Home > 106th Congressional Bills > H.R. 2366 (eh) To provide small businesses certain protections from litigation excesses and to limit the product liability of nonmanufacturer product sellers. [Engrossed in House] ...

H.R. 2366 (eh) To provide small businesses certain protections from litigation excesses and to limit the product liability of nonmanufacturer product sellers. [Engrossed in House] ...


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                                                 Union Calendar No. 278

106th CONGRESS

  2d Session

                               H. R. 2366

                      [Report No. 106-494, Part I]

_______________________________________________________________________

                                 A BILL

    To provide small businesses certain protections from litigation 
excesses and to limit the product liability of nonmanufacturer product 
                                sellers.

_______________________________________________________________________

                           February 14, 2000

  Committee on Commerce discharged; committed to the Committee of the 
    Whole House on the State of the Union and ordered to be printed





                                                 Union Calendar No. 278
106th CONGRESS
  2d Session
                                H. R. 2366

                      [Report No. 106-494, Part I]

    To provide small businesses certain protections from litigation 
excesses and to limit the product liability of nonmanufacturer product 
                                sellers.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 25, 1999

Mr. Rogan (for himself, Mr. Holden, Mr. Burr of North Carolina, and Mr. 
Moran of Virginia) introduced the following bill; which was referred to 
  the Committee on the Judiciary, and in addition to the Committee on 
Commerce, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

                            February 7, 2000

Additional sponsors: Mr. Nussle, Mr. Baker, Mr. Cunningham, Mr. DeMint, 
Mr. Lewis of California, Mr. Weldon of Florida, Mr. Ryun of Kansas, Mr. 
Pitts, Mr. Talent, Mr. Hill of Montana, Ms. Pryce of Ohio, Mr. Hobson, 
Mr. Goode, Mr. McCollum, Mr. Cannon, Mr. Condit, Mr. Vitter, Mr. Smith 
of Texas, Mr. Combest, Mrs. Northup, Mr. Watkins, Mr. Stump, Mr. Davis 
                     of Virginia, and Mr. Whitfield

                            February 7, 2000

  Reported from the Committee on the Judiciary with an amendment and 
                         ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                            February 7, 2000

Referral to the Committee on Commerce extended for a period ending not 
                      later than February 14, 2000

                           February 14, 2000

 Additional sponsors: Mr. Chabot, Mr. Tancredo, Mr. Watts of Oklahoma, 
                     Mrs. Myrick, and Mr. Goodlatte

                           February 14, 2000

  Committee on Commerce discharged; committed to the Committee of the 
    Whole House on the State of the Union and ordered to be printed
 [For text of introduced bill, see copy of bill as introduced on June 
                               25, 1999]

_______________________________________________________________________

                                 A BILL


 
    To provide small businesses certain protections from litigation 
excesses and to limit the product liability of nonmanufacturer 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Small Business 
Liability Reform Act of 2000''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

            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 joint and several liability for noneconomic 
                            loss for small businesses.
Sec. 105. Exceptions to limitations on liability.
Sec. 106. Preemption and election of State nonapplicability.

                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.

                       TITLE III--EFFECTIVE DATE

Sec. 301. Effective date.

            TITLE I--SMALL BUSINESS LAWSUIT ABUSE PROTECTION

SEC. 101. FINDINGS.

    Congress finds that--
            (1) the defects in the United States civil justice system 
        have a direct and undesirable effect on interstate commerce by 
        decreasing the availability of goods and services in commerce;
            (2) there is a need to restore rationality, certainty, and 
        fairness to the legal system;
            (3) 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;
            (4) 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;
            (5) 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;
            (6) 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;
            (7) 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;
            (8) 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;
            (9) liability reform for small businesses will promote the 
        free flow of goods and services, lessen burdens on interstate 
        commerce, and decrease litigiousness; and
            (10) 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 14th amendment to the Constitution of 
        the United States.

SEC. 102. DEFINITIONS.

    In this title:
            (1) Crime of violence.--The term ``crime of violence'' has 
        the same meaning as in section 16 of title 18, United States 
        Code.
            (2) Drug.--The term ``drug'' means any controlled substance 
        (as defined in section 102 of the Controlled Substances Act (21 
        U.S.C. 802)) 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.
            (3) 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.
            (4) Harm.--The term ``harm'' means any physical injury, 
        illness, disease, or death or damage to property.
            (5) 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).
            (6) International terrorism.--The term ``international 
        terrorism'' has the same meaning as in section 2331 of title 
        18, United States Code.
            (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) Person.--The term ``person'' means any individual, 
        corporation, company, association, firm, partnership, society, 
        joint stock company, or any other entity (including any 
        governmental entity).
            (9) 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 fewer than 25 full-time employees 
                as determined on the date the civil action involving 
                the small business is filed.
                    (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.
            (10) 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, 
        commonwealth, 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) 3 times the total amount awarded to the claimant for 
        economic and noneconomic losses; or
            (2) $250,000.

SEC. 104. LIMITATION ON JOINT AND 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 that 
                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--
            (1) to any defendant whose misconduct--
                    (A) constitutes--
                            (i) a crime of violence;
                            (ii) an act of international terrorism; or
                            (iii) a hate crime;
                    (B) results in liability for damages relating to 
                the injury to, destruction of, loss of, or loss of use 
                of, natural resources described in--
                            (i) section 1002(b)(2)(A) of the Oil 
                        Pollution Act of 1990 (33 U.S.C. 
                        2702(b)(2)(A)); or
                            (ii) section 107(a)(4)(C) of the 
                        Comprehensive Environmental Response, 
                        Compensation, and Liability Act of 1980 (42 

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