ATRA is strongly committed to long term efforts to reform the U.S. tort

liability system. Again we applaud the efforts of the Senate Commerce Committee in reporting out what many consider to be the first step toward a comprehensive overhaul of our tort system. We urge the members of this distinguished Committee to support and improve it. Thank you for the opportunity to present our views today. I will be happy to answer any questions.

Senator MCCONNELL. I assume then you would prefer to see, as you indicated, a comprehensive tort reform bill at the Federal level rather than a product only tort reform bill?

Mr. COYNE. The members of the American Tort Reform Association, while they support this specific bill because it does provide relief, also strongly believe that the broader the bill is, the better it will be for all Americans.

Senator MCCONNELL. That is, of course, my bill as you know, and I certainly share the view that it does not make any sense to segment out just the products portion for relief and ignore the balance of society which is suffering under the current system.

Mr. COYNE. Well, as you know, Mr. Chairman, the American Tort Reform Association has endorsed your bill as well, and we hope that in the debate that follows on the Senate floor will provide many improvements to this specific piece of legislation along the lines of your earlier legislation.

Senator MCCONNELL. Thank you, Mr. Coyne.

Mr. Curcio.

STATEMENT OF JOHN B. CURCIO

Mr. CURCIO. Thank you, Mr. Chairman.

I am chairman of the board and chief executive officer of Mack Trucks, Inc., but today I am testifying on behalf of the National Association of Manufacturers as a member of its board of directors. I also ask that my complete written testimony be submitted for the record.

Senator McCONNELL. That will be included.

Mr. CURCIO. Also with me today is Sharon Spiegelmeyer of the National Association of Manufacturers.

NAM's message to the Senate Judiciary Committee is simple. The time is long past for the U.S. Congress to pass a Federal product liability law. Manufacturers of every size, producing the highest quality of products, are under siege by the convoluted patchwork of 50 State systems now in effect.

The bill passed by the Senate Commerce Committee is certainly a far cry from what the manufacturers of this Nation believe is necessary to significantly bring down insurance rates. We believe it must be strengthened on the floor if it is going to curb some of the worst abuses in our system.

However, it is a positive step in the right direction. It will help us get on the road toward stability, uniformity, and predictability. It will not, as its most ardent critics say, inhibit in any way the rights of injured victims to recover a just award when their injury was the result of a faulty product.

The committee should be commended for attacking some of the abuses we have seen in the punitive damage area.

Another positive reform includes a very reasonably 25-year statute of repose limiting manufacturers of capital goods from liability claims for decades after their product was produced.

Other measures which NAM endorses include the uniform standards for offsetting damages by workers' compensation benefits, the uniform statute of limitation, the defense for manufacturers when a plaintiff causes his own injury by being drunk or on drugs, and

the presumption that people injured in foreign countries should sue in that country.

We wholeheartedly endorse the provision which holds attorneys liable for bringing frivolous lawsuits or intentionally causing delay. As to the provision on the unfair theory of joint and several liability, the committee adopted the approach overwhelmingly endorsed by the California voters in the now famous proposition 51 referendum. This is a half-way approach to a totally unjust theory. It provides that the defendants will still be jointly and severally liable for economic damages. For noneconomic damages, the defendant would only pay his proportionate share. If a manufacturer is only 5 percent guilty, he should only have to pay 5 percent of the damages, whether or not they are economic damages or noneconomic damages. Otherwise the insurance companies simply cannot weed out the safe companies from the nonsafe companies. Unpredictability is the hallmark of this theory and should be abolished unless defendants act in concert.

During the entire Commerce Committee debate, no single issue was more contentious than the expedited settlement procedure. The business community never once during the process advocated or sought a settlement procedure. It was the result of months of compromise sessions between consumers, labor representatives, spokesmen for the plaintiffs' bar and business leaders.

We would like to see some improvements in the proposed system. At any rate, we believe that, above all, a balance must be maintained between the incentives and the penalties, or the whole settlement structure will be rendered completely ineffective. We believe if such a balance cannot be maintained, then we should revisit the settlement proposal originally passed by the Commerce Committee by a 16 to 1 vote. It would basically require the losing party to pay the other party's attorney's fees if settlement had been rejected. Again, while imperfect, it would be a balanced approach.

One of NAM's top priorities for product liability reform has always been to establish a Federal fault standard.

We still maintain a fault standard should be adopted. Some particular basic fairness questions in this area should be addressed. A company should not be held liable if someone misuses or alters their product. And manufacturers should not be held liable if they have produced a product that complies with the best available and feasible, scientific, and medical knowledge at the time the product was made. But, in today's world, companies can be held guilty 30 years after a product was made because the knowledge we have today is much more advanced. The absence of a state-of-the-art defense will continue to impede development of new and innovative products, many which would improve our quality of life.

Thank you, Mr. Chairman.

[Statement follows:]

TESTIMONY OF JOHN B. CURCIO

ON BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS

My

Good morning, Mr. Chairman and members of the Committee. name is John B. Curcio. I am the Chairman of the Board and chief executive officer of Mack Trucks, Inc., testifying today on

behalf of the National Association of Manufacturers as a member

of its board of directors.

The National Association of Manufacturers is a voluntary business association of over 13,500 companies, large and small, located in every state. Our members range in size from the very large to over 9,000 small manufacturing firms that each have less than 500 employees. NAM member companies employ 85% of all workers in manufacturing and produce over 80% of the nation's manufacturered goods. NAM is affiliated with an additional 158,000 businesses through its Association Council and the National Industrial Council.

I. Introduction:

NAM's message to the Senate Judiciary Committee is simple: the time is long past due for the United States Congress to pass a federal product liability law. Manufacturers of every size, producing the highest quality of products, are under seige by the convuluted patchwork of 50 state systems now in effect. Individual state reform does nothing to bring predictability, uniformity and rationality to our nation's businesses. And for the millions of consumers, I think they are sick and tired too of footing the bill for a court system run amuck.

Larger companies can discontinue certain products, can sometimes pass the price tag onto their consumers, and can sometimes lower costs by having more of their parts produced overseas. While this system hurts such companies and their employees, they can survive. NAM's smaller members cannot. you know the 1,800 delegates to the White House Small Business Conference just three weeks ago ranked federal product liability

As

and tort reform their number one issue; over and above taxes and trade. Small manufacturers are going out of business, they're going bare, they feel their very ability to survive is on the line. For many of those small businessmen, it is not only their business assets at stake, it's their personal assets as well. The White House Small Business representatives' plea was for Congress to tackle this problem. It is the plea of all of the companies represented by NAM, as well.

An Analysis of S. 2760, The Product Liability Reform Act

The bill passed by the Senate Commerce Committee is certainly

a far cry from what the manufacturers of this nation believe is necessary to significantly bring down insurance rates. We believe it must be strengthened on the floor if it is going to curb some of the worst abuses in our system.

However, it is a positive step in the right direction. It will help get us on the road toward stability, uniformity and predictability. It will not, as its most ardent critics say, inhibit in any way the rights of injured victims to recover a just award when their injury was the result of a faulty product.

The Committee should be commended for attacking some of the abuses we've seen in the punitive damage area. Punitive damages should not be awarded unless there is "clear and convincing evidence" of "conscious, flagrant" indifference to the safety of others. And companies who comply with the Food and Drug Administration, Federal Aviation Administration and similar standards should have a defense against having punitive damages awarded against them.

Another positive reform includes a very reasonable 25-year statute of repose limiting manufacturers of capital goods from liability claims for decades after their product was produced. While many of us believe a shorter statute should be enacted, this will at least place a cutoff date after which a company can close the books on a product.