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wide, it would be impossible to try to identify every document in every agency that conceivably could ultimately be found relevant to a claim filed against the United States. 16 However, any failure by the United States in such a case to identify and retain such documents would expose the United States to severe litigation sanctions which could substantially, grejudice the ability of the United States to defend itself. 15

If the Congress enacts this provision, it ultimately may have to consider the establishment and funding of a new federal bureaucracy to implement this provision for the United States, or, alternatively, be willing to accept potentially major and unmerited litigation losses.

1. section 310 ("Admissibl. Evidencory

Section 310(a) provides that "all relevant evidence is admissible in any product liability action," except as provided by the Constitution, federal statute or the Federal Rules of Evidence. The Section identifies certain limited exceptions, including unfairly prejudicial evidence, hearsay and privileged evidence.

It is quite unclear what Section 310(a) is intended to accomplish, or what it would accomplish if it were enacted which, in and of itself, is a matter of serious concern. But, one possible interpretation of the provision is that it will require State courts to apply the Federal Rules of Evidence in all product liability actions.

Should the provision be construed in such a way, it would represent a massive and wholly unnecessary intrusion by the federal government into state procedural law. No problem of

16 For example, the discovery against the United States in the on-going asbestos product liability litigation has already identified over two billion pages of potentially relevant government documents in the federal record centers. This represents only a portion of all potentially relevant government documents, since it does not include documents held in the federal archives or by the originating agencies.

17 One obvious effect of this provision will be for parties to seek discovery of every conceivable document in the hope that some documents will have been disposed and thereby give them the benefit; of the evidentiary presumption established by the Section In fact, the provision will almost certainly increase both the amount of discovery and the degree to which plaintiffs engage in unnecessary and burdensome discovery.

product liability law or tort law has been identified as justification for such a wholesale abrogation of State law; indeed, it is difficult to conceive of any rationale which could possibly justify such a result.

Moreover, the provision could present serious problems for those States which have rules of evidence different from the federal rules. State court judges and many attorneys are trained in their state's rules of evidence, not in the federal rules. The provision thus will create unnecessary confusion and complexity in the State courts, both at the trial and appellate levels. In addition, cases which include both product liability and non-product liability claims would present a troubling dilemma. Do the federal rules apply to all issues, or does the judge attempt to distinguish the issues for purposes of evidentiary rulings, or is the judge required to construct a hybrid set of rules? In addition, State rules of trial practice and civil procedure may not mesh well with the Federal Rules of Evidence, having been designed to complement the State's own rules of evidence rather than those of the federal government. This may lead to some highly anomalous and confusing results.

We thus strongly urge that Section 310 be deleted from the bill.

section 101 ("Product Liability Insurance Roporting") Section 401 would create a new and potentially massive federal bureaucracy by requiring the collection of data and a yearly report by the Secretary of Commerce "analyzing the impact of the Act on insurers which issue product liability insurance either separately or in conjunction with other insurance; and on self-insurers, captive insurers and risk retention groups.“

We do not believe that the collection of such data by the federal government would have any effect on the availability or affordability of product liability insurance. But even assuming that there were a basis for collecting such insurance related data, the federal government is neither the appropriate nor best vehicle for obtaining such data. The regulation of the insurance industry has appropriately been left to the individual States, and the collection and analysis of insurance data is best left with those who regulate and are intimately familiar with that industry.

The Commerce Committee, in reporting s. 2760, has addressed an issue of critical importance to this Nation the need to reform product liability law. We believe that the Judiciary Committee and the Senate, in considering the merits of s. 2760 will share the commerce Committee's recognition of both the depth of the problem and the urgent need for reform. It is the Administration's hope that during such deliberations all of the above discussed issues will be carefully considered. We will be pleased, of course, to provide clarification of any of our views should the Committee or the Senate so desire.

The office of Management and Budget has advised that there is no objection to the presentation of this report to the Congress.

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Enclosure

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Honorable Robert Dole
Honorable John C. Danforth

Senator HATCH. Well, thank you. As you know, I strongly share your views on Federalism, and certainly the justification for Federal products liability legislation is the need to protect interstate commerce from State liability doctrines that jeopardize the flow of products and commerce, and thereby threaten the vitality of American manufacturers and small businesses.

Now as you have stated, the preemption provision contained in the administration bill, the Product Liability Reform Act of 1985, is less intrusive of State law in that it specifically states that its provisions shall not preempt or supersede any State law that provides for defenses or places limitations on a person's liability, in addition to those contained in the act.

However, would not this sort of a partial preemption fail to reach the goals of achieving uniformity and predictability, within the product liability laws?

Mr. WILLARD. That would be correct, Mr. Chairman. We do feel, though, that absolute uniformity is an unattainable goal in this field. That is, as long as cases are decided in 50 different State courts; as long as legislation is subjected to varying interpretations by judges and juries, there is going to be some nonuniformity.

We do not think that that is unacceptable. What we consider to be unacceptable is when the lack of uniformity goes so far that in some States, excessive liability actually chokes off the provision of necessary products, or creates an excessive burden on interstate commerce.

So we think some nonuniformity can be lived with as long as we have a limit on what we regard as excessive liability doctrines.

Senator HATCH. OK. Your testimony as to the importance of returning to a fault-based liability system in the product liability context is well stated.

I also share your view that the doctrine of joint and several liability should be abolished for economic as well as noneconomic damages in product liability actions.

You have clearly stated, the administration believes that an essential element of any meaningful tort reform package must include a return to a fault-based liability and abolition of joint and several liability, except in circumstances, or instances, where parties have acted in concert to cause an injury.

Does that mean that the administration could support S. 2760 only with the addition of these particular concepts?

Mr. WILLARD. Our position is that these concepts are important and that without those provisions in S. 2760 the bill would fail to alleviate the problems that we have cited with regard to products liability law.

Senator HATCH. In your testimony, you make no mention of the settlement procedures contained in S. 2760. Would you please comment on the merits of this particular portion of the bill, and on needed improvements.

Mr. WILLARD. This matter is discussed in the letter which is attached to the testimony. One of the problems with the settlement provisions, and one of the difficulties in discussing it is that the provisions are so complicated.

As in any case where you attempt to shift the incentives with regard to litigation, it is difficult to predict in advance how they will work out; whether they will serve to increase the incentives for people to file claims, or decrease them.

In some regards, these provisions might well serve to increase the total number of product liability claims that are made, which would be counterproductive to the goal of reducing this burden on interstate commerce.

For that reason we think that it would be well-advised to consider whether these provisions are necessary, or at least whether the provisions should have a number of technical kinds of modifications which we have suggested to make them work more smoothly.

Senator Hatch. I would like to bring your attention to the insurance liability reporting section of this particular bill. I note that in your written testimony, you feel that this particular insurance reporting requirement is overly burdensome. Nevertheless, the evidence does seem to indicate that the burdens facing the Nation, in the area of product liability and tort liability generally, are part and parcel of some of the problems created by the insurance industry. At least some are advocating that particular position.

Now I assume that you agree that further regulation of the insurance industry is basically a matter for the States to take care of, but could this reporting section be reworked, in your eyes, so that it might be more beneficial?

Mr. WILLARD. In our view, the reporting is best done by the regulatory authorities who are more familiar with the insurance industry. I think that exactly how burdensome this particular provision will be is something better addressed by industry groups and State authorities rather than by the administration, which has not dealt with regulation of the insurance industry previously.

I think that the collecting of information is something that obviously is hard to be against, but we think this could be done more efficiently at the State level. Where there is a need for interstate cooperation, one could use groups like the National Association of Insurance Commissioners, which is an organization of all the State insurance commissioners, which could work together, cooperatively, to develop national data. Obviously, this is preferable to creating a new bureaucracy in the U.S. Commerce Department to undertake this task.

Senator Hatch. All right. Thank you. Senator Metzenbaum, we will turn to you.

Senator METZENBAUM. Mr. Willard, it is nice to see you again, but not under these circumstances. Because when we have met on previous occasions, you were up for confirmation, and I indicated my concern about your failure to adequately prosecute companies that had been involved in manufacture of vaccines, and the Food and Drug Administration had recommended prosecution and you dropped the case. And you know my views. You and I have met in my office on that subject.

I have told you of my disappointment with you, and I have told you of my concern, and questioned how you, as a father of children, could have been in that position.

Now we have another matter before us, and again it seems the Department of Justice finds itself on the side of intervening, and of coming down for Federal involvement in a matter that I am not certain the Federal Government ought to be involved in.

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