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said, simply do not participate in negotiations of this sort, it is kind of like having only two legs of a three-legged stool.
I think if the groundrule that he insisted upon, legislation that would not place limits on the recovery of injured persons, could be agreed upon initially, then perhaps they could come to the table, if I read him correctly.
On that score, I would like to say that I support the argument of those who have opposed caps. I think caps are bad from an insurer's standpoint in that they do not help the predictability of the smaller cases, because they tend to perpetuate the overcompensation of those cases. At the other end of the spectrum, they preserve the tort system's principal defect, which is the undercompensation of serious cases.
On the data issue, I think part of the insurance business' problem with the data reporting requirement is that historically all of the data that is collected has been done so only if it was useful for ratemaking purposes.
We are now talking about public policy issues that require a different cut at perhaps some of that same data. There are discussions, in which I am a participant, underway at the ISO to see if we cannot collectively come up with some of the kinds of data that you have indicated that you would like to have, to see if we cannot make a cut between economic versus noneconomic loss, and to, as Jay suggests, find out exactly how many people actually are subject to joint and several liability in particular cases.
I think we would welcome the opportunity to participate in the process, to let people know what minimal changes in the law we would need to be able to predict the risk. Then you, as public policymakers, would have to decide whether the costs involved in that predictable
system were acceptable. Senator Simon. I thank you. And I thank all four of you for that answer. Nothing is going to happen realistically between now and November 4 on the political calendar. But it seems to me that if some of us were to get together and invite representatives of the various groups, just small groups to meet informally, and get Senator McConnell on that side and Paul Simon on this side, we can make progress. Some trial lawyers resist any change, though most acknowledge that there ought to be some change. Some insurance companies acknowledge they do not want any change.
I think there is a middle ground that has to be cultivated and that some of us are going to try and do that.
I thank all of you for your testimony.
Senator SIMON. The next panel, Mr. Gene Kimmelman, Linda Lipsen, Joseph Goffman, Ernie DuBester, and Prof. Marshall Shapo.
Prof. Marshall Shapo, of Northwestern University Law School,
PANEL CONSISTING OF MARSHALL S. SHAPO, NORTHWESTERN
UNIVERSITY LAW SCHOOL; GENE KIMMELMAN, LEGISLATIVE
Senator SIMON. So if you duck out before we are through here, we understand.
Mr. SHAPO. Yes, sir. I am grateful. I am Marshall S. Shapo. I am a professor at Northwestern University School of Law. My testimony represents my own views based on 20 years of teaching and the writing of several books, including three about product liability.
I must say I have come to believe from my appearances at various committees on this subject that perhaps there should be a Gramm-Rudman-Hollings bill to limit the number and scope of Federal statutes.
You have heard a lot about crises in insurance and data, and I suppose that an insurance layman may be forgiven for being puzzled when he sees headlines like "Reinsurers Predict Good Times Here to Stay," and "Insurers' Health Termed Excellent."
But the problem of getting accurate data is not limited to insurance. It extends to the question of how and why injuries occur, and it is for that reason that the very first recommendation of the Report of the ABA's Special Committee on the Tort Liability System, which I served as reporter, was for the creation of a permanent organization for the comprehensive collection of data on injuries.
A related point is that the general thrust of the proposals that I have seen appears to cut against requiring distributors of unreasonably dangerous products to compensate for the costs of harm caused by those goods, and if that happens the law has not served its deterrence role.
One of the biggest problems that I think would concern the Judiciary Committee is that a bill of this sort would pile an extra layer of decisionmaking and doctrinal complexity on the existing legal structure. I cannot imagine right now how the courts will deal with those problems.
I have said at other hearings that there may be a role for a few modest and highly specific Federal provisions aimed at some easily identifiable and especially irritating problems. But the difficulty has been, as you know, Senator, that there has been an expensively financed 6-year effort to build momentum for much more comprehensive statute. I call it the baroque version of the law. And the enactment of that sort of statute will multiply-I think Senator Heflin is quite right about that—not simply add to our flock of legal problems. Litigation will probably increase and Congress undoubtedly will face demands for drastic amendment each session.
I should also say that I can think of nothing more calculated to undermine federalism than for Congress to tell
the States that they have done such a bad job of making private law that the National Government ought to take it away from them.
I want to say a word about the phrase and the concept of tort reform. Surely there are ways to make the process of resolving tort cases more efficient. Indeed, it was a group of suggestions directed to process reform that comprised the principal recommendations, of which there are more than a dozen, of the ABA Special Committee's study.
But beyond that, I think that the kinds of substantive law reforms that these products bills would bring would create some terrible conceptual problems for courts that must deal with the rest of tort law day in and day out. In an era in which technology threatens to outrun our ability to deal with it, and regulation does not always keep up with technology, this kind of legislation would confuse and handcuff the courts. And the courts are an absolutely vital and relatively independent social watchdog agency.
Now, you have my prepared testimony, Mr. Chairman, so I would just like to close on a personal note. I returned last month from a fascinating trip to East Asia as the leader of a people-to-people delegation. We spoke with various officials in the Chinese Ministry of Justice and the state-run insurance company and we even witnessed a civil trial. It seemed to me, at least through translation, that while citizens of the People's Republic of China have a very ethical approach to questions that we think of as being issues of law, that that approach is highly collectivist.
The trial we witnessed was very much the exception in the Chinese system of justice, and it was striking to me as a student and often a critic of our own system of civil law how fortunate we are to have the legal process we do have. For all its faults, it preserves a substantial amount of freedom for the employment of counsel and the assertion of a cluster of rights that respond to the demands of our present technology.
Now, I certainly share the concerns that many members of Congress have articulated in favor of improving the legal process, but I am at least as concerned about the limitations that this bill places or may place on both our substantive rights and our ability to assert them.
I thank you very much, Mr. Chairman.
represents my own views, based on more than twenty years of teaching about tort law and related compensation systems. I have
written nine books or long monographs about that area of the law,
with three of them focusing on the law of products liability.
while my comments here are directed to the latest versions
of committee drafts that I have had an opportunity to review,
some of my comments relate to suggestions and proposals that
reportedly will be offered as amendments on the floor.
A lot of people, mostly in the manufacturer and seller community, are unhappy about the law of products liability. The question is whether complex federal legislation is a solution
that will improve on the present situation.
I do not think it
A fundamental problem with the proposals in this area is
that the data
the economic statistics
controversial, and often even obscure.
we have heard for many
years, off and on, about a "crisis" in insurance and reinsurance,
but recently we begin to get news articles like a recent one that
"Reinsurers predict good times here to stay."
also have in my file an item dated just this past August 19th with the subhead, "Insurers' Health Termed 'Excellent.'
The problem of getting accurate data is not limited to
It extends to the question of how and why injuries
It is for this reason that the very first recommendation
in the Report of the ABA's Special Committee on the Tort
Liability System, which I served as Reporter, was for "the
creation of a permanent organization for the comprehensive
collection of data on injuries and injury-causing events, and the ways in which individuals, communities, and the legal system
repond to the problems created by injuries."
One reason why having that sort of data is very important is
that products liability law, and tort law in general, are
important social tools for controlling accidents achieving what is loosely referred to as "deterrence." The general thrust
of the proposals I have seen appears to cut against requiring
distributors of unreasonably dangerous products to compensate for the cost of the harm caused by those goods. If that happens,
then the law has not served its deterrence role.
One of the biggest problems that would concern a committee
of lawyers is that a bill of this sort would pile an extra layer of decisionmaking, and doctrinal complexity, upon the existing federal structure. On the basis of the bills I have reviewed, and as nearly as I can tell specifically with reference to s. 2760, I have no idea how the state or federal courts are going to fashion rules of decision that will straighten out the extra layer of conflicts that will occur.
I have said at other hearings that there may be a role for a few modest and highly specific provisions aimed at some easily identifiable and especially irritating problems. I have suggested, for example, that a simple piece of legislation that
creates a uniform statute of limitations and repose might be
The problem is that there has been an expensively financed six year effort to build momentum for a much more comprehensive statute an absolutely baroque law. The enactment of such a statute dragging Congress into the complexities of liability and defense doctrines and damages theories, not to mention frankly experimental efforts at alternative settlement procedures -- will multiply, not simply add, a flock of legal problems. Litigation will likely increase, and undoubtedly Congress will face demands for drastic amendment each session. Perhaps there
should be a Gramm-Rudman-Hollings bill to limit the size and