I think Mr. Willard in his testimony this morning alluded to this potential difficulty.

Section 310(b) of the bill would bar certain evidence in product cases. However, that evidence might be admissible against other defendants where there are multiple defendants and joint tortfeasors in particular cases.

S. 2760 and similar legislation would not necessarily bring about uniformity. Product cases would still be brought in the various State courts. The 50 State supreme courts would then be left to interpret the language of S. 2760. And I might say S. 2760 brings to the front various new concepts and includes new language which the courts are going to be left to construe the 50 courts. Such definitions and such language as reasonable care, the meaning of the term "conscious, flagrant indifference," "useful safe life," "good faith."

With each of the States dealing with these issues, I do not see that the provisions of S. 2760 in fact will result in uniformity in the area of products liability.

S. 2760 would not only be difficult to administer but would be an unwarranted preemption of State law. And this really is the basis of the opposition of the National Conference of State Legislatures to this proposal. The Federal Government, acting through Congress, acting through the Federal Courts, and acting through a maze of Federal administrative agencies, has over the years, under the supremacy clause entered into an ever greater number of policy areas which have traditionally been the area of State con

cern.

The Supreme Court, in Garcia v. San Antonio has stated that it is the primary responsibility of Congress to protect the States from Federal intervention. I urge you to adopt a policy of restraint and to decline to preempt the States in the area of products liability. Thank you. [Statement follows:]

5-678 0-87---5

I am Edward Zuccaro. I am a member of the Vermont House of

Representatives where I serve as a spokesman for the Republicans on the Ways and Means Committee. I also serve as vice-chairman of the Law and Justice Committee of the National Conference of State Legislatures.

I appear today on behalf of the National Conference of State Legislatures. NCSL represents over 7,400 state legislators in the 50 states, the Commonwealth of Puerto Rico, and the American territories. NCSL through its State-Federal Assembly, in which all the states are represented, adopts policy resolutions on important issues of state-federal relations. One of those important issues is federal preemption of state product liability law. NCSL has for several years consistently opposed federal preemption of product liability law.

NCSL's policy is based on concern about what preemption of a large area of the civil law would mean for the vitality of our federal system and for the smooth functioning of our state court systems.

NCSL recognizes that manufacturers and product sellers across the country face severe problems finding affordable liability insurance. Many firms have been faced with mid-term cancellations or the non-renewal of their liability insurance coverage. The cost has risen so high as to make certain lines of insurance in effect unavailable. Although insurance is a cyclical industry and

though we have faced liability insurance crises in the past, never before have we faced a liability insurance crisis of this severity. Let me assure you that state legislators understand how serious this problem is and are addressing the problem.

In the 44 legislatures in session during 1986, over 1400 bills were introduced in response to the high cost and unavailability of liability insurance. Between January 1 and June 30, 1986, 41 states passed some form of tort reform legislation. Many of the across-the-board civil justice reforms applied to product liability, and some states specifically addressed product liability. Kansas, for instance, enacted legislation making evidence of post-accident improvements inadmissable in product liability actions. Iowa adopted an absolute state-of-the-art defense for manufacturers. Nor was legislative action limited to tort reform. Twenty-four states passed some form of new insurance regulation. (See attached chart of 1986 state legislative action on tort reform and insurance.)

State legislative action in the first half of 1986 built on a base of already extensive state tort reform and insurance reform legislation enacted in 1985 and previous years. For example, in the first half of 1986, thirteen states modified the doctrine of joint and several liability. This was in addition to the laws modifying joint and several liability already on the books in twenty-two states as of January 1, 1986. Similarly, the 16 states which acted in 1986 to limit non-economic damages built on a base of 13 existing state laws. (See attached charts of state legislative action on tort reform as of January 1, 1986).

State legislatures have concentrated on tort reform and now increasingly on insurance regulation because we write the law in those areas, but tort law and insurance industry practices are not the only reasons for the current "hard market" which has resulted in skyrocketing liability insurance costs. Macroeconomic policies set in Washington, particularly those that affect interest rates, I am told, may be the most important influence on the insurance market. I have also heard the theory that if the dollar weakens against the pound sterling, Lloyd's of London may expand its North American reinsurance operation, which would allow domestic insurance companies to write more policies. Each level of government has its own role to play in resolving the crisis.

As you review the reports on state legislative action on tort and insurance reform prepared by NCSL, you will see that state legislatures have been doing their part to resolve the liability insurance crisis. This is a difficult policy issue as you know. It involves balancing the legitimate demands of manufacturers and other potential defendants, including state governments, to be protected from unnecessary or unpredictable liability against the legitimate demands for compensation and justice of those who have suffered sometimes devastating injuries. State legislatures have been vigorous in their search for fair and effective policies. Different states have tried different approaches. We hope to learn from each other and from our experiences and to find ways in which we can improve and refine our existing laws.

In light of the tort reform measures already adopted in the states and in light of the capacity of the states to enact further reforms based on our cumulative experience, NCSL regards federal product liability legislation as unnecessary. NCSL has also heard convincing testimony that the proposed legislation would create problems for state and federal courts and would not necessarily achieve its stated goal of unifying product law and reducing liability insurance costs. But more fundamentally, the effect of S.2760 or similar legislation on our federal system is its most serious drawback. Such a federal product liability act would centralize a large area of the civil law and would attempt to impose uniformity at the cost of local self government, flexibility, experimentation and the other advantages of legislation by the fifty state legislatures.

S. 2760 would create confusion in our state court systems. For example, section 308 of the proposed act would eliminate joint liability for non-economic damages in product cases. Changing this rule for product liability would create confusion in multiparty litigation involving both claims of product liability and other tort claims. I urge you to contemplate how section 308 would be applied in a suit against a driver of an auto and a manufacturer or a suit against both a doctor and a drug company. For another example, section 310(b) of the proposed act would bar evidence of subsequent remedial measures in product cases. The rule in section 310(b) would result in certain key facts being admissible in many states in the trial of the unrelated claim but inadmissible in the trial of the product liability claim. There is a serious question as to whether section 310(b) in these circumstances would preclude

resolution of such cases in a single trial.

I offer these examples not because either I or NCSL is critical of tort reforms which eliminate joint liability for non-economic damages or which bar evidence of subsequent remedial measures. Several states are experimenting with these reforms, and we are very interested in how they may affect rates. I offer the examples instead to illustrate the practical difficulties of imposing standardized federal rules of evidence, procedure, and liability in the context of an already existing and complex body of state law. The new federal rules would not mesh with existing law in many states.

While a federal product liability act such as S. 2760 could disrupt state court systems, it would not in our judgment necessarily provide the uniformity which its supporters allege is necessary. The novel language and new terms of art in the bill would be subject to interpretation by fifty state judicial systems. Federal court review would be allowed in diversity cases. That would result in intercircuit conflicts and lead in turn to a possible increase in the U.S. Supreme Court's caseload.

Let me provide some examples of language in S. 2760 which could easily be subject to fifty different state interpretations. Section 302 provides that a product seller will be liable when he fails to "exercise reasonable care" with the product which caused harm to the claimant. Similarly broad language is found in Section 303 which provides that punitive damages may be awarded only where there is a showing of "conscious, flagrant indifference" to safety. Section 304 provides a statute of repose for non-capital goods for the "useful safe life" of the product. Section 305 provides for counsel's liability for excessive costs attributable to conduct "calculated to delay resolution of the action" or not in "good faith." If S. 2760 is enacted, it could take years for state courts to define in the context of real cases the meaning of phrases such as "reasonable care," "conscious, flagrant indifference," "useful safe life," and "good faith." I seriously doubt at the conclusion of the process that the fifty systems would arrive at a uniform interpretation of all the language in the proposed act.

S. 2760 would not only be difficult for the states to administer but it would also constitute an unprecedented preemption of state law. NCSL opposes