Statement of Administration Policy: H.R. 956 - Common Sense Product Liability Legal Reform Act of 1996

(Conference)
(Hyde (R) IL and Hoke (R) OH)

The President will veto H.R. 956 if it is presented to him in the form of the Conference Report.

The Administration supports the enactment of limited but meaningful product liability reform at the Federal level. Any legislation, however, must fairly balance the interests of consumers with those of manufacturers and sellers. Further, any legislation must respect the important role of the States in our Federal system. The Conference Report on H.R.' 956 underscores that Congress has failed to meet these requirements.

As a general matter, tort law, including product liability law, is the responsibility and prerogative of the States, rather than of Congress. This is an area in which States have served as laboratories, testing and developing new ideas and making needed reforms. Proponents of new and sweeping Federal restrictions on traditional State authority should bear the burden of persuasion. The Conference Report fails to show why the Federal Government should wrest this important responsibility from the States. Certainly the bill's findings — which fail to recognize, for example, that the current increase in litigation is attributable to commercial suits between corporations rather than consumer- initiated product liability actions against manufacturers and sellers — do not justify such broad scale Federal intrusion.

Moreover, the Conference Report unfairly tilts the legal playing field to the disadvantage of consumers. Many provisions of H.R. 956, such as those dealing with punitive damages and the statute of repose, displace State law only when that law is more favorable to the consumer; when state law is more favorable to manufacturers and sellers, it remains in operation. This "oneway preemption" approach unfairly disadvantages consumers. So, too, do several specific provisions of H.R. 956 that would impede the ability of injured persons to gain fair and adequate recovery.

In particular, the bases for the Administration's opposition to H.R. 956 are as follows:

First, the Administration, as noted in its Statement of Administration Policy on the Senate version of this bill, opposes an artificial ceiling on the amount of punitive damages that may be awarded in a product liability action. Statutory caps ignore the fundamental purpose of punitive awards: to punish and deter. While the Senate bill and the Conference Report allow judges to exceed the ceiling in certain circumstances, the explanation in the Statement of Managers that "occasions for additional awards will be very limited indeed" reveals a continuing basis for concern. The Conference Report invites a wealthy, irresponsible, potential wrongdoer to weigh the risks of a capped punitive damages award against the potential gains or profits from the wrongdoing.

Second, the Administration, as also noted in its Statement of Administration Policy on the Senate version, opposes the abolition of joint-and-several liability for noneconomic damages (most notably, pain and suffering). This provision would severely and unfairly discriminate against those innocent victims whose injuries involve mostly noneconomic damages, rather than the sort of damages that can be measured by lost income. Elderly citizens, for example, would suffer. Noneconomic damages are as real and as important to victims as economic damages. Those who incur such damages should not suffer if one defendant has gone bankrupt or otherwise become unavailable.

In addition, the Administration is concerned that the Conference Report takes several steps backward from the Senate version. Most notably, the Conference Report deletes a provision that would have tolled the statute of limitations in the event of a stay or injunction against an action. Such a provision is critical when a potential defendant files for liquidation or reorganization, as happened in cases involving asbestos and the Daikon Shield. In such a case, the bankruptcy court will issue a stay pending the completion of its proceedings; if the statute of limitations is not tolled, many injured persons run the risk of losing meritorious claims. Similarly, the conference Report reduces the statute of repose from twenty years to a maximum of fifteen years (and less if States so provide). This change, which prevents a person from bringing suit against a manufacturer of an old product even if the product has just caused injury, also will preclude valid claims.

The Conference Report includes some good and useful provisions.

In particular, Title II is a laudable attempt to ensure that suppliers of biomaterials will provide sufficient quantities of their products to manufacturers of medical devices. The Administration is committed to working with Congress to address this issue.

Nonetheless, the President will veto H.R. 956 if presented, because in its current form, it interferes unduly with State prerogatives and unfairly tilts the legal playing field to the disadvantage of consumers.

THE WHITE HOUSE
WASHINGTON

March 16, 1996

Dear Mr. Leader:

I will veto H.R. 956, the Common Sense Product Liability Legal Reform Act of 1996, if it is presented to me in its current form.

This bill represents an unwarranted intrusion on state authority, in the interest of protecting manufacturers and sellers of defective products. Tort law is traditionally the prerogative of the states, rather than of Congress. In this bill, Congress has intruded on state power — and done so in a way that peculiarly disadvantages consumers. As a rule, this bill displaces state law only when that law is more beneficial to consumers; it allows state law to remain in effect when that law is more favorable to manufacturers and sellers. In the absence of compelling reasons to do so, I cannot accept such a one-way street of federalism, in which Congress defers to state law when doing so helps manufacturers and sellers, but not when doing so aids consumers.

I also have particular objections to certain provisions of the bill, which would encourage wrongful conduct and prevent injured persons from recovering the full measure of their damages. Specifically, the bill's elimination of joint-and-several liability for noneconomic damages, such as pain and suffering, will mean that victims of terrible harm sometimes will not be fully compensated for it. Where under current law a joint wrongdoer will make the victim whole, under this bill an innocent victim would suffer when one wrongdoer goes bankrupt and cannot pay his portion of the judgment. It is important to note that companies sued for manufacturing and selling defective products stand a much higher than usual chance of going bankrupt; consider, for example, manufacturers of asbestos or breast implants or intra-uterine devices.

In addition, for those irresponsible companies willing to put profits above all else, the bill's capping of punitive damages increases the incentive to engage in the egregious misconduct of knowingly manufacturing and selling defective products. The provision of the bill allowing judges to exceed the cap in certain circumstances does not cure this problem, given Congress's clear intent, expressed in the Statement of Managers, that judges should do so only in the rarest of circumstances.

The attached Statement of Administration Policy more fully explains my position on this issue — an issue of great importance to American consumers, and to evenly applied principles of federalism.

Sincerely,

Bill

The Honorable Richard A. Gephardt
Democratic Leader
House of Representatives
Washington, D.C. 20515

THE WHITE HOUSE
WASHINGTON

March 16, 1996

Dear Mr. Speaker:

I will veto H.R. 956, the Common Sense Product Liability Legal Reform Act of 1996, if it is presented to me in its current form.

This bill represents an unwarranted intrusion on state authority, in the interest of protecting manufacturers and sellers of defective products. Tort law is traditionally the prerogative of the states, rather than of Congress. In this bill, Congress has intruded on state power — and done so in a way that peculiarly disadvantages consumers. As a rule, this bill displaces state law only when that law is more beneficial to consumers; it allows state law to remain in effect when that law is more favorable to manufacturers and sellers. In the absence of compelling reasons to do so, I cannot accept such a one-way street of federalism, in which Congress defers to state law when doing so helps manufacturers and sellers, but not when doing so aids consumers.

I also have particular objections to certain provisions of the bill, which would encourage wrongful conduct and prevent injured persons from recovering the full measure of their damages. Specifically, the bill's elimination of joint-and-several liability for noneconomic damages, such as pain and suffering, will mean that victims of terrible harm sometimes will not be fully compensated for it. Where under current law a joint wrongdoer will make the victim whole, under this bill an innocent victim would suffer when one wrongdoer goes bankrupt and cannot pay his portion of the judgment. It is important to note that companies sued for manufacturing and selling defective products stand a much higher than usual chance of going bankrupt; consider, for example, manufacturers of asbestos or breast implants or intra-uterine devices.

In addition, for those irresponsible companies willing to put profits above all else, the bill's capping of punitive damages increases the incentive to engage in the egregious misconduct of knowingly manufacturing and selling defective products. The provision of the bill allowing judges to exceed the cap in certain circumstances does not cure this problem, given Congress's clear intent, expressed in the Statement of Managers, that judges should do so only in the rarest of circumstances.

The attached Statement of Administration Policy more fully explains my position on this issue — an issue of great importance to American consumers, and to evenly applied principles of federalism.

Sincerely,

Bill Clinton

The Honorable Newt Gingrich
Speaker of the House of Representatives
Washington, D.C. 20515

THE WHITE HOUSE
WASHINGTON

March 16, 1996

Dear Mr. Leader:

I will veto H.R. 956, the Common Sense Product Liability Legal Reform Act of 1996, if it is presented to me in its current form.

This bill represents an unwarranted intrusion on state authority, in the interest of protecting manufacturers and sellers of defective products. Tort law is traditionally the prerogative of the states, rather than of congress. In this bill, Congress has intruded on state power — and done so in a way that peculiarly disadvantages consumers. As a rule, this bill displaces state law only when that law is more beneficial to consumers; it allows state law to remain in effect when that law is more favorable to manufacturers and sellers. In the absence of compelling reasons to do so, I cannot accept such a one-way street of federalism, in which Congress defers to state law when doing so helps manufacturers and sellers, but not when doing so aids consumers.

I also have particular objections to certain provisions of the bill, which would encourage wrongful conduct and prevent injured persons from recovering the full measure of their damages. Specifically, the bill's elimination of joint-and-several liability for noneconomic damages, such as pain and suffering, will mean that victims of terrible harm sometimes will not be fully compensated for it. Where under current law a joint wrongdoer will make the victim whole, under this bill an innocent victim would suffer when one wrongdoer goes bankrupt and cannot pay his portion of the judgment. It is important to note that companies sued for manufacturing and selling defective products stand a much higher than usual chance of going bankrupt; consider, for example, manufacturers of asbestos or breast implants or intra-uterine devices.

In addition, for those irresponsible companies willing to put profits above all else, the bill's capping of punitive damages increases the incentive to engage in the egregious misconduct of knowingly manufacturing and selling defective products. The provision of the bill allowing judges to exceed the cap in certain circumstances does not cure this problem, given Congress's clear intent, expressed in the Statement of Managers, that judges should do so only in the rarest of circumstances.

The attached Statement of Administration Policy more fully explains my position on this issue — an issue of great importance to American consumers, and to evenly applied principles of federalism.

Sincerely,

Bill

The Honorable Thomas A. Daschle
Democratic Leader
United States Senate
Washington, D.C. 20510

THE WHITE HOUSE
WASHINGTON

March 16, 1996

Dear Mr. Leader:

I will veto H.R. 956, the Common Sense Product Liability Legal Reform Act of 1996, if it is presented to me in its current form.

This bill represents an unwarranted intrusion on state authority, in the interest of protecting manufacturers and sellers of defective products. Tort law is traditionally the prerogative of the states, rather than of Congress. In this bill, Congress has intruded on state power — and done so in a way that peculiarly disadvantages consumers. As a rule, this bill displaces state law only when that law is more beneficial to consumers; it allows state law to remain in effect when that law is more favorable to manufacturers and sellers. In the absence of compelling reasons to do so, I cannot accept such a one-way street of federalism, in which Congress defers to state law when doing so helps manufacturers and sellers, but not when doing so aids consumers.

I also have particular objections to certain provisions of the bill, which would encourage wrongful conduct and prevent injured persons from recovering the full measure of their damages. Specifically, the bill's elimination of joint-and-several liability for noneconomic damages, such as pain and suffering, will mean that victims of terrible harm sometimes will not be fully compensated for it. Where under current law a joint wrongdoer will make the victim whole, under this bill an innocent victim would suffer when one wrongdoer goes bankrupt and cannot pay his portion of the judgment. It is important to note that companies sued for manufacturing and selling defective products stand a much higher than usual chance of going bankrupt; consider, for example, manufacturers of asbestos or breast implants or intra-uterine devices.

In addition, for those irresponsible companies willing to put profits above all else, the bill's capping of punitive damages increases the incentive to engage in the egregious misconduct of knowingly manufacturing and selling defective products. The provision of the bill allowing judges to exceed the cap in certain circumstances does not cure this problem, given Congress's clear intent, expressed in the Statement of Managers, that judges should do so only in the rarest of circumstances.

The attached Statement of Administration policy more fully explains my position on this issue — an issue of great importance to American consumers, and to evenly applied principles of federalism.

Sincerely,

Bill Clinton

The Honorable Bob Dole
Majority Leader
United States Senate
Washington, D.C. 20510