~tpartmtnt ll~ ~u,;ti!t

Transcription

1 ~tpartmtnt ll~ ~u,;ti!t STATEMENT OF EDWIN MEESE III ATTORNEY GENERAL OF THE UNITED STATES UNITED STATES DEPARTMENT OF JUSTICE BEFORE THE SUBCOMMITTEE ON CONSUMER COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION UNITED STATES SENATE CONCERNING THE ADMINISTRATION'S PRODUCT LIABILITY REFORM MEASURE AND RELATED PROPOSALS ON MAY 20, 1986

2 It is a pleasure t appear tday t speak in supprt f Senatr Kasten's substitute amendment t 5.100, the Prduct Liability Refrm Act f In the last year, the prblems facing ur civil justice system have increased at a frightening pace. Theries f liability are expanding and awards t plaintiffs have skyrcketed. These factrs, especially in the prduct liability area, have helped t cause an explsin in trt liability litigatin. The result has been a crisis in the availability and affrdability f liability insurance. This crisis seriusly threatens the ecnmy by reducing the availability f gds and services t the American cnsumer, while at the same time increasing prices dramatically. The very existance f whle industries and tens f thusands f jbs are at risk. As yu knw Mr. Chairman, the Administratin has been actively invlved in finding the surces f the insurance crisis and prpsing sund and wrkable slutins t the prblem. Last fall, I created the Trt Plicy Wrking Grup, chaired by my Assistant Attrney General Richard K. Willard, wh is with me tday. This inter-agency task frce examined all aspects f the liability insurance crisis, and in February f this year, issued a reprt with findings and recmmendatins fr refrm. The Wrking Grup fund that althugh ther factrs have cntributed

3 t the crisis, a majr and fundamental cause is the explsim., Of trt liability in ur curts. Mre specifically, the Wrki~ Grup fund fur specific prblems areas in trt law that neeqed t be addressed: The mvement tward n-fault liability, which increasingly results in cmpanies and individuals lh:eing fund liable even in the absence f any wrngding n their part. The undermining f causatin thrugh a variety f questinable practices and dctrines that shift liability t "deep pcket" defendants even thughtaey did nt cause the underlying injury r had nly a limited r tangential invlvement. The explsive grwth in the damages awarded in trt lawsuits, particularly with regard t nn-ecnmic awards such as pain and suffering r punitive dama;es. And, The excessive transactin csts f the trt system,!, in which virtually tw-thirds f every dllar paid QU! thrugh the system is lst t attrney fees and litigatin expenses. The need fr refrm f ur trt system has becme quit~ clear. The public nw recgnizes that excessive jury verd~

4 and escalating insurance rates must be paid by smene, and that smene is us. Last mnth, Secretary Malclm Baldrige and I, n behalf f the President, submitted three pieces f legislatin designed t address the trt prblem. One imprtant part f this legislative package is the Prduct Liability Refrm Act f 1986, which Senatr Kasten has ffered as a substitute t S.100. The prvisins f the three bills are based n the recmmendatins f the Trt Plicy Wrking Grup, cntained in its February reprt, and are strngly supprted by the Administratin. These effrts are just a beginning, and t be effective, they must be fllwed by similar undertakings at the state level. that will: The Prduct Liability Refrm Act f 1986 cntains prvisins require liability t be based n fault, limit applicatin f the dctrine f jint liability t thse situatins where the defendants have acted in cncert, place a cap f $100,000 n the amunt f nn-ecnmic damages -- such as pain and suffering, mental anguish, and punitive damages -- that can be awarded, prvide fr future ecnmic damages t be paid in peridic installments,

5 0_ mdify cllateral cmpensatin dctrines t eliminate duble recveries by plaintiffs, encurage states t develp and use alternative dis~ute reslutin mechanisms that will help alleviate burgening caselads in the curt and allw injurem parties t receive a greater share f any award in a mre timely fashin and, alleviate the excessive transactin csts f ur trt system by placing reasnable limits n cntingency fees charged by attrneys. S.100, as amended, will assist thse American businesses, particularly small businesses, that are unable t btain reasnably affrdable insurance because f the high csts f the current liability system. This bill, alng with The Gvernment cntractr Liability Refrm Act f 1986 and the Federal Trt Claims Refrm Act f 1986, will begin t crrect the wrst abuses f ur present liability system. The Prduct Liability Refrm Act f 1986, unlike sme earlier prpsals, des nt ttally preempt r supersede state legislatin in this area, but rather, prvides specific mdificatins in nly thse areas that cnflict witt., the specified refrms. Enactment f this bill will return ur civil liability dctrines t fair and fault-based standards design!m t cmpensate the injured party. It will als prvide an

6 extrardinarily beneficial impact nt nly fr the business cmmunity, but mre imprtantly fr cnsumers. I wuld like t thank Senatr Kasten fr his cntinued leadership in the area f prduct liability refrm and fr his strng cmmitment t the meaningful refrms set ut in his substitute ammendment. Thank yu Mr. Chairman, that cncludes my testimny.