Lawsuit Abuse Reduction Act of 2005

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

Mr. Chairman, I support H.R. 420, the Lawsuit Abuse Reduction Act of 2005.

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, when 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 the 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 plaintiff's hospital room and asked how the patient 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 commonsense notion that it is necessary to properly chew hard foodstuffs prior to swallowing.'' But, of course, the defendants had to absorb hundreds of thousands of dollars in legal fees.

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

Today almost any party can bring any suit in almost any jurisdiction. That is because plaintiffs and their attorneys have nothing to lose. All they

want is for the defendant to settle. This is legalized extortion. It is lawsuit lottery.

Defendants, on the other hand, can unfairly lose their lifetime savings, their careers, their businesses, and their reputations. This is simply not justice.

There is a remedy: the Lawsuit Abuse Reduction Act. It passed the House last year by a margin of almost 60 votes. The bill applies to both plaintiffs who file frivolous lawsuits to extort financial settlements and to defendants who unnecessarily prolong the legal process. If a judge determines that a claim is frivolous, they can order the plaintiff to pay the attorneys' fees of the defendant who was victim of their frivolous claim. This will make a lawyer think twice before filing a frivolous lawsuit.

It is a problem that even the American Trial Lawyers Association has tried to address in its own code of conduct by declaring, ``No American Trial Lawyers Association member shall file or maintain a frivolous suit, issue, or position.'' However, ATLA has not disciplined a single attorney for violation of this code of conduct in the last 2 years.

This legislation also prevents forum shopping. It requires that personal injury claims be filed only where the plaintiff resides, where the injury occurred, or 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. Here is what he says about forum shopping:

``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 populists. 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.''

Forum shopping is a part of lawsuit abuse, and we must pass legislation to stop it from occurring. Even several largely recognized Democrats have acknowledged the need to end frivolous lawsuits. For instance, the John Kerry for President campaign endorsed national legislation in which ``lawyers who file frivolous cases would face tough mandatory sanctions.'' And former Vice Presidential candidate Senator Edwards stated, ``Lawyers who bring frivolous cases should face tough, mandatory sanctions.''

The Lawsuit Abuse Reduction Act is sensible reform that will help restore confidence to America's justice system.

Mr. Chairman, the following organizations support H.R. 420: American Tort Reform Association, National Association of Home Builders, National Association of Manufacturers, National Restaurant Association, American Insurance Association, and the United States Chamber of Commerce. And this legislation is the top legislative priority of the National Federation of Independent Businesses.

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

Mr. Chairman, I yield 5 minutes to the gentleman from Florida (Mr. Keller), a member of the Judiciary Committee.

Mr. Chairman, I yield 4 minutes to the gentleman from Ohio (Mr. Chabot), the chairman of the Constitutional Law Subcommittee of the Judiciary Committee.

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

Mr. Chairman, the scourge of frivolous litigation mars the fabric of our legal system and undermines the vitality of our economy. As President Bush has stated, ``We have a responsibility to confront frivolous litigation head on.'' H.R. 420 would do exactly that.

Frivolous lawsuits have become a form of legalized extortion. Without the serious threat of certain punishment for filing frivolous claims, innocent people and small businesses will continue to confront the stark economic reality that simply paying off frivolous claims through monetary settlements is always cheaper than litigating the case until no fault is found. Frivolous lawsuits subvert the proper role of the tort system and affront fundamental notions of fairness that are central to our system of justice.

The effects of frivolous litigation are both clear and widespread. 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 injuries and even hurt feelings. Common playground equipment is now an endangered species. The Girl Scouts in the metro Detroit area alone have to sell 36,000 boxes of cookies each year just to pay for their liability insurance. Good Samaritans are discouraged. 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.''

Unfortunately, the times we are in allow for a much more litigious environment than common sense would dictate. A Federal lawsuit has even been filed against U.S. weather forecasters after the South Asian tsunami disaster.

Today results of frivolous lawsuits are written on all manner of product warnings that aim to prevent obvious misuse. A warning label on a baby stroller cautions, ``Remove child before folding.'' A five-inch brass fishing lure with three hooks is labeled, ``Harmful if swallowed.'' And household irons warn, ``Never iron clothes while they are being worn.''

Small businesses and workers suffer the most. The Nation's oldest ladder manufacturer, 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, while never losing an actual court judgment. The workers of John S. Tilley Ladders never faced a competitor they could not beat in the marketplace, but they were no match for frivolous lawsuits.

When Business Week published an extensive article on what the most effective legal reforms would be, it stated that what is needed are ``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. Then the Civil Rules Advisory Committee, an obscure branch of the courts, made penalties optional. This needs to be reversed by Congress. Today, H.R. 420 would do exactly that.

Rule 11 of the Federal Rules of Civil Procedure presently does not require sanctions against parties who bring frivolous lawsuits. Without certain punishment for those who bring these suits and the threat of serious 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. In fact, as currently written, Rule 11 allows lawyers to entirely avoid sanctions for filing frivolous claims by withdrawing them within 3 weeks. Such a rule actually encourages frivolous claims because personal injury attorneys can file harassing pleadings secure in the knowledge that they have nothing to lose. If someone objects, they can always retreat without penalty.

H.R. 420 would restore mandatory sanctions and monetary penalties under Federal Rule 11 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 have interstate implications and close the loopholes of a tort system that often resembles a tort lottery.

The legislation applies to frivolous lawsuits brought by businesses as well as individuals, and it expressly precludes 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. The Class Action Fairness Act, which was recently signed into law after receiving broad support in both Houses, prohibits the unfair practice of forum shopping for favorable courts when the case is styled as a class action. The same policy should apply to individual lawsuits as well.

One of the Nation's wealthiest personal injury attorneys, Richard ``Dickie'' Scruggs, and I quoted him at length a while ago, but I will quote him a little bit shorter right now, described what he calls ``magic jurisdictions'' as ``What I call the `magic jurisdictions' is where it is almost impossible to get

a fair trial if you are a defendant. Any lawyer fresh out of law school can walk in there and win the case, so it does not matter what the evidence or the law is.''

America's system of justice deserves better, much better. H.R. 420 prevents the unfair practice of forum shopping by requiring that personal injury cases be brought only where there is some reasonable connection to the case; namely, where the plaintiff lives or was allegedly injured, where the defendant's principal place of business is located, or where the defendant resides.

The time for congressional action to close the loopholes that create incentives for frivolous lawsuits is now. Too many jobs have been lost and more will not be created if this legislation is not enacted into law.

I urge my colleagues to return a measure of fairness to America's legal system by passing the Lawsuit Abuse Reduction Act.

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

Mr. Chairman, I offer an amendment.

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

Mr. Chairman, the bipartisan manager's amendment I am offering today reflects the important contributions of the gentleman from New York (Mr. Nadler) and the gentleman from Virginia (Mr. Scott). It incorporates into the base bill provisions imposing sanctions for the destruction of relevant documents in a pending Federal court proceeding, an amendment setting standards for a court's determination that certain court records should be sealed, and an amendment providing for a presumption on a Rule 11 violation when the same issue is repeatedly relitigated.

This manager's amendment also makes clear that in the antiforum- shopping provisions, if there is no State court in the county in which the injury occurred, the case can be brought in the nearest adjacent county where a court of general jurisdiction is located.

Finally, the manager's amendment makes clear that the legislation does not affect personal injury claims that Federal bankruptcy law requires to be heard in a Federal bankruptcy court. This reasonable request was made by the National Bankruptcy Conference Committee on Legislation.

I urge my colleagues to join me in supporting this bipartisan manager's amendment.

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

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

Mr. Chairman, I rise in opposition to this substitute amendment. And I have to point out that this same substitute amendment was defeated in the last Congress. Mr. Chairman, 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 the title of section 1 does not reflect the text it contains.

In fact, the substitute provides that following three violations of its provisions: ``The court shall refer each such attorney to one or more appropriate State bar associations for disciplinary proceedings.''

The substitute does not say the attorney shall be suspended from the practice of law. However, the base bill explicitly provides for such a sanction. Specifically, the base bill states 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 contains a substantive three-strikes-and-you-are-out provision that will prevent attorneys who file frivolous lawsuits from getting into the courtroom. The substitute merely requires that repeat offenders be reported to State bar associations.

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

The substitute references only three. 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 a lack of information or belief.

The substitute removes this protection for victims of frivolous pleadings under existing law. In addition, the substitute for the first time without penalty allows defendants to file papers with the court that include factual denials of the allegations against them that are not warranted by the evidence and not reasonably based.

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. So the substitute not only undermines the clarity of the three strikes and you're out rule, it purports to establish, it dramatically expands the potential for even more frivolous lawsuits.

Furthermore, the base bill provides that those who file frivolous lawsuits can be made to pay all costs and attorneys' fees that are ``incurred as a direct result of the filing of the pleading, motion, or other paper that is the subject of the violation.'' The 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 proponent of this amendment claims that the anti-forum shopping standards in H.R. 420 regarding where a personal injury lawsuit can be brought are somehow unfair, even though they are the very same standards contained in the vast majority of State venue laws. In fact, the gentleman from California's own State venue law provides as follows: ``If the action is for injury to person or personal property or for death from wrongful act or negligence, the superior court in either the county where the injury occurs or the injury causing death occurs or the county where the defendants, or some of them reside at the commencement of the action, is the proper court for the trial of the action.''

Insofar as foreign corporations cannot be sued in some limited circumstances in this country, that is not the fault of H.R. 420, nor is it the fault of California's venue law. It is a result of the Supreme Court's interpretation of the Due Process Clause.

Mr. Chairman, the substitute does not provide for three strikes and you're out. It provides for three strikes and you get referred to a State bar association that can continue to let the offending attorney practice law.

The Democratic substitute weakens existing law that protects plaintiffs from defendants that file frivolous denials that are not warranted by the evidence and not reasonably based. This substitute amendment includes provisions that are unconstitutional and penalizes those who would challenge those unconstitutional rules. That is more than three strikes against the substitute, Mr. Chairman, and I urge my colleagues to return it to the bench and vote yes for the job- protecting and job-creating Lawsuit Abuse Reduction Act when it gets to final passage.

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

Mr. Chairman, I yield myself 30 seconds.

Mr. Chairman, I want to point out to the gentleman from Wisconsin who just spoke that I could have saved him a lot of time. And I would like to remind him that he might want to take a look at the language of H.R. 420, that it applies just as much to businesses as it does individuals, despite statements to the contrary.

Mr. Chairman, I yield 3 minutes to the gentleman from Utah (Mr. Cannon), the chairman of the Administrative Law Subcommittee of the Judiciary Committee.

Mr. Chairman, I believe I have the right to close, and I am the remaining speaker on this side, so I will reserve the balance of my time.

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

Mr. Chairman, the gentlewoman from California who spoke previously to the gentleman from California who just finished used a couple of words that I would like to return to and clarify. She used the word ``madness,'' but anyone listening to this debate or anyone having a firsthand knowledge of frivolous

lawsuits knows that the real madness is the filing of thousands of frivolous lawsuits across this country that unfairly tarnish the reputations of innocent citizens, that unfairly destroy the businesses of small business owners across the country. That is the type of madness that this bill addresses.

She also used the phrase ``special interests,'' but again, I think anyone listening to this debate today and anyone knowing firsthand the agony and the losses and the destruction caused by frivolous lawsuits realizes that the special interests that this bill hopes to protect are really the special interests of the American people who have stuttered and staggered and been burdened by frivolous lawsuits too many times and much too often in our history.

The special interests, if there are any, involved in this legislation again are obvious to those who listened to the debate, the trial lawyers of America; and, Mr. Chairman, let me take a minute here just to dwell on that subject because I happen to believe the vast majority of trial lawyers or personal injury lawyers are honorable people and they are members of an honorable profession.

I think one of the aspects of the debate that most troubles me is, in fact, the lack of sanctioning lawyers who engage in frivolous lawsuits by the Trial Lawyers of America. Their own code of conduct reads as follows: ``No ATLA member shall file or maintain a frivolous suit, issue or position.'' We checked and not a single member of the Trial Lawyers Association, not a single lawyer, had been sanctioned in the last 2 years; and, in fact, no one can even tell us when the last time any attorney was sanctioned for filing a frivolous lawsuit.

I think the trial lawyers would have a lot more credibility on this subject if, in fact, they had monitored their own ranks and, in fact, had sanctioned just a single trial lawyer for filing one of those tens of thousands of frivolous lawsuits that have been filed.

That, as I say, is discouraging; and I hope the Trial Lawyers of America will see fit in the future to sanction some attorney somewhere, somehow who has filed a frivolous lawsuit.

Mr. Chairman, anyone who is worried about what frivolous lawsuits will do to them, their family, their friends or their businesses ought to oppose this substitute amendment. It is an amendment that would do very little to prevent frivolous lawsuits. The underlying bill, however, will deter lawyers from filing those frivolous lawsuits.

Let me give some examples of actual suits that are frivolous, but that would be allowed under the Democratic substitute amendment.

A New Jersey man filed suit against Galloway Township School District claiming that assigned seating in a school lunchroom violated his 12- year-old daughter's right to free speech.

A Florida high school senior filed suit after her picture was left out of the school's yearbook.

An Arizona man filed suit against his hometown after he broke his leg sliding into third base during a softball tournament.

An Alabama person sued the school district after his daughter did not make the cheerleading squad, claiming that the rejection caused her humiliation and mental anguish.

The families of two North Haven, Connecticut, sophomores filed suit because of the school's decision to drop the students from the drum majorette squad.

A Pennsylvania teenager sued her former softball coach, claiming that the coach's incorrect teaching style ruined her chances for an athletic scholarship.

After a wreck in which an Indiana man collided with a woman who was talking on her cell phone, the man sued the cell phone manufacturer.

A Knoxville, Tennessee, woman sued McDonald's, alleging that a hot pickle dropped from a hamburger burned her chin and caused her mental injury.

A Michigan man filed suit claiming that television ads that showed Bud Light as the source of fantasies involving tropical settings and beautiful women misled him and caused him physical and mental injury, emotional distress, and financial loss.

A woman sued Universal Studios trying to get damages because the theme park's haunted house was too scary.

In every one of these instances and in thousands of others, the individuals sued were forced to spend considerable amounts of money, time and effort to defend themselves. This is a travesty of justice, and it is simply wrong.

H.R. 420 will end the filing of frivolous lawsuits. Unfortunately, the substitute amendment will still allow small businesses, churches, schools, hospitals, sports leagues, cities and others to be burdened with these meritless and frivolous claims.

This substitute amendment provides no disincentive to file a frivolous lawsuit. It would still subject small business owners to the cost of frivolous lawsuits and subject individuals to the cost of rising insurance premiums and health care costs that result from frivolous lawsuits.

In other words, Mr. Chairman, this substitute amendment does not provide any relief to those who would be unfairly targeted by frivolous lawsuits. The underlying bill would.

The substitute includes no real consequences for the attorney who repeatedly files frivolous lawsuits. The underlying bill does.

The substitute includes nothing to address the problem of forum shopping which is also a large part of the problem. The underlying bill does.

Mr. Chairman, I urge my colleagues to oppose the substitute amendment and vote ``yes'' on the underlying bill, which, in fact, would deter lawsuit abuse.

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

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

Mr. Speaker, I oppose this completely irrelevant motion to recommit. First, nothing in H.R. 420, the Lawsuit Abuse Reduction Act, prohibits anyone from being sued for fraud to the full extent of Federal law. Second, the motion to recommit relates to contract claims when the section of the bill that it modifies relates only to personal injury claims.

There is no flaw in the bill that needs to be corrected, but even if there were, the motion to recommit fails to correct it because it relates to contract claims rather than personal injury claims.

Mr. Speaker, I just received a statement of administration policy from the executive office of the President which I would like to read, because it provides a good summary of H.R. 420, the Lawsuit Abuse Reduction Act of 2005. This statement reads as follows:

``The administration supports House passage of H.R. 420 in order to address the growing problem of frivolous litigation. H.R. 420 would rein in the negative impact of frivolous lawsuits on the Nation's economy by establishing a strong disincentive to file such suits in Federal and State courts. Junk lawsuits are expensive to fight and often force innocent small businesses to pay exorbitant costs to make these claims go away. These costs hurt the economy, clog our courts, and are burdening the American businesses of America. The administration believes the bill is a step in the right direction toward the goal of ending lawsuit abuse.''

Mr. Speaker, I urge my colleagues to oppose this absolutely irrelevant motion to recommit and support the underlying bill.

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

Mr. Speaker, I demand a recorded vote.

Madam Speaker, by direction of the Committee on Rules, I call up H. Res. 508 and ask for its immediate consideration.

Madam 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.

Madam Speaker, House Resolution 508 is a structured rule. It provides for 1 hour of general debate, equally divided and controlled by the chairman and the ranking minority member of the Committee on the Judiciary. It waives all points of order against consideration of the bill, and it 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 an original bill for the purpose of amendment and shall be considered as read.

It makes in order only those amendments printed in the Rules Committee report accompanying the resolution. It provides that the amendments printed in the report may be offered only in the order printed, may be offered only by the Member designated in the report, shall be considered as read, shall be debatable for the time specified in the report, equally divided and controlled by the proponent and an opponent, shall not be subject to amendment, and shall not be subject to a demand for division of the question in the House or in the Committee of the Whole.

This resolution waives all points of order against the amendments printed in the report, and it provides one motion to recommit, with or without instructions.

Madam Speaker, I rise today in support of House Resolution 508 and the underlying legislation, H.R. 420, the Lawsuit Abuse Reduction Act of 2005.

First, I want to commend the gentleman from Wisconsin (Mr. Sensenbrenner), the distinguished chairman of the Committee on the Judiciary, not just for the underlying bill but for a number of recent bills aimed at strengthening our legal system by protecting people's rights under the law and shielding them from frivolous proceedings. Additionally, I want to thank the gentleman from Texas (Mr. Smith), the chairman of the Subcommittee on the Courts, the Internet, and Intellectual Property, for sponsoring H.R. 420.

Madam Speaker, over the past couple of weeks, this House has taken several important steps to reform our legal system, to relieve our overburdened court dockets and drastically reduce the number of costly frivolous claims against innocent and legitimate businesses.

On October 24, we passed and sent to the President's desk S. 397, the Lawful Commerce in Arms Act of 2005, by a vote of 283 to 144 in the House. I might add that in the spirit of bipartisanship, 59 Democrats and one Independent joined 223 Republicans in passing this landmark legislation that refocuses liability for gun violence on the actual criminal, the person who pulled the trigger.

Additionally in this House, 226 Republicans, along with 80 Democrats, passed H.R. 554, the Personal Responsibility in Food Consumption Act of 2005. This bill also reaffirms the need for individuals to take responsibility for their own actions and not expect someone else to foot the bill for the adverse health consequences of their own gluttony.

Today, Madam Speaker, we have another prime opportunity to pass meaningful legislation to strengthen our court system even further and to protect the falsely accused.

The Lawsuit Abuse Reduction Act of 2005 will go a long way to curb the actions of individuals who would seek to abuse our courts by gaming the judicial system. Last week, there were probably millions of people across this country who tuned in, ticket in hand, to see if they had won a $340 million Powerball jackpot. Unfortunately, there are also people who look to the courts, legal briefs in hand, as if it were the Powerball lottery.

However, Madam Speaker, it is the American people and small businesses that pay the ultimate price for frivolous lawsuits and this type of jackpot justice. They pay for it through higher prices for goods and services, they pay for it through diminished quality of products, they pay for it through loss of economic freedom, and they pay for it through a clogged court system that has been turned into an ATM for junk lawsuits. In fact, the current tort system is estimated to cost American people well over $200 billion per year.

Clearly, the Lawsuit Abuse Reduction Act of 2005 is a bill that is sorely overdue, sorely needed and, I might add, was approved by this House in the last Congress by a vote of 229 to 174.

With respect to the underlying bill, it would amend Rule 11 of the Federal Rules of Civil Procedure by restoring the mandatory sanctions for the filing of frivolous lawsuits. This bill would require that courts impose an appropriate penalty on attorneys, law firms, or parties who continue to file frivolous lawsuits. Also this bill would eliminate the ``free pass'' provision that allows attorneys to avoid sanctions if they withdraw their frivolous claim after a motion for sanctions has been filed.

Madam Speaker, H.R. 420 also would prevent forum shopping by requiring that personal injury cases only be brought in those jurisdictions either where the plaintiff, the defendant or a related business resides, or where the alleged injury or surrounding circumstances occurred.

This act would also institute a three-strikes-and-you're-out sanction that would suspend an attorney from practicing in Federal court if a Federal judge determines the lawyer has violated Rule 11 on three or more occasions.

H.R. 420 clearly emphasizes that personal responsibility is not just some catch phrase that applies only to some people, such as a fast-food connoisseur, a firearms owner, a consumer or, indeed, a doctor. Personal responsibility and professional accountability should be the rule for those in the legal field, too, and that is why this House should pass this bill.

In closing, Madam Speaker, I would just emphasize that House Resolution 508 is a straightforward rule and H.R. 420 is a straightforward bill. Simply put, it just makes sense to stop and punish the willful abuse of our legal system by the slash-and-burn tactics of frivolous lawsuits.

As always, I look forward to the consideration of this rule, and I ask my colleagues to support it and the underlying bill.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, in response to some of the comments that were made, I just want to hold up this document that lists over 300 groups in support of LARA, the Lawsuit Abuse Reduction Act of 2005, and I will include them in the Record.

I would like to also point out that the Federal Judicial Center was in opposition to class action reform, which we passed in the previous Congress and in the 108th by a vote in this body of 279 to 149.

Groups Supporting H.R. 420--The Lawsuit Abuse Reduction Act of 2005

Advanced Medical Technology Association.

Air Conditioning Contractors of America.

Alabama Civil Justice Reform Committee.

Alabama Restaurant Association.

Alabama Trucking Association, Inc.

Alaska Cabaret, Hotel, Restaurant and Retailers

Association.

Alliance of Automotive Service Providers of Minnesota.

Alliance of Automotive Service Providers of Pennsylvania.

America Chamber of Commerce (NV).

American Apparel and Footwear Association.

American Automotive Leasing Association.

American Bakers Association.

American Boiler Manufacturers Association.

American Business Conference.

American Chemistry Council.

American Council of Engineering Companies.

American Health Care Association.

American Home Furnishing Alliance.

American Insurance Association.

American International Automobile Dealers Association.

American Legislative Exchange Council.

American Machine Tool Distributors Association.

American Petroleum Institute.

American Rental Association.

American Road & Transportation Builders Association.

American Supply Association.

American Trucking Associations.

American Tort Reform Association.

American Veterinary Distributors Association.

American Wholesale Marketers Association.

Antelope Valley Chamber of Commerce (CA).

Ardmore Chamber of Commerce (OK).

Arkansas Chapter, National Electrical Contractors

Association.

Arkansas Hospitality Association.

Arizona Chapter, National Electrical Contractors

Association.

Arizona Restaurant & Hospitality Association.

Associated Builders & Contractors.

Associated General Contractors of America.

Associated Equipment Distributors.

ASFE--Associated Soil & Foundation Engineers.

Associated Wire Rope Fabricators.

Association for High Technology Distribution.

Association of Equipment Manufacturers.

Association of Pool & Spa Professionals.

AMT--The Association for Manufacturing Technology.

Automotive Aftermarket Industry Association.

Automotive Parts Remanufacturers Association.

Automotive Parts & Service Association of Illinois.

Aviation Distributors & Manufacturers Association.

Bay Area Citizens Against Lawsuit Abuse.

Bearing Specialists Association.

Brunswick-Golden Isles Chamber of Commerce (GA).

Business Council of New York State, Inc.

Business Roundtable.

California Central Coast Chapter, National Electrical

Contractors Association.

California Restaurant Association.

California/Nevada Automotive Wholesalers Association.

Central California Citizens Against Lawsuit Abuse.

Central Illinois, National Electrical Contractors

Association.

Chamber of Business and Industry of Centre County (PA).

Chamber of Commerce for Anderson & Madison County (IN).

Chamber of Commerce of the Mid-Ohio Valley (WV).

Citizens Against Lawsuit Abuse of Central Texas.

Citizens for Civil Justice Reform.

City of Chicago, National Electrical Contractors

Association.

Civil Justice Association of California.

Cleaning Equipment Trade Association.

Cleveland Chapter, National Electrical Contractors

Association.

Coalition for Uniform Product Liability Law.

Colorado Civil Justice League.

Colorado Motor Carriers Association.

Colorado Restaurant Association.

Connecticut Restaurant Association.

Construction Industry Round Table.

Copper & Brass Service Center Association.

Council of Insurance Agents and Brokers.

Crawfordsville/Montgomery Chamber of Commerce (IN).

Dayton Area Chamber of Commerce (OH).

Delaware Motor Transport Association.

Delaware Restaurant Association.

East Texans Against Lawsuit Abuse.

The Employers Association.

Electrical Manpower Development Trust.

Equipment Leasing Association.

Florida Chamber of Commerce.

Florida Restaurant Association.

Food Industry Suppliers Association.

Gas Appliance Manufacturers Association.

Gases and Welding Distributors Association.

General Aviation Manufacturers Association.

Georgia Association of Petroleum Retailers, Inc.

Georgia Industry Association.

Georgia Restaurant Association.

Great Lakes Petroleum Retailers & Allied Trades

Association.

Georgia Motor Trucking Association.

Hawaii Restaurant Association.

Hawaii Transportation Association.

Health Industry Distributors Association.

Healthcare Distribution Management Association.

Heating, Air Conditioning & Refrigeration Distributors

International Association.

Hobbs Chamber of Commerce (NM).

Hospitality Association of South Carolina.

Hospitality Minnesota--Minnesota's Restaurant, Hotel &

Lodging and Resort & Campground Associations.

Hudson Valley Chapter, National Electrical Contractors

Association (NY).

Humble Area Chamber of Commerce (TX).

Idaho Lodging and Restaurant Association.

Illinois Chapter, National Electrical Contractors

Association.

Illinois Civil Justice League.

Illinois Lawsuit Abuse Watch.

Illinois Quad City Chamber.

Illinois Restaurant Association.

Independent Electrical Contractors.

Independent Insurance Agents & Brokers of America, Inc.

Independent Sealing Distributors.

Industrial Compressor Distributor Association.

Industrial Supply Association.

International Association of Plastics Distributors.

International Foodservice Distributors Association.

International Franchise Association.

International Furniture Suppliers Association.

International Housewares Association.

International Safety Equipment Association.

International Sanitary Supply Association.

International Sign Association.

International Sleep Products Association.

International Truck Parts Association.

Iowa Hospitality Association.

Iowa Motor Truck Association.

Jackson Area Manufacturers Association.

Kansas Chamber of Commerce.

Kansas City Chapter, National Electrical Contractors

Association.

Kansas Restaurant and Hospitality Association.

Kentucky Motor Transport Association.

Kentucky Restaurant Association.

Kern County Chapter, National Electrical Contractors

Association (CA).

Kingman Area Chamber of Commerce (AZ).

Lakewood Chamber of Commerce (WA).

Latrobe Area Chamber of Commerce (PA).

Lawn and Garden Marketing and Distribution Association.

Lebanon Valley Chamber of Commerce (PA).

Los Angeles Citizens Against Lawsuit Abuse.

Los Angeles Fastener Association.

Louisiana Motor Transport Association.

Louisiana Restaurant Association.

Maine Liability Crisis Alliance.

Maine Restaurant Association.

Manufactured Housing Institute.

Manufacturers' Association of Northwest Pennsylvania.

Marion Area Chamber of Commerce (IL).

Maryland Business for Responsive Government.

Maryland Chapter, National Electrical Contractors

Association.

Massachusetts Restaurant Association.

Material Handling Equipment Distributors Association.

Mechanical Contractors Association of America.

Memphis Chapter, National Electrical Contractors

Association.

Metals Service Center Institute.

Mason Contractors Association of America.

Michigan Chamber of Commerce.

Michigan Lawsuit Abuse Watch.

Michigan Restaurant Association.

Minnesota Trucking Association.

Mississippi Hospitality and Restaurant Association.

Mississippi Manufacturers Association.

Mississippi Trucking Association.

Mississippians for Economic Progress.

Missouri Motor Carriers Association.

Missouri Restaurant Association.

Montana Chamber of Commerce/Montana Liability Coalition.

Montana Motor Carriers Association.

Montana Restaurant Association.

Motor & Equipment Manufacturers Association.

Motorcycle Industry Council.

National Association of Chemical Distributors.

National Association of Convenience Stores.

National Association of Electrical Distributors.

National Association of Home Builders.

National Association of Manufacturers.

National Association of Mutual Insurance Companies.

National Association of Sign Supply Distributors.

National Association of Wholesaler-Distributors.

National Concrete Masonry Association.

National Council of Chain Restaurants of the National

Retail Federation.

National Electrical Contractors Association.

National Federation of Independent Business.

National Lumber & Building Materials Dealers Association.

National Marine Distributors Association.

National Paint & Coatings Association.

National Pest Management Association.

National Propane Gas Association.

National Restaurant Association.

NRF--The National Retail Federation.

National Roofing Contractors Association.

National School Supply & Equipment Association.

National Shooting Sports Foundation.

NAHAD--The Association for Hose & Accessories Distributors

NPES--The Association for Suppliers of Printing, Publishing

and Converting Technologies.

National Small Business Association.

Nebraska Restaurant Association.

Nebraska Trucking Association.

Nevada State Medical Association.

New Hampshire Lodging and Restaurant Association.

New Jersey Automobile Wholesalers Association.

New Jersey Business & Industry.

New Jersey Motor Truck Association.

New Jersey Restaurant Association.

New Mexico Alliance for Legal Reform.

New Mexico Chapter, National Electrical Contractors

Association.

New Mexico Restaurant Association.

Nevada Restaurant Association.

New York State Automotive Aftermarket Association.

New York State Motor Truck Association.

New York State Restaurant Association.

North American Horticultural Supply Association.

North Carolina Citizens for Business and Industry.

North Carolina Restaurant Association.

North Carolina Trucking Association.

North Dakota State Hospitality Association.

North Florida Chapter, National Electrical Contractors

Association.

North Louisiana Chapter, National Electrical Contractors

Association.

North Texas Chapter, National Electrical Contractors

Association.

Northeastern Illinois Chapter, National Electrical

Contractors Association.

Northern California Citizens Against Lawsuit Abuse.

Northern Illinois Chapter, National Electrical Contractors

Association.

Northern New York Chapter, National Electrical Contractors

Association.

Northern Rhode Island Chamber of Commerce.

Office Products Wholesalers Association.

Ohio Association of Wholesaler-Distributors.

Ohio Manufacturers Association.

Ohio Restaurant Association.

Ohio Trucking Association.

Oklahoma Restaurant Association.

Orange Chamber of Commerce (CA).

Orange County Citizens Against Lawsuit Abuse.

Oregon Restaurant Association.

Outdoor Power Equipment & Engine Service Association.

Outdoor Power Equipment Institute.

Outdoor Power Equipment Aftermarket Association.

Pacific Printing & Imaging Association (AK, HI, ID, MT, OR,

To the gentleman from Massachusetts, we do not actually have any additional speakers at this time, so right now I am reserving the balance of my time for the purpose of closing, unless another speaker comes.

Madam Speaker, I might point out that the people that oppose this legislation, as the gentleman from Massachusetts mentioned earlier, are the very ones that support his party. So I think that there is a little balance there, if that be true in either instance.

Madam Speaker, I would first like to close this debate by thanking my colleagues for a very productive discussion of both the rule and H.R. 420. The opportunity before this House today is another example of how this Congress has improved our legal system and preventing frivolous lawsuits from closing the doors of justice for those who have truly been harmed.

Contrary to what the opponents of legal reform might say, the underlying bill, as well as other recent bills, do not demonstrate contempt for our legal system or the esteemed profession of attorneys, but rather demonstrate respect for the important and historic role of our judicial system in defending the rights and ensuring the constitutional application of the laws. Frivolous lawsuits have not only driven up costs and destroyed economic opportunity for the American people, but they have also damaged the image of the courts. When the American people stop respecting the decisions of the judiciary, the courts begin to lose their effectiveness, and they cease to perform their constitutionally mandated role.

For the sake of the courts and for the sake of the American people, we in this House need to push forward with this additional meaningful and genuine reform. Therefore, I would like to urge all of my colleagues on both sides of the center aisle to support this rule and the underlying bill.

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

The previous question was ordered.

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

Mr. Chairman, I oppose this bill because it will not reduce frivolous lawsuits, but will instead increase the cost of litigation at the State and Federal level, set back the fairness of civil rights litigation, and favor foreign corporate defendants at the expense of their domestic competitors. As a result of this misguided legislation, satellite litigation, costs and delays will result, and litigation abuses will not be reduced.

H.R. 420 makes significant changes to Rule 11 sanctions without following the statutory rulemaking process. The Association of Chief Justices of the States and the Federal Judicial Council have both criticized skipping the statutory rulemaking process. This bill would revert Rule 11 back to the 1983 version and unduly affects plaintiffs in civil rights cases. The current Rule 11 was adopted in 1993 specifically to correct abuses by defendants in civil rights cases. By rolling back this rule and requiring a mandatory sanctions system to civil rights cases, H.R. 420 will chill many legitimate and important civil rights actions.

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, or local civil rights law,'' the language does not clearly and simply exempt civil rights and discrimination cases, as it should. 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.

The Honorable Robert Carter, United States District Court Judge for the Southern District of New York, who was one of the pioneers in civil rights legislation and worked on the Brown v. Board of Education case, 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.'' This is a good example of the dreadfully detrimental effect of this rule on civil rights cases.

Furthermore, this bill will operate to benefit foreign corporate defendants at the expense of their domestic counterparts. 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 minimum contacts, as most State long-arm statutes provide, the bill permits the suit to be brought only where the defendant's principal place of business is located. In the case of a foreign corporation, that does not exist in the United States. If a U.S. citizen is harmed by a product manufactured by a foreign competitor, under this bill the injured U.S. citizen would have no recourse against a foreign corporation, whereas he or she would have recourse against the comparable U.S. corporation. This is unfair to both the U.S. citizen with no recourse and to all U.S. companies that must compete against the foreign firm. Consequently American employers and employees would be put at an unfair disadvantage vis-a-vis their foreign counterparts, not exactly what we would want to be doing not only from a standpoint of fairness, but from a standpoint of our economy.

Mr. Chairman, this bill has another deleterious effect. Because it provides for reasonable attorneys' fees in the case of a sanction, because many Rule 11 sanctions are minor, and in any complex case there are almost invariably going to be some, the current law, first of all, permits the judge discretion whether to impose sanctions or not. This makes it mandatory for even the most picayune infractions.

Second of all, the current law says that if it is pointed out to an attorney that he has done something that would fall under Rule 11, he has 21 days to correct it. If he does not correct it, he is subject to sanctions. This would say they have no time to correct it. They get automatic sanctions. That is unfair.

Thirdly, because under those circumstances this bill provides for attorneys' fees, they had better have their head examined if they want to sue a large corporation, because if they are the little guy, and they have one attorney, and he is paid a reasonable fee, and they can afford the litigation, they hope; but if they are suing the big company, and General Motors has 32 attorneys lined up over there, and they are all charging $800 an hour, then reasonable attorneys' fees are going to be a lot of money, and they have to anticipate, if they file that suit, that because of the mandatory nature of the Rule 11 sanctions that this bill would impose, because of the lack of an ability to correct it, because of the automatic sanctions and mandatory sanctions, they have to assume that they are going to have to pay those sanctions, and they are going to have to pay the mandatory attorneys' fees, so they had better not sue the big boys.

What this bill is really saying is big corporations shall be exempt from lawsuits by people who cannot afford to pay huge attorneys' fees of the big corporations, because we have to assume that will happen, and because this bill leaves no discretion to the judge.

It is no surprise that 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 of State Legislatures, National Partnership for Women, 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 all oppose the bill.

In other words, if Members care about civil rights, if they care about the ability of the consumer to have justice with a large corporation, if they care about civil liberties, if they care about people being able to use the Federal or State courts, they must vote against this bill.

I urge my colleagues to vote against this poorly drafted and unfair legislation.

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

Announcement by the Chairman

Mr. Chairman, I observe the gentleman tells us that President Bush assures us of the problem of frivolous lawsuits. President Bush assured us there were weapons of mass destruction in Iraq and a lot of other nonsense. So I do not give that too much credence.

Mr. Chairman, I yield 5 minutes to the distinguished gentlewoman from Texas (Ms. Jackson-Lee).

Mr. Chairman, I yield 3 minutes to the gentlewoman from Ohio (Mrs. Jones).

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

I will summarize in a few words what we are really talking about. There are frivolous lawsuits. There are also novel legal claims which some may consider frivolous, but which, in the fullness of time, yield legal progress. The claims against Plessy v. Ferguson were considered frivolous at first, but eventually the courts accepted them, and so with many other arguments.

The courts have Rule 11 sanctions available at their discretion. Any judge who thinks an attorney is being frivolous, is wasting the court's time, is wasting his adversary's time, can impose the sanctions today. The courts have not asked for further power. The courts have certainly not asked us to tie their hands and to mandate that they impose sanctions whenever they are requested and a technicality may have been violated. That is not justice, to enforce technicalities against the discretion of the judge.

The Association of State Chief Justices are not in favor of this. The Judicial Council of the United States is not in favor of this.

To mandate that attorneys be sanctioned on any technicality, to say that an attorney may not correct his own mistake, you must sanction him; to say that three sanctions on three technicalities means he cannot practice anymore is to tell attorneys, do not try novel legal arguments, do not argue new claims. To say that attorneys' fees, reasonable attorneys' fees, will be assessed mandatorily, whatever the judge thinks, whether he thinks or she thinks it is reasonable or not, is to say that you better not sue the big boys, that you better not sue General Motors, and a small business, a supplier cannot sue Wal-Mart lest the attorney violate some technicality and the attorneys' fees of Wal-Mart, with their 45 attorneys sitting there, be assessed against the small supplier.

This is not justice. What this bill is, Mr. Chairman, is another attempt, another in a series of attempts, the class action bills, the various other bills we have had here, to close the courts, to close the courts to anyone who would try to hold giant corporations accountable. That is what this is. This is a bill

that says, do not try to use the courts for civil rights, do not try to use the courts to sue large corporations. We are going to make sure you do not. We are going to punish you if you do, and we are going to make sure you cannot find an attorney who will take the case because they are worried about draconian imposition of draconian attorneys' fees.

So I urge my colleagues to reject this bill. It should be rejected, because the courts ought to be opened to all people who need to use them. Otherwise there is no justice.

I yield to the gentlewoman from Texas.

Mr. Chairman, reclaiming my time, I thank the gentlewoman.

I think the gentlewoman has established not only that the system is not broken, but that any claim of an avalanche of frivolous litigation is absurd for these kinds of statistics of declining use of the courts, of declining caseloads, of declining filings. Again, the courts have not requested this, they have not said that there is any problem, there is any problem existing. This is an attempt again to shut the courthouse doors to people who need access to the courts, and on the most fundamental grounds of justice, this bill ought to be soundly rejected.

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

Mr. Chairman, I do not seek recognition in opposition to the amendment.

Mr. Chairman, I am pleased that Chairman Sensenbrenner has included in the manager's amendment two provisions that I offered in the Judiciary Committee markup of the bill, and I thank the chairman for his support.

The first amendment included in the manager's amendment provides for mandatory sanctions for destroying documents relating to a court proceeding. Delays during litigation provide ample opportunities for wrongdoers to destroy incriminating documents. Because this can result in the complete inability to hold these defendants accountable for their wrongful acts, parties who knowingly destroy relevant and incriminating documents should be severely sanctioned.

Secondly, the second amendment bans the concealment of unlawful conduct when the interests of public health and safety outweigh the interest of litigating parties in concealment. Very often in civil litigation, a company producing an unsafe product or an unsafe procedure will settle with the plaintiff.

The settlement will include a payment of a sum to the defendant, but will also often include an agreement that the records will be sealed and no one will ever talk about it. That is the condition that the defendant company puts on it.

So the defendant pays the money, the plaintiff gets the settlement, everybody keeps quiet. But meanwhile, hundreds of thousands of people may continue to be injured by that product in the future.

The defendant company forces the plaintiffs never to discuss the problems with anyone else, no one knows about it, and more people keep getting hurt because the product remains on the market.

When it comes to public health and safety, people must have access to information about an unsafe product, not only to protect themselves but also to serve as a deterrent against companies that may continue to place the public in harm's way.

Secrecy agreements should not be enforced unless they meet stringent standards to protect the public interest and the public health. This amendment prevents this harmful practice. The amendment says that an agreement to keep a settlement secret, the terms and conditions of settlement secret, cannot be approved by the court unless the court determines that the interests of the parties in secrecy, perhaps legitimate interests outweigh the interests of the public in knowledge of whatever it is.

If the court so determines, the court can order the secrecy upheld. But if the court determines that the interest and the public knowledge outweigh the secrecy, then the court must say that and disapprove the concealment agreement.

I support the manager's amendment because it includes these two amendments and other good ideas. But these changes are not enough for me to support final passage of what is still an egregious bill.

Again, I would like to thank Chairman Sensenbrenner for working together in addressing these issues. I believe the manager's amendment provides some positive changes in what is otherwise an egregious bill.

I urge my colleagues to vote for the manager's amendment, but against the final bill.

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

Mr. Chairman, I thank the ranking member, and I thank my good friend and colleague from Texas (Mr. Smith). There are many opportunities that we have to agree. I believe in his unabiding commitment to the integrity to the judicial system. That is why I rise to quote him when he says that there is a premise that we all deserve justice and that justice, in essence, should not be denied. He agrees with that, and I agree with that. Frankly, however, this legislation is not merely a denial of justice. It is an obliteration, a complete destruction of justice.

It is interesting in the backdrop of the United States promoting democratization in Iraq, challenging Iran, and now with the proceedings against Saddam Hussein and the very basis of our dependence upon a fair and impartial judicial system that will allow lawyers to be able to petition for their client or defend their client, that we would stand here on the floor of the House today and in essence create the lawsuit elimination legislation rather than the suggestion that we are preventing abuse.

Let me tell you what this legislation intends to do. This legislation intends

to ride roughshod over States' rights, forcing State courts to enact burdensome procedures and even stripping their jurisdiction over certain cases. That means that, in essence, it forces State judges within 30 days of a case being filed to conduct an extensive and lengthy pretrial hearing to determine whether Federal Rule 10 must be imposed. We already know that Federal Rule 11 has given the court system an effective tool to ensure, if you will, that if there is frivolous activity in the courthouse, or a lawyer files a frivolous case, that lawyer can be sanctioned.

This now protects foreign corporations at the expense of consumers. Why? Because you may be able to sue in a State court, but the State court may not have jurisdiction over that foreign corporation, leaving the victim of products liability, the victim of a terrible heinous accident left without remedy in a State court.

It makes sanctions mandatory rather than discretionary. It undermines the Federal judiciary system and the court system. It says to our judges that although you have gone to the highest litmus test, confirmation on the Federal bench, elections and bar scrutiny, we are telling you that we are going to pierce your courtroom and we are going to take away the rights of Rule 11 where you have discretion and we are going to simply tell you to throw a lawyer out.

Then for myself as an African American and someone whose very existence is based upon the privileges that Thurgood Marshall had, and many other lawyers, to go into the courthouse, and at that time and era in the early 1940s and 1950s, speak language that could have been considered frivolous, I would suggest that just in a general sense, whether or not this particular legislation speaks particularly to that issue, there are many times in our history where lawyers may be considered frivolous because they are speaking a language that opposes society.

The question of an equal education under Brown v. Topeka might have been frivolous. I do not want to have a Federal law that suggests that you cannot go into the courthouse. This bill allows judges to order individuals to reimburse litigation costs, including attorneys' fees, by specifically stating that reasonable attorneys' fees should be taken into account when assessing the amount of the sanction. That means that the poorer client is going to be thrown out.

This is supposed to help small businesses. At the same time, it may be the small business that is a petitioner. They may think their case is legitimate.

For example, what about this lawsuit for one business against another. That is frivolous lawsuits, when you had Enterprise, a very big company, filed a lawsuit against Rent-A-Wreck of America, a tiny rental company, and Hertz Corporation and threatened to file lawsuits against several other rental car companies that used the phrase, ``pick you up,'' claiming that ``We'll pick you up'' is Enterprise's slogan. Then there was a whole bunch of other lawsuits around who will pick you up, and who is not picking you up and why you are being picked up.

We could label frivolous lawsuits across the board. It should be left to the judges in Rule 11. This legislation removes the safe harbor provision of the rule which allows an attorney a period of 21 days to withdraw an objectionable pleading. That undermines justice. Maybe the lawyer made a mistake and therefore we do not have that opportunity.

Mr. Chairman, I would simply say this is a bill that has no basis in need, and we should unanimously defeat it.

Mr. Chairman, I rise in opposition to the base bill before the Committee of the Whole H.R. 4571, the Lawsuit Abuse Reduction Act of 2005 and state my support for the substitute offered by the Gentleman from as California, Mr. Schiff.

As I mentioned during the Committee on the Judiciary's oversight hearing on this legislation during its iteration in the 108th Congress and reiterated in my statement for the markup, one of the main functions of the Congress before it passes legislation is to analyze potentially negative impact against the benefits that it might have on those affected. The base bill before the House today does not represent the product of careful analysis.

In the case of H.R. 4571, the Lawsuit Abuse Reduction Act, the oversight functions of the Judiciary Committee allowed us to craft a bill that will protect those affected from negative impacts of the shield from liability that it proposes. This legislation required an overhaul in order to make it less of a misnomer--to reduce abuse rather than encourage it.

The goal of the tort reform legislation is to allow businesses to externalize, or shift, some of the cost of the injuries they cause to others. Tort law always assigns liability to the party in the best position to prevent an injury in the most reasonable and fair manner. In looking at the disparate impact that the new tort reform laws will have on ethnic minority groups, it is unconscionable that the burden will be placed on these groups--that are in the worst position to bear the liability costs.

When Congress considers pre-empting State laws, it must strike the appropriate balance between two competing values--local control and national uniformity. Local control is extremely important because we all believe, as did the Founders two centuries ago, that state governments are closer to the people and better able to assess local needs and desires. National uniformity is also an important consideration In federalism--Congress' exclusive jurisdiction over interstate commerce has allowed our economy to grow dramatically over the past 200 years.

This legislation would reverse the changes to Rule 11 of the Federal Rules of Civil Procedure, FRCP, that were made by the Judicial Conference in 1993 such that (1) sanctions against an attorney whose litigation tactics are determined to harass or cause unnecessary delay or cost or who has been determined to have made frivolous legal arguments or unwarranted factual assertions would become mandatory rather than discretionary to the court, (2) discovery-related activity would be included within the scope of the Rule, and (3) the Rule would be extended to state cases affecting interstate commerce so that if a state judge decides that a case affects interstate commerce, he or she must apply Rule 11 if violations are found.

This legislation strips State and Federal judges of their discretion in the area of applying Rule 11 sanctions. Furthermore, it infringes States' rights by forcing state courts to apply the rule if interstate commerce is affected. Why is the discretion of the judge not sufficient in discerning whether Rule 11 sanctions should be assessed?

If this legislation moves forward in this body, it will be important for us to find out its effect on indigent plaintiffs or those who must hire an attorney strictly on a contingent-fee basis. Because the application of Rule 11 would be mandatory, attorneys will pad their legal fees to account for the additional risk that they will have to incur in filing lawsuits and the fact that they will have no opportunity to withdraw the suit due to a mistake. Overall, this legislation will deter indigent plaintiffs from seeking counsel to file meritorious claims given the extremely high legal fees.

Furthermore, H.R. 4571, as drafted, would allow corporations that perform sham and non-economic transactions in order to enjoy economic benefits in this country. Therefore, I planned to offer an amendment that would preclude these entities from so benefiting.

The text of the amendment defined the term ``Benedict Arnold Corporation'' and proposed to prevent such companies from benefiting from the legal remedies that H.R. 4571 purports to offer.

The ``Benedict Arnold Corporation'' refers to a company that, in bad faith, takes advantage loopholes in our tax code to establish bank accounts or to ship jobs abroad for the main purpose of tax avoidance. A tax-exempt group that monitors corporate influence called ``Citizen Works'' has compiled a list of 25 Fortune 500 Corporations that have the most offshore tax-haven subsidiaries. The percentage of increase in the number of tax havens held by these corporations since between 85.7 percent and 9,650 percent.

This significant increase in the number of corporate tax havens is no coincidence when we look at the benefits that can be fund in doing sham business transactions. Some of these corporations are ``Benedict Arnolds'' because they have given up their American citizenship; however, they still conduct a substantial amount of their business in the United States and enjoy tax deductions of domestic corporations.

Such an amendment would preclude these corporations from enjoying the benefit of mandatory attorney sanctions for a Rule 11 violation. By forcing these corporate entities to fully litigate matters brought helps to put their true corporate identity into light and discourages them from performing as many domestic transactions that may be actionable for a claimant.

In the context of the Judiciary's consideration of the Terrorist Penalties Enhancement Act, H.R. 2934, my colleagues accepted an amendment that I offered that ensured that corporate felons were included in the list of individuals eligible for prosecution for committing

terrorist offenses. The amendment that I would have offered for this bill has the same intent--to increase corporate accountability and to encourage corporate activity with integrity.

I ask that my colleagues support the Substitute offered by Mr. Schiff and defeat the base bill. We must carefully consider the long-term implications that this bill, as drafted, will have on indigent claimants, the trial attorney community, and facilitation of corporate fraud.

Mr. Chairman, will the gentleman yield?

Mr. Chairman, I was listening to the gentleman framing the question, and the gentleman framed the question I think in the way that we should ask our colleagues for them to give us an answer. I think what the gentleman has suggested in his very detailed and eloquent presentation, there is a judicial system in place that is functioning and functional. We should take the Boy Scouts' oath, make your camp better than you found it. Therefore, if there are issues that we can improve in the judiciary, let us do it.

But I am just looking at some information here that tells me that Federal litigation is, in fact, decreasing. A 2005 report issued by the U.S. Department of Justice says that the U.S. district courts in some areas, of course, fell 79 percent, fell 79 percent, the cases, the tort cases, between 1985 and 2003. According to the Administrative Office of the U.S. Courts, tort actions in the U.S. district courts went down from 29 percent from 2002 to 2003, so it fell 28 percent. In addition, over the last 5 years, Federal civil filings have not only decreased 8 percent, but the prefilings that are personal injury cases has also declined. State litigation is decreasing. The numbers show they are decreasing. Lawsuit filings are decreasing. As I said, tort filings have declined 5 percent since 1993. Contract filings have declined.

I do not particularly consider that a good omen. I would like people to legitimately feel they can go into the courts for their remedies. But the question is, it is not broken, and here we are putting heavier burdens on the court system that literally shuts the door closed to a number of individuals, and I think that is completely unacceptable for the responsibility of this Congress.

Mr. Chairman, I offer an amendment in the nature of a substitute.

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

I rise today to offer an amendment in the nature of a substitute to H.R. 420, the Lawsuit Abuse Reduction Act of 2005, with the gentleman from Wisconsin (Mr. Kind).

I thank the Rules Committee for affording us this opportunity to offer and debate our substitute amendment on the floor today.

Mr. Chairman, the base bill certainly has an important and worthy stated goal of cracking down on the filing of frivolous lawsuits. As a former Federal prosecutor and a member of the bar, I strongly support this meritorious goal, as any responsible attorney should.

However, I am forced to oppose the legislation in its current form as it contains a number of serious deficiencies which I believe the substitute amendment will remedy. First, the legislation would revert to a failed regime that has been soundly criticized by those best equipped to comment on the proposed changes, the Federal judiciary.

Second, the legislation would inappropriately involve the States in the application of the Federal Rules of Civil Procedure. And, third, the legislation's forum-shopping provisions drastically change State venue laws to benefit foreign corporations over domestic corporations and victims, to say nothing of doing a great deal to damage States' rights.

Finally, the legislation would harm those seeking relief from civil rights violations. Instead, I ask my colleagues to support the Schiff- Kind substitute amendment, a proposal that would crack down vigorously on frivolous lawsuits. Members on both sides of the aisle agree that our laws and rules of procedure must prohibit frivolous litigation.

Our substitute amendment has a strong three-strikes-and-you-are-out provision for attorneys who file frivolous lawsuits. Unlike the base bill, these frivolous proceedings and pleadings could have been filed in any court. The mandatory sanctions begin after the very first violation; but after the third, the attorney shall be found in contempt of court and referred to the appropriate State bar associations for disciplinary proceedings, including suspension.

Unlike the base bill, the third sanction can also include disbarment.

Our substitute amendment also has strong three-strikes-and-you-are- out provisions for attorneys who engage in frivolous conduct during discovery, including causing unnecessary delay or needless increases in the costs of litigation. Again, mandatory sanctions begin after the first violation, and a third violation in any Federal court can include suspension and even disbarment.

Our substitute also limits the ability of wrongdoers to conceal any conduct harmful to the public welfare by requiring that such court records not be sealed unless the court finds that a sealing is justified. This important provision will help ensure that information on dangerous products and actions is made available to the public.

The Schiff-Kind substitute also includes tough enhanced sanctions for document destruction by parties punishable by mandatory sanctions under Rule 11 and referral to the appropriate State bars for disciplinary proceedings, including disbarment. We also include strong language to provide a presumption of a Rule 11 violation for repeatedly relitigating the same issue.

I am pleased that some of these important provisions have recently been added to the base bill. The venue provisions, however, in section 4 of the base bill would recast State and Federal court jurisdiction and venue in personal injury cases.

This section would actually operate to provide a litigation and financial windfall to foreign corporations at the expense of their domestic competitors. Instead of permitting claims to be filed wherever a corporation does business or has minimum contacts, as most State long-arm jurisdiction statutes provide, section 4 only permits the suit to be brought where the defendant's principal place of business is located.

This means that it would be far more difficult to pursue a personal injury or product liability action against a foreign corporation in the United States. In fact, this section could operate to make it impossible to sue a foreign corporation in this country, only further promoting the disturbing process of corporations in our country relocating their headquarters overseas to avoid U.S. taxes.

This is bad policy. And our substitute amendment includes language to ensure that jurisdiction for such legal actions is not limited in this manner.

Finally, by requiring a mandatory sanctions regime that would apply to civil rights cases, the base bill 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, the 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 civil rights cases.

A 1991 Federal judicial study found that the incidence of Rule 11 sanctions or sua sponte orders is higher in civil rights cases than in some other types of cases. Another study found that there is ample evidence to suggest that plaintiffs in civil rights cases, plaintiffs in particular, were far more likely than defendants to be the target of Rule 11 motions and the recipient of sanctions.

While the base bill purports to encourage that the provisions not be applied to civil rights cases, the fact of the matter is it does not explicitly exempt civil rights cases as our substitute does.

Mr. Chairman, this is a commonsense substitute. It cracks down on frivolous lawsuits in a tough fashion, but without jeopardizing civil rights claims or providing unnecessary shields to foreign corporations. It is a better bill,

and I urge the House to adopt the substitute rather than the base proposal.

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

Mr. Chairman, I yield 4 minutes to the gentleman from Wisconsin (Mr. Kind).

Mr. Chairman, before I recognize my colleague from Texas, I want to respond to a couple of points made by my other colleague from Texas; that is, comparing the strength of the three strikes and you're out provisions in the substitute and base bill. The three strikes language in the Democratic substitute would apply to frivolous proceedings that are filed in any court. The base bill, on the other hand, would apply the three strikes provision only to the specific court in which the violation occurred. That is a narrower provision of the base bill.

Similarly, my substitute provides for the referral to the appropriate State bars for disciplinary proceedings, including disbarment after the third strike. With the first violation there is the required payment of costs and attorneys' fees. With the second, the attorney is held in contempt with a monetary fine. And then the third provision of referral to the State bar for possible disbarment, compared to the base bill which calls for a 1-year suspension only in the specific court where the three violations occurred. The violations have to occur in the same court. If you move from one court where you are sanctioned to another to another, the base bill seems to have far less strength and applicability than the substitute.

Second, I wanted to rebut the claim that the substitute will somehow promote litigation more than the base bill. In fact, when you ask the judges who have operated under both systems, the one that is proposed by the base bill and the one that is proposed by the substitute, the courts were quite clear that the earlier form of Rule 11, which we would go back to in the base bill, spawned a cottage industry where someone would file a Rule 11 motion, the opposing counsel would file a Rule 11 motion on the Rule 11 motion, and then you would have litigation over whose Rule 11 motion should succeed.

In fact, in 1993, the Judicial Conference remarked that the experience with the amended rule since 1993, since we got away from what the base bill would take us back to, has demonstrated a marked decline to Rule 11 satellite litigation without any noticeable increase in the number of frivolous filings.

Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. Gene Green).

Mr. Chairman, it gives me great pleasure to yield such time as she may consume to the gentlewoman from California (Ms. Pelosi), our minority leader.

Mr. Chairman, I have no further speakers, and I reserve the balance of my time.

Mr. Chairman, I just have a parliamentary inquiry. Does my colleague have the opportunity to close or does the offerer of the amendment?

Mr. Chairman, I know my colleague will close very well. How much time do I have remaining?

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

In my concluding comments I want to reiterate some of the points that have been made with respect to the civil rights provisions and quote from the testimony of Professor Theodore Eisenberg, who testified before the House Committee on the Judiciary in the 108th Congress and said: ``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 the 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.''

I would also like to cite the testimony of the Honorable Robert L. Carter, U.S. District 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.''

We do not want to put off a Brown v. Board of Education civil rights case like that for a decade because of a Rule 11 that has been rejected by the Federal courts already.

The language in the substitute makes it clear that neither the sanctions approach we have taken in the substitute nor the sanctions approach taken in the base bill would apply in civil rights cases; and while there is some language of suggestion in the base bill, it is not definitive.

In fact, the NAACP wrote in respect to the language in the base bill: ``While language nominally intended to mitigate the damage that this bill will cause to civil rights cases has been added, it is vague and simply insufficient in addressing our concerns.''

So on the basis of a need not to chill civil rights legislation, which I think we have only seen the greater importance with, as Katrina ripped off the veneer of poverty and inequality in the country once again for all to see, as we consider that the base bill would implement a change that the courts themselves have rejected and found spawned a cottage industry in meritless Rule 11 litigation, and as the base bill has a stronger and I think more sensible three-strikes-and-you-are-out provision, I would urge my colleagues to support the Democratic substitute in preference to the flawed base bill.

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

Mr. Chairman, I demand a recorded vote.