision that would disbar any lawyer for at least 1 year that filed three frivolous lawsuits in Federal court. It allows for rule 11 sanctions for frivolous or harassing conduct during discovery, and it allows monetary sanctions, including attorney fees and compensation against a represented party.

The Lawsuit Abuse Reduction Act also provides new protections against frivolous lawsuits such as extending rule 11 sanctions to State cases that affect interstate commerce, and reducing forum shopping by requiring that a plaintiff in a civil tort action may sue only where he or she lives or was injured or where the defendant's principal place of business is located.

A recent poll found that 83 percent of likely voters believe that there are too many lawsuits in America and 76 percent believe that lawsuit abuse results in higher prices for goods and services. Another poll found that 73 percent of Americans support requiring sanctions against attorneys who file frivolous lawsuits, just as H.R. 4571 would do.

Small businesses, the engine of job growth in our economy, rank the cost and availability of liability insurance as second only to the costs of health care as their top priority, and both problems are fueled by frivolous lawsuits. A recent report by AEI-Brookings Joint Center for Regulatory Studies has concluded: ``The tort liability

price tag for small businesses in America is $88 billion a year'' and that ``small businesses bear 68 percent of the business tort liability cost but only take in 25 percent of the business revenue.'' The small businesses studied in this report account for 98 percent of the total number of small businesses with employees in the United States.

Mr. Speaker, I believe it is time for Congress to listen to what the average Americans say about frivolous lawsuits. It is time for us to hear the concerns of small businessmen and -women in our communities, along with consumers, who list frivolous lawsuits as one of their greatest impediments to success.

And it is time for us to get serious about encouraging economic growth, job creation, and international competitiveness by ending the practice that keeps our economy from thriving. The choice presented by this legislation is stark and clear and will demonstrate whether we support the frivolous actions of the trial lawyer and the drain that they place on the American economy or whether we support American workers and businesses.

I encourage all of my colleagues to stand up for our economy and for consumers by supporting this rule and the underlying legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Republicans do listen to Democrats, and we have had a number of times where the Republican Party, the majority party, has talked about tort reforms and other issues that are important to consumers.

One of the persons that we have listened to repeatedly in this debate is perhaps one of the most successful trial lawyers who is now a United States Senator, and his name is John Edwards. Senator Edwards has written in Newsweek that ``lawyers who bring frivolous lawsuits should face tough mandatory sanctions with the `3-strikes' penalty.'' That is what Mr. Edwards has said. Senator Edwards has also said that he ``believes we need a national system in place that will weed out meritless lawsuits.'' That is exactly what H.R. 4571 would do.

We are listening to the American people. We are listening to people who are lawyers who are engaged in the business of advocating on behalf of people who have been harmed. But sometimes those people know most about the system, as Senator John Edwards, who knows best that we need to reform the system. That is what we are doing here today. I do appreciate the opportunity to have Senator Edwards' remarks that were in Newsweek magazine included today, because I think it is important for the American public to hear that.

Mr. Speaker, I yield 3 minutes to the gentleman from Bristol, Indiana (Mr. Chocola).

Mr. Speaker, I thank the gentleman for yielding, and I am pleased to respond. First of all, I would like to say that the gentleman from Texas (Mr. Turner) requested its removal.

Secondly, I would like to say that the provision actually allows a covered company under this provision that they have the absolute right not only to remove their case to Federal court, but they can remove the case to any Federal court in the country that they would like, and that they can pick the Federal court if they have one, wherever the Federal court is, and have the case there; whereas our bill prevents unfair forum shopping by making sure that cases are actually brought in States that actually have a connection to the case.

As the gentleman may be aware, there are abuses that take place all across this country, including in Illinois and Mississippi, where there are cases that are accepted by courts where no one actually even lives in those jurisdictions.

I thank the gentleman for asking for a response.

Mr. Chairman, I yield 5 minutes to the gentleman from Georgia (Mr. Linder), a member of the Committee on Rules.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, today, as I had stated, this is balanced legislation that is important to consumers. It is important to judges who sit to make themselves ready for those lawsuits that are necessary to make wise decisions on. But frivolous lawsuits are clogging our courts.

Mr. Speaker, I would remind this body that we have debated numerous tort reform issues, and one which was decided as a local issue in Texas was about medical malpractice, tort reform for medical malpractice. It was passed last year. It became law in January of this year. And one of the most important health care systems in Texas, a company called Christus HealthCare Systems, has announced earlier this month that as a result of those tort reform changes in Texas, they are able to put $21 million that previously they had set aside for lawsuits, that would go right back into their hospitals, to health care, to retraining of their employees, to make their system better, to make health care work better for every single consumer, and most of all to hire more nurses which is where the shortage was in their hospital.

Tort reform issues and ideas work but so do those things like we are doing today, H.R. 4571, that says we are going to alleviate and stop frivolous lawsuits from clogging our courts. I would remind this wonderful body that the young chairman, the gentleman from San Antonio, Texas (Mr. Smith), has worked very diligently to ensure that this is balanced legislation that was brought to the floor, as he appeared yesterday in the Committee on Rules to talk about the need for this. I think we are listening to the special interests and we admit in the Republican Party we do have a specialty interest, they are call consumers. They are called taxpayers. And those special interest people that the Republican Party represents, we will continue to do so with common sense legislation that will allow the United States Congress to speak on issues that are important.

Mr. Speaker, I encourage all of my colleagues to stand up to support not only this rule but also the underlying legislation that is good for consumers. It is good for small businesses. It is good to ensure that America's economic growth continues. And most of all, it is good for the people, like Senator Edwards noted, who are there on the front line in our courts who say that frivolous lawsuits must end. The United States Congress will speak today. Every single Member of this body will have a chance to make that firm decision whether we want to end frivolous lawsuits or whether we are going to allow the status quo.

I urge my fellow Members to please support this underlying legislation and we will make a strong statements on behalf of consumers.

Mr. Speaker, I yield back the balance of my time, and I move the previous question on the resolution.

The previous question was ordered.

Mr. Speaker, I yield myself such time as I may consume.

(Mr. McGOVERN asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I thank the gentleman from Texas (Mr. Sessions) for yielding me the customary 30 minutes.

Mr. Speaker, I rise in opposition to this rule and in opposition to H.R. 4571, the so-called Frivolous Lawsuit Protection Act.

Today the Republican leadership of this body continues willful disregard for the American public. Once again we are considering legislation in the shadow of the November elections, and once again the Republican leadership is catering to big business at the expense of the public good. And once again that leadership is squandering the House's limited time with foolish, misguided special interest legislation.

This is a bill that attempts to turn back the judicial clock by over a decade; and in the process, more pressing issues and priorities are ignored. Mr. Speaker, this simply is not needed.

Yesterday the Federal Assault Weapons Ban died at the hands of the Republican leadership. President Bush, who, during his first campaign, said he saw no reason for such weapons to be on the street, indicated on more than one occasion that he would sign a new bill if the Republican-controlled Congress sent him one. But the Republican leadership refused to bring the reauthorization up for a vote. I believe they prevented a vote to protect President Bush from having to sign or veto the reauthorization of the Federal Assault Weapons Ban. Why? Because doing the bidding of the gun lobby is their priority. Apparently the Republican strategy in homeland security includes defying law enforcement by making these military-style assault weapons more available.

Mr. Speaker, in addition to failing to act on the Federal assault weapons ban this week, the Republican leadership has scheduled zero time, that is zero time, to consider the 9/11 Commission's recommendations. The Commission took a hard and comprehensive look at the intelligence and homeland security needs of our country. They asked Congress to do its job, to take a hard look at the way this House organizes and carries out its works, ways that potentially undercut the security of our Nation and our people. Yet, today, in this House, it is business as usual, with special interest legislation on the House floor. Six weeks have passed since the Commission's report was first issued, and we still have no firm date as to when this House will take up legislation and debate the Commission's recommendations.

Will it be before Congress breaks for elections? Will we have to wait for another September 11 anniversary to come and go before we take up the Commission's findings? Or, like today, will this body continue to waste its time on frivolous legislation?

The Republican leadership in both parties of Congress has failed to pass a budget resolution, but we are not talking about that today. And today we begin one more legislative week without a transportation bill. We certainly are not working on a bill to increase the minimum wage, even though wages are stagnant and over 4 million Americans have fallen out of the middle class into poverty since George Bush became President. In fact, the Bush administration and the Republican Congress are on track to have the worst jobs record since the Great Depression, all the way back to Herbert Hoover. The average length of unemployment is at a 10-year high, and manufacturing employment remains at a 53-year low. Yet, this House does not seem to have the time to do anything to help the millions of Americans who have lost their jobs. No extension of unemployment benefits, no help for the millions of uninsured Americans, and certainly, no effort to reduce gas prices or lower the cost of college tuition, or pass a highway bill that might create good- paying jobs.

No, Mr. Speaker, we are not taking up legislation to address these issues today.

Mr. Speaker, if the American public wants real leadership on real issues, they should not look here for help. Indeed, this body is guilty of willful neglect of America's priorities. Why do we not work on a bill to help the millions of uninsured Americans? Over 70 percent of the uninsured live in households with at least one worker, and yet we sit idly by as more and more Americans work in jobs that provide little or no health care benefits.

Instead, here we are, taking up H.R. 4571, the so-called Frivolous Lawsuit Reduction Act, a bill that does nothing to address the real problems facing working families of America, yet does so much to help the special interests who fill the campaign coffers of the majority.

Among its provisions, H.R. 4571 would turn back the clock to the pre- 1993 provision of Rule 11 of the Federal Rules of Civil Procedure, provisions that were changed on the recommendation of the Judicial Conference after years of study, approved by the U.S. Supreme Court, and reviewed by Congress in accordance with the Rules Enabling Act.

What will this bill change? The supporters of H.R. 4571 contend that it would help reduce frivolous lawsuits. That is what they say. But in reality, the bill would have a terrible effect on credible claims brought by families, workers, consumers, and senior citizens.

Without many of these civil lawsuits, the following changes in consumer products would likely never have occurred: The redesign of defective baby cribs so that they no longer strangle infants; flammable children's pajamas taken off the market; the redesign of harmful medical devices; the strengthening of auto fuel systems so that they do not blow up upon impact; the addition of basic safeguards to dangerous farm machinery; and the elimination of asbestos so that workers are no longer poisoned in their workplaces.

Mr. Speaker, instead of providing more protections for the average American, the Republican leadership actually provides protections for, get this, the ``Benedict Arnold corporations'' who reincorporate in a foreign tax shelter only to avoid paying U.S. taxes. Specifically, this bill protects these Benedict Arnold corporations from lawsuits American citizens could file if they are injured by those corporations' products. Unbelievable. The bill limits the venue of a lawsuit against a corporate defendant to either the place the injury happened or the jurisdiction where ``the defendant's principal place of business is located.'' If a foreign corporation does not do significant business in a place where the injury occurred, a plaintiff cannot sue a corporation headquartered outside the United States. In other words, a person injured by a defective product would be able to sue a U.S. corporation in its principal place of business, but he or she would often have no way to seek redress against a foreign corporation.

Now, the gentleman from Texas (Mr. Turner) attempted to fix this provision. While the Republican leadership actually made the Turner amendment in order, they did so only after a provision intended to hold these Benedict Arnold corporations accountable for

their actions in the United States was removed from the amendment. The provision the Republican leadership removed from the Turner amendment defines Benedict Arnold corporations as U.S. companies that set up corporate shells in foreign countries in order to escape U.S. tax liability and other U.S. regulatory duties.

In other words, Mr. Speaker, the one proposal that was intended to protect people, not corporations, was left on the Committee on Rules floor last night. The Republican leadership does not want the American people to know that their bill puts Benedict Arnold corporations ahead of American consumers. This is just one example of the Republican leadership bending over backwards for special interests, while ignoring the real issues facing the American people. I hope my friend, the gentleman from Texas (Mr. Sessions), will take the time during this debate to explain to the American people why the Republican leadership continues to protect Benedict Arnold companies instead of fighting for American jobs here at home.

But, then again, today's debate is not about the real issues confronting the American people; it is all about distraction. If we waste enough time on this bill, maybe the American people will not have time to ponder the failures and the lack of action by the Republican- controlled Congress on our most pressing priorities. It is a cynical ploy, and I hope that the American people recognize it.

I urge my colleagues to reject H.R. 4571.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

The gentleman from Texas (Mr. Sessions), I am happy to yield to him 30 seconds to answer the question that I asked in my opening statement and that is, why did you remove this section of the Turner amendment that held Benedict Arnold corporations accountable? Why do you feel that we need to protect companies who purposely open up P.O. boxes in Bermuda so that they can escape paying U.S. taxes? Even if you support paying Benedict Arnold corporations, why can we not have at least an up or down vote on an amendment so that the House can decide?

I am happy to yield to the gentleman 30 seconds so that he can clarify that for me.

Mr. Speaker, reclaiming my time, I appreciate the gentleman's response, but it really did not answer my question, and I yield myself such time as I may consume.

The bottom line is the gentleman from Texas (Mr. Turner) decided not to pursue his amendment only after he was told by the leadership of this House that he could not have the language he wanted, and the companies that we are talking about here, these Benedict Arnold companies, are not in individual States, they are in places like Bermuda.

I just think it is outrageous that these companies that really skirt U.S. tax law, and I think are not the kind of corporations that deserve to be protected, are in fact protected in this bill, and I think it is wrong.

Mr. Speaker, I would like to insert in the Record the complete text of the amendment that the gentleman from Texas (Mr. Turner) wanted to offer and was told that he could not offer because I think it is instructive for the American people to at least have on record what he tried to do.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I urge my colleagues to reject H.R. 4571, and I ask that they support the substitute that will be offered by the gentleman from Texas (Mr. Turner).

The Turner substitute is a stronger bill and addresses the real needs of the American public. The Turner substitute respects all Americans by setting up other three strikes and you are out systems while protecting civil rights lawsuits. The Turner substitute also prevents corporate wrongdoers from sealing their activities in court records. And the Turner substitute requires States to put into action a system to speed up the trial process and eliminate junk lawsuits.

Let me again state for the record, Mr. Speaker, that it is frustrating and it is mind boggling to me that the Republican leadership insists that the Turner substitute not include language that would hold Benedict Arnold corporations accountable. What is the deal?

Why does the Republican leadership not only on this bill but on so many other bills in which we try to hold these companies accountable insist on bending over backwards to protect them. These are companies that purposefully set up P.O. boxes in places like Bermuda to avoid paying U.S. taxes. There is no citizen in this country that can do that. But these corporations that make millions and millions, if not billions of dollars get to do that, get to take advantage of all the benefits of this country, but do not have to pay U.S. taxes and here they are being protect from lawsuits if in fact they produce a damaging product.

It is wrong. It is outrageous. This should not be happening, and I would again just say that it is sad that we are at this point.

Mr. Speaker, I would urge the adoption again of the Turner substitute and the rejection of this ill-conceived, ill-advised bill, and I would urge my colleagues to vote no on H.R. 4571.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.