TABLE OF CONTENTS:
Title I: Small Business Lawsuit Abuse Protection
Title II: Product Seller Fair Treatment
Small Business Liability Reform Act of 1999 - Title I: Small Business Lawsuit Abuse Protection - Allows punitive damages to be awarded against a small business only if the claimant establishes by clear and convincing evidence that conduct carried out by the defendant through willful misconduct or with a conscious, flagrant indifference to the rights or safety of others was the proximate cause of the harm that is the subject of the action. Limits such punitive damages to the lesser of two times the amount awarded for economic and noneconomic losses, or $250,000.
(Sec. 104) States that, in any civil action against a small business: (1) each defendant shall be liable only for the amount of noneconomic loss allocated to that defendant in direct proportion to the percentage of responsibility of that defendant for the harm caused to the plaintiff; and (2) the court shall render a separate judgment against each defendant describing such percentage of responsibility.
(Sec. 105) Excepts from such liability limitations any misconduct of a defendant: (1) that constitutes a crime of violence, international terrorism, or a hate crime; (2) that results in liability for damages under specified provisions of the Oil Pollution Control Act of 1990 or the Comprehensive Environmental Response, Compensation, and Liability Act of 1980; (3) that involves a sexual offense or violation of a Federal or State civil rights law; or (4) caused by being under the influence of intoxicating alcohol or a drug.
(Sec. 106) Preempts inconsistent State law.
Title II: Product Seller Fair Treatment - States that this title governs any product liability action brought in any Federal or State court. Excludes from this title actions for commercial loss, negligent entrustment, negligence per se concerning firearms and ammunition, and actions brought under a dram-shop or third-party liability arising out of the sale or provision of alcohol to an intoxicated person or a minor.
(Sec. 204) Mandates that, in any product liability action covered by this Act, a product seller other than a manufacturer shall be liable to a claimant only if such claimant establishes that: (1) the product that caused the harm was sold, rented, or leased by the seller, the seller failed to exercise reasonable care with respect to the product, and such failure was the proximate cause of harm to the plaintiff; (2) the seller made an express warranty applicable to such product, the product failed to conform to the warranty, and such failure caused the harm to the plaintiff; or (3) the product seller engaged in intentional wrongdoing (as determined under applicable State law), and such wrongdoing caused the harm to the plaintiff. States that a seller shall not be considered to have failed to exercise reasonable care with respect to a product based upon a failure to inspect if: (1) there was no reasonable opportunity to inspect; or (2) such inspection would not have revealed the aspect of the product that allegedly caused the claimant's harm. Allows a seller to be liable as a manufacturer if: (1) the manufacturer is not subject to appropriate service of process; or (2) the court determines that the claimant is or would be unable to enforce a judgment against the manufacturer. Provides limited liability for persons engaged in the business of renting or leasing a product.
[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1185 Introduced in Senate (IS)]
106th CONGRESS
1st Session
S. 1185
To provide small businesses certain protections from litigation
excesses and to limit the product liability of non-manufacturer product
sellers.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 27, 1999
Mr. Abraham (for himself, Mr. Lieberman, Mr. Hatch, Mr. McCain, Mr.
McConnell, Mr. Lott, Mr. Bond, Mr. Ashcroft, Mr. Coverdell, Mr.
Nickles, Mr. Brownback, Mr. Gorton, Mr. Grassley, Mr. Sessions, Mr.
Burns, Mr. Inhofe, Mr. Helms, Mr. Allard, Mr. Hagel, Mr. Mack, Mr.
Bunning, Mr. Jeffords, Mr. DeWine, Mr. Craig, Mrs. Hutchison, and Mr.
Enzi) introduced the following bill; which was read twice and referred
to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To provide small businesses certain protections from litigation
excesses and to limit the product liability of non-manufacturer product
sellers.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``Small Business
Liability Reform Act of 1999''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title.
TITLE I--SMALL BUSINESS LAWSUIT ABUSE PROTECTION
Sec. 101. Findings.
Sec. 102. Definitions.
Sec. 103. Limitation on punitive damages for small businesses.
Sec. 104. Limitation on several liability for noneconomic loss for
small businesses.
Sec. 105. Exceptions to limitations on liability.
Sec. 106. Preemption and election of State nonapplicability.
Sec. 107. Effective date.
TITLE II--PRODUCT SELLER FAIR TREATMENT
Sec. 201. Findings; purposes.
Sec. 202. Definitions.
Sec. 203. Applicability; preemption.
Sec. 204. Liability rules applicable to product sellers, renters, and
lessors.
Sec. 205. Federal cause of action precluded.
Sec. 206. Effective date.
TITLE I--SMALL BUSINESS LAWSUIT ABUSE PROTECTION
SEC. 101. FINDINGS.
Congress finds that--
(1) the United States civil justice system is inefficient,
unpredictable, unfair, costly, and impedes competitiveness in
the marketplace for goods, services, business, and employees;
(2) the defects in the civil justice system have a direct
and undesirable effect on interstate commerce by decreasing the
availability of goods and services in commerce;
(3) there is a need to restore rationality, certainty, and
fairness to the legal system;
(4) the spiralling costs of litigation and the magnitude
and unpredictability of punitive damage awards and noneconomic
damage awards have continued unabated for at least the past 30
years;
(5) the Supreme Court of the United States has recognized
that a punitive damage award can be unconstitutional if the
award is grossly excessive in relation to the legitimate
interest of the government in the punishment and deterrence of
unlawful conduct;
(6) just as punitive damage awards can be grossly
excessive, so can it be grossly excessive in some circumstances
for a party to be held responsible under the doctrine of joint
and several liability for damages that party did not cause;
(7) as a result of joint and several liability, entities
including small businesses are often brought into litigation
despite the fact that their conduct may have little or nothing
to do with the accident or transaction giving rise to the
lawsuit, and may therefore face increased and unjust costs due
to the possibility or result of unfair and disproportionate
damage awards;
(8) the costs imposed by the civil justice system on small
businesses are particularly acute, since small businesses often
lack the resources to bear those costs and to challenge
unwarranted lawsuits;
(9) due to high liability costs and unwarranted litigation
costs, small businesses face higher costs in purchasing
insurance through interstate insurance markets to cover their
activities;
(10) liability reform for small businesses will promote the
free flow of goods and services, lessen burdens on interstate
commerce, and decrease litigiousness; and
(11) legislation to address these concerns is an
appropriate exercise of the powers of Congress under clauses 3,
9, and 18 of section 8 of article I of the Constitution of the
United States, and the 14 amendment to the Constitution of the
United States.
SEC. 102. DEFINITIONS.
In this title:
(1) Act of international terrorism.--The term ``act of
international terrorism'' has the same meaning as in section
2331 of title 18, United States Code.
(2) Crime of violence.--The term ``crime of violence'' has
the same meaning as in section 16 of title 18, United States
Code.
(3) Drug.--The term ``drug'' means any controlled substance
(as defined in section 102 of the Controlled Substances Act (21
U.S.C. 802(b)) that was not legally prescribed for use by the
defendant or that was taken by the defendant other than in
accordance with the terms of a lawfully issued prescription.
(4) Economic loss.--The term ``economic loss'' means any
pecuniary loss resulting from harm (including the loss of
earnings or other benefits related to employment, medical
expense loss, replacement services loss, loss due to death,
burial costs, and loss of business or employment opportunities)
to the extent recovery for such loss is allowed under
applicable State law.
(5) Harm.--The term ``harm'' includes physical,
nonphysical, economic, and noneconomic losses.
(6) Hate crime.--The term ``hate crime'' means a crime
described in section 1(b) of the Hate Crime Statistics Act (28
U.S.C. 534 note).
(7) Noneconomic loss.--The term ``noneconomic loss'' means
loss for physical or emotional pain, suffering, inconvenience,
physical impairment, mental anguish, disfigurement, loss of
enjoyment of life, loss of society and companionship, loss of
consortium (other than loss of domestic service), injury to
reputation, or any other nonpecuniary loss of any kind or
nature.
(8) Small business.--
(A) In general.--The term ``small business'' means
any unincorporated business, or any partnership,
corporation, association, unit of local government, or
organization that has less than 25 full-time employees.
(B) Calculation of number of employees.--For
purposes of subparagraph (A), the number of employees
of a subsidiary of a wholly owned corporation includes
the employees of--
(i) a parent corporation; and
(ii) any other subsidiary corporation of
that parent corporation.
(9) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, American Samoa, the Northern
Mariana Islands, any other territory or possession of the
United States, or any political subdivision of any such State,
territory, or possession.
SEC. 103. LIMITATION ON PUNITIVE DAMAGES FOR SMALL BUSINESSES.
(a) General Rule.--Except as provided in section 105, in any civil
action against a small business, punitive damages may, to the extent
permitted by applicable State law, be awarded against the small
business only if the claimant establishes by clear and convincing
evidence that conduct carried out by that defendant through willful
misconduct or with a conscious, flagrant indifference to the rights or
safety of others was the proximate cause of the harm that is the
subject of the action.
(b) Limitation on Amount.--In any civil action against a small
business, punitive damages shall not exceed the lesser of--
(1) 2 times the total amount awarded to the claimant for
economic and noneconomic losses; or
(2) $250,000.
(c) Application by Court.--This section shall be applied by the
court and shall not be disclosed to the jury.
SEC. 104. LIMITATION ON SEVERAL LIABILITY FOR NONECONOMIC LOSS FOR
SMALL BUSINESSES.
(a) General Rule.--Except as provided in section 105, in any civil
action against a small business, the liability of each defendant that
is a small business, or the agent of a small business, for noneconomic
loss shall be determined in accordance with subsection (b).
(b) Amount of Liability.--
(1) In general.--In any civil action described in
subsection (a)--
(A) each defendant described in that subsection
shall be liable only for the amount of noneconomic loss
allocated to that defendant in direct proportion to the
percentage of responsibility of that defendant
(determined in accordance with paragraph (2)) for the
harm to the claimant with respect to which the
defendant is liable; and
(B) the court shall render a separate judgment
against each defendant described in that subsection in
an amount determined under subparagraph (A).
(2) Percentage of responsibility.--For purposes of
determining the amount of noneconomic loss allocated to a
defendant under this section, the trier of fact shall determine
the percentage of responsibility of each person responsible for
the harm to the claimant, regardless of whether or not the
person is a party to the action.
SEC. 105. EXCEPTIONS TO LIMITATIONS ON LIABILITY.
The limitations on liability under sections 103 and 104 do not
apply to any misconduct of a defendant--
(1) that constitutes--
(A) a crime of violence;
(B) an act of international terrorism; or
(C) a hate crime;
(2) that results in liability for damages relating to the
injury to, destruction of, loss of, or loss of use of, natural
resources described in--
(A) section 1002(b)(2)(A) of the Oil Pollution Act
of 1990 (33 U.S.C. 2702(b)(2)(A)); or
(B) section 107(a)(4)(C) of the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980 (42 U.S.C. 9607(a)(4)(C));
(3) that involves--
(A) a sexual offense, as defined by applicable
State law; or
(B) a violation of a Federal or State civil rights
law; or
(4) if the defendant was under the influence (as determined
under applicable State law) of intoxicating alcohol or a drug
at the time of the misconduct, and the fact that the defendant
was under the influence was the cause of any harm alleged by
the plaintiff in the subject action.
SEC. 106. PREEMPTION AND ELECTION OF STATE NONAPPLICABILITY.
(a) Preemption.--Subject to subsection (b), this title preempts the
laws of any State to the extent that State laws are inconsistent with
this title, except that this title shall not preempt any State law that
provides additional protections from liability for small businesses.
(b) Election of State Regarding Nonapplicability.--This title does
not apply to any action in a State court against a small business in
which all parties are citizens of the State, if the State enacts a
statute--
(1) citing the authority of this subsection;
(2) declaring the election of such State that this title
does not apply as of a date certain to such actions in the
State; and
(3) containing no other provision.
SEC. 107. EFFECTIVE DATE.
(a) In General.--This title shall take effect 90 days after the
date of enactment of this Act.
(b) Application.--This title applies to any claim for harm caused
by an act or omission of a small business, if the claim is filed on or
after the effective date of this title, without regard to whether the
harm that is the subject of the claim or the conduct that caused the
harm occurred before such effective date.
TITLE II--PRODUCT SELLER FAIR TREATMENT
SEC. 201. FINDINGS; PURPOSES.
(a) Findings.--Congress finds that--
(1) although damage awards in product liability actions may
encourage the production of safer products, they may also have
a direct effect on interstate commerce and consumers of the
United States by increasing the cost of, and decreasing the
availability of products;
(2) some of the rules of law governing product liability
actions are inconsistent within and among the States, resulting
in differences in State laws that may be inequitable with
respect to plaintiffs and defendants and may impose burdens on
interstate commerce;
(3) product liability awards may jeopardize the financial
well-being of individuals and industries, particularly the
small businesses of the United States;
(4) because the product lability laws of a State may have
adverse effects on consumers and businesses in many other
States, it is appropriate for the Federal Government to enact
national, uniform product liability laws that preempt State
laws; and
(5) under clause 3 of section 8 of article I of the United
States Constitution, it is the constitutional role of the
Federal Government to remove barriers to interstate commerce.
(b) Purposes.--The purposes of this Act, based on the powers of the
United States under clause 3 of section 8 of article I of the United
States Constitution, are to promote the free flow of goods and services
and lessen the burdens on interstate commerce, by--
(1) establishing certain uniform legal principles of
product liability that provide a fair balance among the
interests of all parties in the chain of production,
distribution, and use of products; and
(2) reducing the unacceptable costs and delays in product
liability actions caused by excessive litigation that harms
both plaintiffs and defendants.
SEC. 202. DEFINITIONS.
In this title:
(1) Alcohol product.--The term ``alcohol product'' includes
any product that contains not less than \1/2\ of 1 percent of
alcohol by volume and is intended for human consumption.
(2) Claimant.--The term ``claimant'' means any person who
brings an action covered by this title and any person on whose
behalf such an action is brought. If such an action is brought
through or on behalf of an estate, the term includes the
claimant's decedent. If such an action is brought through or on
behalf of a minor or incompetent, the term includes the
claimant's legal guardian.
(3) Commercial loss.--The term ``commercial loss'' means--
(A) any loss or damage solely to a product itself;
(B) loss relating to a dispute over the value of a
product; or
(C) consequential economic loss, the recovery of
which is governed by applicable State commercial or
contract laws that are similar to the Uniform
Commercial Code.
(4) Compensatory damages.--The term ``compensatory
damages'' means damages awarded for economic and noneconomic
losses.
(5) Dram-shop.--The term ``dram-shop'' means a drinking
establishment where alcoholic beverages are sold to be consumed
on the premises.
(6) Economic loss.--The term ``economic loss'' means any
pecuniary loss resulting from harm (including the loss of
earnings or other benefits related to employment, medical
expense loss, replacement services loss, loss due to death,
burial costs, and loss of business or employment opportunities)
to the extent recovery for that loss is allowed under
applicable State law.
(7) Harm.--The term ``harm'' includes physical,
nonphysical, economic, and noneconomic loss.
(8) Manufacturer.--The term ``manufacturer'' means--
(A) any person who--
(i) is engaged in a business to produce,
create, make, or construct any product (or
component part of a product); and
(ii)(I) designs or formulates the product
(or component part of the product); or
(II) has engaged another person to design
or formulate the product (or component part of
the product);
(B) a product seller, but only with respect to
those aspects of a product (or component part of a
product) that are created or affected when, before
placing the product in the stream of commerce, the
product seller--
(i) produces, creates, makes, constructs
and designs, or formulates an aspect of the
product (or component part of the product) made
by another person; or
(ii) has engaged another person to design
or formulate an aspect of the product (or
component part of the product) made by another
person; or
(C) any product seller not described in
subparagraph (B) that holds itself out as a
manufacturer to the user of the product.
(9) Noneconomic loss.--The term ``noneconomic loss'' means
loss for physical or emotional pain, suffering, inconvenience,
physical impairment, mental anguish, disfigurement, loss of
enjoyment of life, loss of society and companionship, loss of
consortium (other than loss of domestic service), injury to
reputation, or any other nonpecuniary loss of any kind or
nature.
(10) Person.--The term ``person'' means any individual,
corporation, company, association, firm, partnership, society,
joint stock company, or any other entity (including any
governmental entity).
(11) Product.--
(A) In general.--The term ``product'' means any
object, substance, mixture, or raw material in a
gaseous, liquid, or solid state that--
(i) is capable of delivery itself or as an
assembled whole, in a mixed or combined state,
or as a component part or ingredient;
(ii) is produced for introduction into
trade or commerce;
(iii) has intrinsic economic value; and
(iv) is intended for sale or lease to
persons for commercial or personal use.
(B) Exclusion.--The term ``product'' does not
include--
(i) tissue, organs, blood, and blood
products used for therapeutic or medical
purposes, except to the extent that such
tissue, organs, blood, and blood products (or
the provision thereof) are subject, under
applicable State law, to a standard of
liability other than negligence; or
(ii) electricity, water delivered by a
utility, natural gas, or steam.
(12) Product liability action.--The term ``product
liability action'' means a civil action brought on any theory
for any physical injury, illness, disease, death, or damage to
property that is caused by a product.
(13) Product seller.--
(A) In general.--The term ``product seller'' means
a person who in the course of a business conducted for
that purpose--
(i) sells, distributes, rents, leases,
prepares, blends, packages, labels, or
otherwise is involved in placing a product in
the stream of commerce; or
(ii) installs, repairs, refurbishes,
reconditions, or maintains the harm-causing
aspect of the product.
(B) Exclusion.--The term ``product seller'' does
not include--
(i) a seller or lessor of real property;
(ii) a provider of professional services in
any case in which the sale or use of a product
is incidental to the transaction and the
essence of the transaction is the furnishing of
judgment, skill, or services; or
(iii) any person who--
(I) acts in only a financial
capacity with respect to the sale of a
product; or
(II) leases a product under a lease
arrangement in which the lessor does
not initially select the leased product
and does not during the lease term
ordinarily control the daily operations
and maintenance of the product.
(14) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, American Samoa, the Northern
Mariana Islands, any other territory or possession of the
United States, or any political subdivision of any such State,
territory, or possession.
SEC. 203. APPLICABILITY; PREEMPTION.
(a) Preemption.--
(1) In general.--Except as provided in paragraph (2), this
title governs any product liability action brought in any
Federal or State court.
(2) Actions excluded.--
(A) Actions for commercial loss.--A civil action
brought for commercial loss shall be governed only by
applicable State commercial or contract laws that are
similar to the Uniform Commercial Code.
(B) Actions for negligent entrustment; negligence
per se concerning firearms and ammunition; dram-shop.--
(i) Negligent entrustment.--A civil action
for negligent entrustment shall not be subject
to the provisions of this title governing
product liability actions, but shall be subject
to any applicable Federal or State law.
(ii) Negligence per se concerning firearms
and ammunition.--A civil action brought under a
theory of negligence per se concerning the use
of a firearm or ammunition shall not be subject
to the provisions of this title governing
product liability actions, but shall be subject
to any applicable Federal or State law.
(iii) Dram-shop.--A civil action brought
under a theory of dram-shop or third-party
liability arising out of the sale or providing
of an alcoholic product to an intoxicated
person or minor shall not be subject to the
provisions of this title, but shall be subject
to any applicable Federal or State law.
(b) Relationship to State Law.--This title supersedes a State law
only to the extent that the State law applies to an issue covered by
this title. Any issue that is not governed by this title, including any
standard of liability applicable to a manufacturer, shall be governed
by any applicable Federal or State law.
(c) Effect on Other Law.--Nothing in this title shall be construed
to--
(1) waive or affect any defense of sovereign immunity
asserted by any State under any State law;
(2) supersede or alter any Federal law;
(3) waive or affect any defense of sovereign immunity
asserted by the United States;
(4) affect the applicability of any provision of chapter 97
of title 28, United States Code;
(5) preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation;
(6) affect the right of any court to transfer venue or to
apply the law of a foreign nation or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum; or
(7) supersede or modify any statutory or common law,
including any law providing for an action to abate a nuisance,
that authorizes a person to institute an action for civil
damages or civil penalties, cleanup costs, injunctions,
restitution, cost recovery, punitive damages, or any other form
of relief, for remediation of the environment (as defined in
section 101(8) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. 9601(8))).
SEC. 204. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS, RENTERS, AND
LESSORS.
(a) General Rule.--
(1) In general.--In any product liability action covered
under this Act, a product seller other than a manufacturer
shall be liable to a claimant only if the claimant establishes
that--
(A)(i) the product that allegedly caused the harm
that is the subject of the complaint was sold, rented,
or leased by the product seller;
(ii) the product seller failed to exercise
reasonable care with respect to the product; and
(iii) the failure to exercise reasonable care was a
proximate cause of the harm to the claimant;
(B)(i) the product seller made an express warranty
applicable to the product that allegedly caused the
harm that is the subject of the complaint, independent
of any express warranty made by a manufacturer as to
the same product;
(ii) the product failed to conform to the warranty;
and
(iii) the failure of the product to conform to the
warranty caused the harm to the claimant; or
(C)(i) the product seller engaged in intentional
wrongdoing, as determined under applicable State law;
and
(ii) the intentional wrongdoing caused the harm
that is the subject of the complaint.
(2) Reasonable opportunity for inspection.--For purposes of
paragraph (1)(A)(ii), a product seller shall not be considered
to have failed to exercise reasonable care with respect to a
product based upon an alleged failure to inspect the product,
if--
(A) the failure occurred because there was no
reasonable opportunity to inspect the product; or
(B) the inspection, in the exercise of reasonable
care, would not have revealed the aspect of the product
that allegedly caused the claimant's harm.
(b) Special Rule.--
(1) In general.--A product seller shall be deemed to be
liable as a manufacturer of a product for harm caused by the
product, if--
(A) the manufacturer is not subject to service of
process under the laws of any State in which the action
may be brought; or
(B) the court determines that the claimant is or
would be unable to enforce a judgment against the
manufacturer.
(2) Statute of limitations.--For purposes of this
subsection only, the statute of limitations applicable to
claims asserting liability of a product seller as a
manufacturer shall be tolled from the date of the filing of a
complaint against the manufacturer to the date that judgment is
entered against the manufacturer.
(c) Rented or Leased Products.--
(1) Definition.--For purposes of paragraph (2), and for
determining the applicability of this title to any person
subject to that paragraph, the term ``product liability
action'' means a civil action brought on any theory for harm
caused by a product or product use.
(2) Liability.--Notwithstanding any other provision of law,
any person engaged in the business of renting or leasing a
product (other than a person excluded from the definition of
product seller under section 202(13)(B)) shall be subject to
liability in a product liability action under subsection (a),
but any person engaged in the business of renting or leasing a
product shall not be liable to a claimant for the tortious act
of another solely by reason of ownership of that product.
SEC. 205. FEDERAL CAUSE OF ACTION PRECLUDED.
The district courts of the United States shall not have
jurisdiction under this title based on section 1331 or 1337 of title
28, United States Code.
SEC. 206. EFFECTIVE DATE.
This title shall apply with respect to any action commenced on or
after the date of enactment of this Act without regard to whether the
harm that is the subject of the action or the conduct that caused the
harm occurred before that date of enactment.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S6371-6373, S6376-6379)
Read twice and referred to the Committee on Judiciary.
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