<DOC> [109th Congress House Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:27707.wais] S. Hrg. 109-421 DEFECTIVE PRODUCTS: WILL CRIMINAL PENALTIES ENSURE CORPORATE ACCOUNTABILITY? ======================================================================= HEARING before the COMMITTEE ON THE JUDICIARY UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS SECOND SESSION __________ MARCH 10, 2006 __________ Serial No. J-109-63 __________ Printed for the use of the Committee on the Judiciary U.S. GOVERNMENT PRINTING OFFICE 27-707 PDF WASHINGTON : 2006 ______________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON THE JUDICIARY ARLEN SPECTER, Pennsylvania, Chairman ORRIN G. HATCH, Utah PATRICK J. LEAHY, Vermont CHARLES E. GRASSLEY, Iowa EDWARD M. KENNEDY, Massachusetts JON KYL, Arizona JOSEPH R. BIDEN, Jr., Delaware MIKE DeWINE, Ohio HERBERT KOHL, Wisconsin JEFF SESSIONS, Alabama DIANNE FEINSTEIN, California LINDSEY O. GRAHAM, South Carolina RUSSELL D. FEINGOLD, Wisconsin JOHN CORNYN, Texas CHARLES E. SCHUMER, New York SAM BROWNBACK, Kansas RICHARD J. DURBIN, Illinois TOM COBURN, Oklahoma Michael O'Neill, Chief Counsel and Staff Director Bruce A. Cohen, Democratic Chief Counsel and Staff Director C O N T E N T S ---------- STATEMENTS OF COMMITTEE MEMBERS Page Kohl, Hon. Herbert, a U.S. Senator from the State of Wisconsin... 2 Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, prepared statement............................................. 130 Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama.... 20 Specter, Hon. Arlen, a U.S. Senator from the State of Pennsylvania................................................... 1 WITNESSES Engler, John, Former Governor of Michigan, and President, National Association of Manufacturers, Washington, D.C......... 9 Maron, Barry J., M.D., Director, Hypertrophic Cardiomyopathy Center, Mineapolis Heart Institute Foundation, Minneapolis, Minnesota...................................................... 4 Mays, Donald L., Senior Director, Product Safety and Consumer Sciences, Consumers Union, Yonkers, New York................... 15 Panish, Brian J., Panish, Shea and Boyle, LLP, Los Angeles, California..................................................... 7 Schwartz, Victor E., Shook, Hardy and Bacon, LLP, Washington, D.C............................................................ 13 Steinbuch, Rob, Professor, University of Arkansas at Little Rock, William H. Bowen School of Law, Little Roxk, Arkansas.......... 12 Vandall, Frank, Professor, Emory School of Law, Atlanta, Georgia. 11 QUESTIONS AND ANSWERS Responses of John Engler to questions submitted by Senator Specter........................................................ 32 Responses of Barry J. Maron to questions submitted by Senator Specter........................................................ 39 Responses of Donald L. Mays to questions submitted by Senators Specter and Leahy.............................................. 44 Responses of Brian J. Panish to questions submitted by Senators Specter and Leahy.............................................. 53 Responses of Victor E. Schwartz to questions submitted by Senators Specter and Leahy..................................... 61 Responses of Rob Steinbuch to questions submitted by Senators Specter and Leahy.............................................. 76 Responses of Frank Vandall to questions submitted by Senators Specter and Leahy.............................................. 81 SUBMISSIONS FOR THE RECORD Center for Corporate Policy, Charlie Cray, Director, Washington, D.C, prepared statement........................................ 89 Claybrook, Joan, President, Public Citizen, Laura MacCleery, Deputy Director, Auto Safety Group, Public Citizen, and Rachel Weintraub, Director of Product Safety & Senior Counsel, Consumer Federation of America, Washington, D.C., joint prepared statement............................................. 102 Engler, John, former Governor of Michigan, and President, National Association of Manufacturers, Washington, D.C., prepared statement............................................. 114 Hester, Theordore M., King & Spalding, LLP, Washington, D.C., on behalf of Guidant Corporation, letter.......................... 128 Maron, Barry J., M.D., Director, Hypertrophic Cardiomyopathy Center, Mineapolis Heart Institute Foundation, Minneapolis, Minnesota, prepared statement.................................. 132 Mays, Donald L., Senior Director, Product Safety and Consumer Sciences, Consumers Union, Yonkers, New York, prepared statement and oral testimony................................... 137 New York Times, Stephen Labaton, March 10, 2006, article......... 149 Panish, Brian J., Panish, Shea and Boyle, LLP, Los Angeles, California, prepared statement................................. 152 Schwartz, Victor E., Shook, Hardy and Bacon, LLP, Washington, D.C., prepared statement and attachment........................ 179 Steinbuch, Rob, Professor, University of Arkansas at Little Rock, William H. Bowen School of Law, Little Roxk, Arkansas, prepared statement...................................................... 202 Terwilliger, George J., III, White & Case LLP, Washington, D.C., prepared statement and attachment.............................. 213 Vandall, Frank, Professor, Emory School of Law, Atlanta, Georgia, prepared statement and attachement............................. 246 DEFECTIVE PRODUCTS: WILL CRIMINAL PENALTIES ENSURE CORPORATE ACCOUNTABILITY? ---------- FRIDAY, MARCH 10, 2006 United States Senate, Committee on the Judiciary, Washington, DC. The Committee met, pursuant to notice, at 9:30 a.m., in room SD-226, Dirksen Senate Office Building, Hon. Arlen Specter, Chairman of the Committee, presiding. Present: Senators Specter, Sessions and Kohl. OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM THE STATE OF PENNSYLVANIA Chairman Specter. Good morning, ladies and gentlemen. The Senate Judiciary Committee will now proceed with our hearing on the subject of defective products, with a focus on whether the imposition in certain extraordinary circumstances of criminal penalties would promote individual and corporate accountability. The essential issue is that when an individual knowingly, maliciously, intentionally engages in reckless conduct which results in the death of another person, such conduct constitutes malice at common law and supports prosecution for murder in the second degree. The issue which the Committee will be exploring is whether that would be, as a matter of public policy, appropriate for legislation at the Federal level. I would have preferred to have held this hearing last Tuesday when it was originally scheduled, but the Judiciary Committee has had a very, very heavy workload and we were occupied with the immigration reform legislation, so we had to put it off. And the question was whether we put it off for several weeks or try to move ahead, and many witnesses were lined up and we thought we would do it on Friday, since we had an open date. Friday is not a very good day to hold hearings from the point of view of having Senators present, but it is a good day to hold hearings from the point of view of being uninterrupted because the Senate is not in session today, so there will not be votes, which frequently occur which delay the hearings. Senators characteristically return to their home States as soon as the Senate is not in session to take care of business in their home States. As a matter of fact, later today I will be back in Pennsylvania myself. We have heard that at least one other Senator plans to attend, and we will see what develops and there may be others who come in. The issue at hand came into very sharp focus many years ago with the Pinto case, where there were corporate documents which showed that the gas tank was placed in a dangerous position because it was cheaper to put the gas tank in that locale and to pay damages for injuries and deaths, that it would be a matter of corporate profitability. That case made a fair size impact on me personally. I was district attorney of Philadelphia at the time. There ultimately was a prosecution in that case by a local prosecutor in Indiana, I believe, and there was an acquittal. From all indications, the case was not handled as well as it might have been, certainly not as well as a Federal prosecution would be. Welcome, Senator Kohl. The problems continue at the present time with story just last week in the New York Times concerning the Guidant Corporation, where there was knowledge for 3 years that its heart defibrillator might short-circuit and fail after being implanted. The publication in the New York Times suggested that a number of patients might have died there, and the problem is as current as the Guidant case and we will hear some testimony on that today. In selecting the matters to be presented in the hearing, we necessarily have gone to some cases which are old cases, and they have been selected because they make the point. To the extent that this conduct continues at the present time is something which we will endeavor to determine. It is not our intent to create any further problems for any companies which are having tough times in a tough market. I think it not inappropriate to note that foreign manufacturers illustratively of automobiles would have liability. Even though the cars were manufactured out of the United States, where they are sold in the United States and injuries occur in the United States, that would be within the jurisdiction of Federal legislation. So as a competitive matter, it would balance out. Let me yield at this time to my distinguished colleague, Senator Kohl, of Wisconsin. STATEMENT OF HON. HERB KOHL, A U.S. SENATOR FROM THE STATE OF WISCONSIN Senator Kohl. Thank you very much, Senator Specter. I appreciate very much your calling this hearing today. It is an unfortunate truth that from time to time consumers are injured by products they purchase. Your bill tries to minimize the frequency of these injuries by punishing anyone who would knowingly sell unsafe items. That is an admirable and a serious approach to the issue, but not the only one. Another way to protect consumers is to let them know when the products they buy have done harm to others. This is the goal of a bill that I have supported for many years called the Sunshine in Litigation Act. This bill would curb the ongoing abuse of secret settlement agreements in Federal courts. The result of this abuse is to keep important health and safety information from the public. The problem is not hard to understand. Typically, an individual sues a manufacturer for an injury resulting from a product defect. The injured person has limited resources and faces a corporation that can spend an unlimited amount of money to delay and defend the case. Facing a formidable opponent, plaintiffs often seek to settle the litigation. In exchange for the award that they sought, the victim agrees to keep secret information disclosed during the litigation. While the plaintiff gets a respectable settlement, the defendant keeps secret the information about the defective product. Others eventually pay the price, as the public remains unaware of critical public health and safety information that could potentially save lives. The most famous case of abuse involved Bridgestone- Firestone tires. From 1992 to 2000, tread separations of various tires were causing accidents across the country, many resulting in serious injuries and even fatalities. Instead of acting responsibly, Bridgestone-Firestone quietly settled dozens of lawsuits, most of which included secrecy agreements. It wasn't until 1999 when a Houston public television station broke the story that the company acknowledged its wrongdoing and recalled 6.5 million tries. But by then, it was too late to prevent many unnecessary injuries and deaths which occurred. The case of General Motors fuel tanks also demonstrates the problem. An internal memo showed that GM was aware of the risks from crashes of trucks with side-saddle fuel tanks which eventually led to an estimated 750 fatalities. When victims sued, GM disclosed documents only under protective orders and settled these cases on the condition that the information remain secret. GM used this type of fuel tank for 15 years before it was discontinued. There are no records kept of the number of confidentiality orders accepted by the State or Federal courts. However, anecdotal evidence suggests that court secrecy and confidential settlements are prevalent. Beyond General Motors and Bridgestone-Firestone, secrecy agreements had real-life consequences by allowing Dalkon Shield, Bork-Shiley heart valves, Con Edison cable covers and numerous other dangerous products to remain on the market. The Sunshine in Litigation Act is a modest proposal that would require Federal judges to perform a simple balancing test to compare the defendant's interest in secrecy against the public's interest in health and safety information. Specifically, prior to making any portion of a case confidential or sealed, a judge would have to determine by making a particularized finding of fact that doing so would not restrict the disclosure of information relevant to public health and safety. Moreover, all courts, both Federal and State, would be prohibited from issuing protective orders that prevent disclosure to relevant regulatory agencies. Of course, important trade secret information could still be kept private. This legislation does not prohibit secrecy agreements across the board. It does not place an undue burden on judges or our courts. It simply states that where the public interest in disclosure outweighs legitimate interests in secrecy, then courts should not shield important health and safety information from the public. Mr. Chairman, letting sunshine in on these secret settlements would complement your legislation on defective products, and I hope that we can work together on this issue to protect consumers. Thank you, Mr. Chairman. Chairman Specter. Thank you very much, Senator Kohl. Senator Leahy, the Ranking Member of this Committee, could not be here today. When the hearing was rescheduled, he could not make it. He had other business in his State to attend to. But without objection, we will make his statement a part of the record. The first paragraph I think it appropriate to read briefly. Senator Leahy in his statement writes, quote, ``Today, we convene to discuss the merits of legislation that would provide Federal criminal penalties for the introduction of dangerously defective products into the stream of interstate commerce. This is important legislation that could protect millions of Americans and its potential is something we should carefully explore. Today's hearing is a good start, and I commend Chairman Specter for his efforts here.'' Our first witness this morning is Dr. Barry Maron, Director of the Hypertrophic Cardiomyopathy Center at Minneapolis Heart Institution Foundation, and was active in disclosures on the Guidant defibrillator case. Dr. Maron received his undergraduate degree from Occidental College, in Los Angeles, and his M.D. from Tulane University in New Orleans. By way of brief additional introduction, the New York Times just yesterday published a story accounting for certain events in this matter, and one worth noting specifically was a memorandum submitted by a consultant, Dr. Richard Fogus, who told the company that their decision to withhold data about device defects was a breach of ethical duty and has subjected patients to the risk of serious bodily harm or, beyond that, fatalities. Dr. Maron, thank you for joining us. The rule of our Committee is that there be 5-minute opening statements, and before you testify I would like to have all the witnesses stand and have the oath administered, which is the Committee's practice. Do each of you solemnly swear that the testimony you will give this Senate Judiciary Committee will be the truth, the whole truth and nothing but the truth, so help you God? May the record show that all have answered in the affirmative. Dr. Maron, the floor is yours. STATEMENT OF BARRY J. MARON, M.D., DIRECTOR, HYPERTROPHIC CARDIOMYOPATHY CENTER, MINNEAPOLIS HEART INSTITUTE FOUNDATION, MINNEAPOLIS, MINNESOTA Dr. Maron. Thank you, Chairman Specter, Senator Kohl. As you mentioned, my name is Dr. Barry Maron. I am a cardiologist, in Minneapolis, at the Minneapolis Heart Institute. Hypertrophic cardiomyopathy, also known as HCM, is a genetic form of heart disease and the most common cause of sudden cardiac death in young people, including athletes. Since 2000, I have promoted the implantable defibrillator as a preventive therapy for sudden death in hypertrophic cardiomyopathy, and with good reason, for we have demonstrated repeatedly that the defibrillator is life-saving by virtue of recognizing and automatically terminating lethal disturbances of heart rhythm. In 1999, I and my colleague, Robert Hauser, treated a 21- year-old student, Joshua Oukrop. He had a severe form of this disease and was at high risk for sudden and unpredictable death. We recommended that a defibrillator be implanted as a prophylactic measure in late 2001. The model is Guidant Prizm 2DR 1861. Three-and-a-half years after receiving his defibrillator, Joshua Oukrop died unexpectedly while on vacation in Utah. Analysis of the defibrillator by Guidant found that a short- circuiting defect caused the device to become electrically inoperative and to fail. When the defibrillator tried to issue a life-saving shock, electrical energy short-circuited and dissipated, and therefore did not enter Joshua's heart as it should have and he was unprotected and he died. Shortly thereafter, in a meeting with four Guidant executives, I learned that this precise problem had been known by the company for over 3 years, but only to Guidant and to any physicians or patients. It was obvious that Guidant believed that it was correct, and even prudent, to conceal all information related to such defibrillator defects. I was asked for my opinion on this strategy and I said I think this is going to be the biggest mistake you will ever make. They said they did not agree. Mr. Oukrop's reaction, the father: ``I told Joshua that the defibrillator was his best chance, that it would allow him to survive and live his life, and you are telling me that they knew all along?'' In fact, at that time Guidant did know. They had already documented 25 other similar short-circuited defibrillators and had already made adjustments in 2002 to newly manufactured defibrillators to correct the problem. Still, Guidant had not informed physicians, patients or the Government. Furthermore, and perhaps most disturbing, the company continued to sell old defibrillators known to be defective. Therefore, this death was not due to an unforeseen, random component failure, as the company once suggested, but, in fact, was a systematic, repetitive, and to some extent predictable problem that cannot be anticipated or monitored. In effect, Guidant had taken over the primary medical management of thousands of high-risk defibrillator patients without their permission. It was the executives who were practicing medicine in this situation and not the physicians. Only because the facts of this unfortunate situation were documented in a series of New York Times articles by Barry Meier have these problems in the defibrillator industry become evident to all. In fact, these circumstances ultimately led to the largest recall of defibrillators and pacemakers in the 25- year history of this industry. The Guidant affair is about patients and their physicians, and the overwhelming importance of informed consent and full disclosure to patients through their physicians. Patients have the right to know any information that could potentially impact their risk for injury or death. It simply is not ethical to withhold such information. Patients must have this autonomy, the opportunity to make important medical decisions in conjunction with their fully informed physicians. It is also important to establish what the Guidant affair is not. It is not a statistical issue. It is not about percentages and probabilities, because patients are not numbers. They are individuals with a reasonable expectation that industry will communicate openly and accurately with their physician. I think most observers agree that that did not happen here. One of our patients told a Guidant executive, quote, ``It is just not your call to make,'' unquote. Most of the cardiovascular community, I think, would agree with that. It is time for greater oversight, greater transparency and communication between industry and the physician community in order to restore the trust of patients in powerful medical devices such as the implantable defibrillator. To make it criminal to knowingly sell defective defibrillators would, I think, have the desired effect on the willingness of companies to make full disclosure. However, such a bill would have to be drawn narrowly enough to avoid a potentially chilling effect on law-abiding companies whose products could, in fact, have occasional random defects. Thank you for the opportunity to tell this story to the Committee. Chairman Specter. Thank you, Dr. Maron. We had extended an invitation to Guidant to come in and participate in the hearing so that they would have an opportunity to respond to what Dr. Maron has testified to. Ordinarily, we await the conclusion of the entire panel before Senators question and we will follow that as a generalization here today, but in an effort to get Guidant's point on the record contemporaneously with your testimony, Dr. Maron, I note that your statement says that Guidant executives believed that it was correct, and even prudent, to conceal all information related to such defibrillator defects. To state their position to the extent you can, when you say that they believed it was correct and even prudent, what factors would lead Guidant to that conclusion? Dr. Maron. Yes. That argument includes the idea that they did not want to frighten the general public, and part of that would have been that--and this is their position, obviously, not mine--patients would have their devices removed, these potentially defective devices, and replaced with other devices, and that would place these patients at undue risk. The risk I think they are talking about there is the small risk of infection which is treatable. It is less than 1 percent, and every patient who has a defibrillator must have their device removed and replaced every 5 years, on the average, anyway. So the argument is a little bit weak in the sense that they are suggesting a danger by replacing defibrillators that would have to be replaced anyway as a course of the standard management of their disease and the defibrillator. Chairman Specter. Thank you, Dr. Maron. [The prepared statement of Dr. Maron appears as a submission for the record.] Chairman Specter. Our next witness is Mr. Brian Panish, lead plaintiff's counsel in the products liability case against General Motors involving a defective 1979 Chevrolet Malibu fuel tank that caused serious bodily injury to several people. Mr. Panish received his undergraduate degree from California State University and his law degree from Southwestern University Law School. Mr. Panish, you are going to be testifying about a case which is admittedly an old case, and I think that ought to be plain on the record so that those who are listening to it understand that these events happened a long while ago and do not necessarily mean that General Motors is engaging in the same conduct at the present time. But the case did receive considerable public attention because of the underlying facts and it was decided that this is a case which had value for a public understanding of the nature of the problem. Thank you for joining us and we look forward to your testimony. STATEMENT OF BRIAN J. PANISH, PANISH, SHEA AND BOYLE, LLP, LOS ANGELES, CALIFORNIA Mr. Panish. Well, thank you. Good morning, and I thank the members of the Committee for inviting me to speak here today. This issue is an issue extremely important to the health and safety of all Americans, and I am pleased that the Senate Judiciary Committee is taking the time to examine it in detail. I am also encouraged by your willingness, Senator Specter, to consider additional legislative steps that would complement the civil justice system in helping to deter corporations from selling products that they know are dangerous. I look forward to working with the Committee on this issue. I have seen firsthand the devastating impacts that corporate deceit can have on a family. I represented Patricia Anderson and her four children in a case against General Motors that went to trial in 1999. Chairman Specter. That went to trial in 1999? Mr. Panish. Was the trial, yes, sir. Patricia and her children suffered horrendous and disfiguring burn injuries by General Motors because General Motors put a car on the market, the Malibu, that it knew contained dangerous defects related to the placement of the fuel system. If the tank had been designed differently, the vehicle would not have exploded when it was rear-ended and the children would have suffered only minor injuries and walked away. On Christmas Eve, Patricia and her children were returning from church in their 1979 Malibu. As they approached an intersection, their vehicle was rear-ended and the gas tank, due to its close location to the bumper, was punctured, resulting in leakage of fuel and a huge explosion. Patricia saw smoke and flames and heard her children asking Jesus to help them. Her 8-year-old daughter Kiontra tried to shield her younger brother and sister from the flames with her body. As a result, she received horrific burn injuries. Several witnesses immediately rushed to the vehicle trying to free the passengers, but the door knobs were too hot to open the doors. So they used a shopping cart to smash the window to remove the passengers. As a result of the fire, Patricia and her children suffered third-degree burns over large portions of their bodies and underwent numerous skin-grafting surgeries which involved taking healthy skin from other parts of their bodies and grafting it to the unhealthy skin that had been burned. The burns resulted in loss of limb, severe scarring and significant deformities. The scarring resulted in serious pain to the children as they grew, causing future surgeries, loss of range of motion and serious psychological damage. General Motors knew what was going to happen. What makes this horrible story more outrageous is that the injuries were preventable. Before General Motors sold the gas tank in the Malibu, they knew that the placement was dangerous. The evidence revealed that they knew a safer location of the fuel tank existed, that they had performed cost/benefit analysis comparing the cost of human life in a dollar amount versus the cost of redesigning the fuel system. They knew that its testing was woefully inadequate and they made a conscious decision to sell a product they knew was dangerous and could cause death or serious injury. At trial, we established and the evidence proved that General Motors knew for several decades that a safer design existed. As far back as 1961, Ed Cole, a design engineer who later became president of General Motors, had patented an over- the-axle tank that had been proposed that GM had designed prototype vehicles for and had tested. GM again had engineers perform cost/benefit analysis evaluating the location of the fuel system, and in this case less than 11 inches from the rear bumper, in a memo which later became known as the Ivey memo, and I have provided copies. Mr. Ivey determined that about 500 deaths per year were caused by fuel-fed fires and they, General Motors, would spend an average of $200,000 per fatality. Mr. Ivey further concluded that based on the number of vehicles on the roadway, General Motors would spend approximately $2.40 per vehicle to prevent fuel system-fed fires. The amount to redesign and place the gas tank in the alternative location cost $8.59. At trial, the chief design engineer of fuel systems testified that performing cost/benefit analysis of human life was despicable. Finally, in 1983, this memo came to light and Mr. Ivey was interviewed by General Motors lawyers and admitted that, in fact, he had performed this memo for his superiors, that he was directed to perform it, and the jury was able to hear the cold, calculated decisions that General Motors made. Patricia Anderson and her children's lives will never be the same. Perhaps your attention to this issue will avoid similar outcomes for other families. This case illustrates the vital role the civil justice system plays in both revealing facts that are important to the public's health and safety and attaining some measure of justice for those families injured or killed due to the deliberate actions of others. Sadly, this is not the only example of corporate executives choosing to risk the lives and futures of families like the Andersons for a few extra dollars of profit. Not too long ago, we faced the Ford-Firestone crisis. I encourage any additional steps this Committee can take to see that only safe products are put on the market and that if a product well on the market is determined unsafe that the manufacturers do the right thing and remove it from the market. The threat of criminal sanctions could help corporate execs make better and safer choices. I thank you for your time and welcome any questions you may have. Thank you. [The prepared statement of Mr. Panish appears as a submission for the record.] Chairman Specter. Thank you very much, Mr. Panish. Our next witness is the former Governor of the State of Michigan, Mr. John Engler, now the President of the National Association of Manufacturers--three-term Governor, actually, from Michigan, with extensive experience as majority leader of the Michigan State Senate before that. He has his undergraduate degree from Michigan State and his law degree from Thomas Cooley Law School. We welcome you back to the Judiciary Committee, Governor Engler. You were here to testify about the asbestos crisis, which has caused serious injuries to tens of thousands of people and resulted in 77 bankruptcies and an enormous drain on the economy. I mention that because it is relevant as to your contribution and help to the Senate, and also to say that we are still working on asbestos. So you may be recalled at a later time. But today you are here representing the National Association of Manufacturers and we welcome you to give another perspective on this issue. STATEMENT OF JOHN ENGLER, FORMER GOVERNOR OF MICHIGAN, AND PRESIDENT, NATIONAL ASSOCIATION OF MANUFACTURERS, WASHINGTON, D.C. Governor Engler. Thank you very much, Mr. Chairman. I am delighted to be back, and I also want to compliment you on the work that you have been doing this week on immigration, also a very important topic. We are grateful for you and the Committee. Mr. Chairman, the National Association of Manufacturers is the Nation's largest industrial trade association, representing small and large manufacturers in every industrial sector in all 50 States, including Senator Kohl's State of Wisconsin. Through our direct membership and our affiliated organizations, the Council of Manufacturing Associations, the Employer Association Group and State Associations Group, we represent more than 100,000 manufacturers. We are grateful for the invitation and the opportunity to testify on this very important question: Would it be wise to make the act of knowingly allowing a defective to be introduced into the stream of interstate commerce a criminal offense? While this proposal may be well-intentioned, the NAM believes it is fraught with many unforeseen and potentially counterproductive consequences. The National Association of Manufacturers does not defend any manufacturing employee who would intentionally introduce a defective product into the marketplace. However, we are here today because of our concern about the real-world and practical difficulties of criminalizing what often are subjective judgments. There already are criminal statutes at the disposal of a U.S. Attorney to address this kind of behavior. This relatively new idea of criminalizing product liability has been explored by Congress at least twice in the recent past, in 2000--this has been mentioned already--when the Transportation Recall Enhancement, Accountability and Documentation Act was passed. That was the Firestone-Ford matter. More recently, a criminal penalties provision for maritime products actually showed up in the Senate-passed Coast Guard Authorization Act of 2004. That language didn't have the chance to come before this Committee, was not publicly debated, ended up being modified in conference and ultimately tied to objective criteria. In both cases, the NAM felt that the committees with jurisdiction over criminal penalties--and that would be the respective Judiciary Committees of the Senate and House--needed to explore the issue more carefully. Here is why. Thousands of decisions are made in a manufacturing company everyday by the R and D staff, by the engineers, product and quality personnel, assembly line and factory floor workers. Defining ``product defect'' is one of the most complex and varied aspects of product liability, as evidenced by the numerous variations of product defect standards among the States. At the same time, the legal concept of what constitutes a criminal act is sort of being whittled away by the courts. Imagine the dilemma faced by a manufacturer who keeps very precise records about products that are returned. What if one or more proved to be defective? Even if the defect rate is extremely low, would the manufacturer knowingly be placing a defective product into the stream of interstate commerce simply because the product line is not one hundred-percent defect- free? Are we seeking to hold a manufacturer criminally liable for the one-in-a-million problem? By the same token, would criminal intent be established if there was a warning label and that warning label was not clear enough for every single consumer user of the product to understand? Every product can cause injury under some circumstances. Justice Breyer wrote, ``Using this vivid example, over the next 13 years we could expect more than a dozen deaths from ingested toothpicks,'' end quote. If product liability violations were criminalized, actual victims also might find themselves forced to wait out the criminal justice system. Mr. Panish's example of a trial that took place in 1999-- that would be a long wait, almost as long as some of those asbestos cases, Senator. But no judge presiding over civil litigation is certainly going to force an individual involved to forswear his or her right to Fifth Amendment protections. The criminalization of product liability law could impede safety, as companies delay improving products for fear it will be seen as an admission that their products are dangerous. Poorly conceived legislation could end up forestalling fact-finding, including how and why the problem occurred. It could also worsen the U.S.'s comparative advantage, or in this case disadvantage, in legal costs which, expressed in GDP terms, are twice as high as in other industrial nations that we compete everyday with. As you consider this matter, I hope that this Committee will remember the genesis of punitive damages in the common law is that they were to serve as a substitute punishment and deterrent for acts that would be difficult to criminalize. We are pleased that the Judiciary Committee is studying the issue. We hope the Committee will carefully weigh the arguments and conclude that the proposal to criminalize product liability as prepared today is not a good idea. We are happy to answer questions, Mr. Chairman. [The prepared statement of Governor Engler appears as a submission for the record.] Chairman Specter. Thank you very much, Governor Engler. Our next witness is Professor Frank Vandall, a professor at the Emory School of Law. He has written extensively on torts, product liability and design defects of consumer products. He received his undergraduate degree from Washington and Jefferson College, near Pittsburgh, and his law degree from Vanderbilt University. Thank you for coming to Washington today, Professor Vandall, and we look forward to your testimony. STATEMENT OF FRANK VANDALL, PROFESSOR, EMORY SCHOOL OF LAW, ATLANTA, GEORGIA Mr. Vandall. Mr. Chairman, Senator Sessions, it is my pleasure to be here. I would like to discuss with you two concepts--preemption and non-enforcement of the law. Preemption is a recent development and holds that Federal statutes or regulations may preempt a State statute, regulation or the common law. Preemption emanates from the Supremacy Clause of the Constitution, Article VI, section 2. My reading of the key cases--Cipollone v. Liggett, Geir v. American Honda and Medtronics v. Lohr--is that the Federal courts can decide to preempt State law at will. The goal in a preemption case is to discern the intent of Congress. Therefore, it is on a case- by-case basis and there is no black letter law of preemption. The bill as drafted leaves open the risk that it may be interpreted to preempt State products liability law. Non-enforcement refers to the issue of whether or not a particular written law will be enforced. Because of insufficient funds and a shortage of personnel in the investigative and prosecutorial levels, there is a real risk that the Act will not be enforced. People respond to the level of enforcement, not the written law. This can be shown by driving on the interstate in Atlanta, Georgia. The speed limit is 70 miles an hour. The people travel at 80 miles an hour, until they see a police car. Then they slow down to 70 or 65. My concern is the interplay between preemption and non- enforcement. Once the bill is passed, it is likely that the courts will hold that it preempts State products liability law because it occupies the field. This would be a tragedy because civil products liability law is the cheap and effective method of deterring defective products. Further, because of the high cost of prosecuting corporate executives and social realities--that is that the judges and the CEOs come from the same class, have similar educations and perhaps are golfing buddies--the Act will not likely be enforced. The reality is that corporate executives and employees will not likely be prosecuted. The result will be that although the Act will not be enforced, it will be interpreted to preempt State products liability law. The solution is easy, and that is that the bill should clearly state that Congress does not intend to preempt State statutes, regulations or the common law with this Act. In conclusion, I am in favor of the bill if the phrase ``Congress does not intend to preempt State law'' is inserted. I am opposed to the bill if it could be interpreted to preempt State products liability law. I am concerned that the Act will not be fully enforced. In my opinion, a better solution than the bill would be to shore up and support the civil products liability system. The product system police, the litigation attorneys, are trained and ready. Thank you. [The prepared statement of Mr. Vandall appears as a submission for the record.] Chairman Specter. Thank you very much, Professor Vandall. We now turn to Professor Robert Steinbuch, from the University of Arkansas School of Law, formerly counsel to Senator Michael DeWine, a distinguished member of this Committee, and Professor Steinbuch was special counsel to the Justice Department at one time. He received his undergraduate and master's degrees from the University of Pennsylvania, and a law degree from Columbia. The floor is yours, Professor. STATEMENT OF ROB STEINBUCH, PROFESSOR, UNIVERSITY OF ARKANSAS AT LITTLE ROCK, WILLIAM H. BOWEN SCHOOL OF LAW, LITTLE ROCK, ARKANSAS Mr. Steinbuch. Thank you, Mr. Chairman, Senator Sessions. It is an honor to be back before this Committee. Currently, only corporations are exposed to civil liability for risky corporate behavior. Corporate executives do not face a comparable liability. Corporate actors, however, receive the benefits of risk-taking by corporations. These corporate actors externalize the costs of risky behavior, but internalize those benefits. The result is excessively dangerous behavior and unsafe outcomes. Your legislation, Senator, will correct this. Your legislation will correct the incentive asymmetry that is created by this dual system of liability. It places non- transferrable costs directly on corporate actors. Your legislation will create appropriate incentives for data collection and investigation, and appropriate incentives for disclosure. A core premise underlying the efficient market theory is that adequate information is disseminated to the public. Your legislation will pursue this goal. Senator, if Sarbanes-Oxley can impose criminal penalties on corporate actors for financial wrongs, surely we can have the same standard for acts that kill. There have been several criticisms levied against your legislation. First is that it is hard to define a defect or an excessively dangerous product. Let's be clear about what we are talking. There are many products on the market today that are dangerous, but not excessively dangerous. There are many products on the market today that are dangerous, but have no defects. More Americans die in car accidents over 2 years than died in the whole Vietnam war, but cars are not inherently defective. They have an inherent danger. That is acceptable. A defect is defined in several ways; as Mr. Panish described, one refers to the introduction of a risk that is beyond what is already in the marketplace. That is unacceptable. There are several examples of this, some discussed already here. You mentioned the Ford Pinto case, a well-known case; the Dalkon Shield case, where the company allowed women to be subjected to defective products that injure or kill for years before it was disclosed. Also, Senator, I am involved with the Chest Pain Society, and through this work I have come to learn a little bit about heart attacks. If you are having a heart attack, you go to a hospital. You go because you want an angioplasty. You want that blocked blood vessel to be opened. Well, there are many hospitals that don't have this capability, but they want your business, and so they advertise the ability to treat chest pain patients. Mather Memorial Hospital in New York is one such hospital. They put out this flyer which is entitled ``Community News.'' It looks like a news report. It contains articles looking like news reports. It is not a news report. It is an advertisement. In that advertisement, they say patients are seen and evaluated within moments of their arrival for chest pain and appropriate treatment is begun immediately. The problem with this advertising, Senator, is that they can't do angioplasty. What is the appropriate treatment? The American Heart Association and the American College of Cardiology says it is angioplasty, but this hospital advertises for your business. That is misleading. That causes death. Another concern raised about your bill, Senator, is that there may be rogue prosecutors and law enforcement pursuing these cases for their own personal interest. Well, I guess that is a possibility. I do know, Senator, that you as well as Senator Sessions were both prosecutors, and I trust in the public service of people like you to do the right thing. There is also the suggestion that criminal prosecution would delay civil recovery. That is simply wrong. Civil cases run parallel to criminal cases. Indeed, any plaintiff's attorney worth his salt wants the criminal case; it helps his case. Senator, I thank you for listening to my remarks and I am open to any questions. [The prepared statement of Mr. Steinbuch appears as a submission for the record.] Chairman Specter. Thank you very much, Professor Steinbuch. We now turn to Mr. Victor Schwartz, who chairs the Public Policy Group at Shook, Hardy and Bacon, and has been co-author of the most widely used tort case book in the United States. He has an undergraduate degree from Boston and a law degree from Columbia. Mr. Schwartz has appeared before Congressional committees with some frequency over the past couple of decades, to my knowledge, and he is very, very experienced in this field. We welcome you back, Mr. Schwartz. STATEMENT OF VICTOR E. SCHWARTZ, SHOOK, HARDY AND BACON, LLP, WASHINGTON, D.C. Mr. Schwartz. Thank you, Senator, and good morning to you, Senator, and to Senator Sessions. I have been pleased to be invited here today. The U.S. Chamber Institute for Legal Reform, thousands of members, and the American Tort Reform Association asked me to be here on their behalf. But they have heard me before, so they said they are not responsible for anything I say. I do want to address something in this proposed bill because it it relates to a topic that I have learned from the people who taught me law, Bill Prosser, and for 30 years Dean Wade, my coauthor. They first attempted to define ``defect'' in Restatement of Torts (Second), where they said a defective product was unreasonably dangerous to the user or consumer. That is what they said. This definition of defect spawned more case law than any other words in the history of torts, conflicting all over the place. What is a design defect? What is a warning defect? Case books, law books, thousands of pages. Can such a word be used to describe a crime? You can know something, and a knowing standard is a very important standard, but if what you know is a non-descriptive word, it really isn't fair to somebody because they have no notice of what the crime is. Senator Sessions, you pointed that out in the TREAD Act when that was going through and helped modify it so there wasn't a non-descriptive word used for a crime like ``defect.'' From 1992 to 1998, I worked with the brightest law professors in America. I learned then what I saw today: you can have two law professors and four opinions. But I also learned that the trouble of defining ``defect'' persists. We tried to define ``defect.'' It is in Restatement of Torts (Third). We did a better job, I think, because of the 30 years of experience that we had, but it is still an opaque concept. Just take the recent Vioxx cases. In the first case, Vioxx manufacturers lost a $253 million judgment under ``defect.'' In the second case, in Atlantic City, a jurisdiction that is friendly to plaintiffs, Merck won. In the third case, which was in Texas, there was a hung jury. In the next case, which was the same case moved over to Louisiana, there was a defense verdict. I don't think we want the criminal law to depend on standards like that, a roulette wheel of that type. The bill also tries to talk about comparative safety, and that is an important concept, but any product that is made today has a degree of safety and you usually can find a product that is safer and less safe. The bill suggests that the one on the bottom of the food chain is going to be criminally viable. But if they are, then you go up one more. How many safety features are on a product may depend on the price of the product. If you buy a toaster oven for $100, it is going to have more features than one for $20. But this would, apart from searching for something that I think is very hard to find, and that is a defective product, cause manufacturers to shun less expensive products that do the job, but really are not dangerous at the level that deserves punishment. And let me mention punishment. We have punitive damages. If anything, there is over- heating in the system now. Just as Sandra Day O'Connor said, punitive damages have run wild in this country and people don't know when they are going to be punished or how they are going to be punished or where. It is over-heated at this point, and that is why constitutional constraints have been put on punitive damages. It is really not a wise thing right now to add yet another vague alternative and make it criminal. I did want to add to the record an article by Professor Wheeler, who tried the Pinto criminal law case. I didn't append it to my testimony because I didn't want a lot of paper sent up here, but I think you would find it informative. In a nutshell, this is an idea that really does sound good. We don't want manufacturers to be killing people, but to put a crime based on the topic of defect is putting a crime based on a fog. And we don't want our Department of Justice to be there where instead of doing their job, you have good friends, like one who testified earlier, kind of waiting outside to see if there is going to be an indictment, because even if there was the slightest hint of an indictment, I assure you there would be a product liability pinata lawsuit following that that no one has ever seen before. I thank you for your time. I look forward to your questions. [The prepared statement of Mr. Schwartz appears as a submission for the record.] Chairman Specter. Thank you very much, Mr. Schwartz. Our final witness is Mr. Donald Mays, Senior Director for Product Safety and Consumer Services at Consumer Reports. He received his undergraduate and master's degrees from Manhattan College. Thank you for joining us today, Mr. Mays, and we look forward to your testimony. STATEMENT OF DONALD L. MAYS, SENIOR DIRECTOR, PRODUCT SAFETY AND CONSUMER SCIENCES, CONSUMERS UNION, YONKERS, NEW YORK Mr. Mays. Good morning, Chairman Specter and Senator Sessions. I am Donald Mays, Senior Director of Product Safety and Consumer Sciences for Consumers Union, publisher of ``Consumer Reports.'' Thank you for providing me the opportunity to come before you today to discuss ways to improve the quality and safety of the consumer marketplace and support all efforts to achieve this important goal. The ultimate question before the Committee today is whether or not criminal penalties will ensure corporate accountability. Will the threat of jail time serve as an effective deterrent in preventing dangerous products from reaching the hands of consumers? Will it force manufacturers to think twice? Would such legislation have prevented Ford-Firestone? Before we answer those questions, I believe that it is critical to look at why legislation targeting marketplace accountability is necessary for the consumer interest, which, based on my experience, I believe to be very much the case. My career has focused on product safety and performance testing for manufacturers and retailers, as well as for consumers. I believe I bring to the floor a unique perspective of someone who understands the competitive pressures of getting new products to the marketplace as quickly and as economically as possible. And from a consumer perspective, I understand the need to trust that all the products in the marketplace are produced with a high degree of integrity and safety. My breadth of experience includes work in laboratories and factories both here and abroad. It has exposed me to countless examples of suppliers that failed to diligently build safety into their products. What is more disturbing are cases that I have seen where manufacturers and retailers have continued to sell unsafe products, despite the emergence of a clear hazard pattern that results in serious injury. My product safety work and expertise have led me to six overall conclusions that I would like to share with the Committee. No. 1, many injuries are avoidable if adequate pre- market safety testing is conducted. Two, manufacturers do not always react responsibly when informed that their products could potentially cause a repeated pattern of death or injury. Three, due to changes in the global marketplace, consumers face increased risk from defective products. Four, there is a lack of compliance with voluntary safety standards. Five, there is inadequate enforcement authority, resources and activity by Federal agencies. And, six, civil penalties may not be an effective deterrent in preventing unsafe products from being in the marketplace. An example: a $750,000 civil penalty levied against Wal-Mart in 2003 for failing to report safety hazards with fitness machines cost the company an equivalent of their sales rung up in only 1 minute and 33 seconds. So, clearly, Consumers Union strongly believes that the consumer marketplace does, in fact, need greater accountability. Consumers Union supports the introduction of legislation clearly designed to deter company employees with decisionmaking authority from knowingly jeopardizing consumer safety. And on this point, please let me be clear. We understand that any company can make a mistake, but it is what companies do after they have taken the time to do their due diligence and establish that they have a defect that could likely cause bodily injury or death that should be the focus of this bill. If companies don't go public and they continue to sell their defective products, then the individuals responsible should be punished to the fullest extent possible. We believe the language of any legislation should be targeted so that responsibility cannot be avoided by company representatives who have the power to ensure that unsafe products are not marketed. In addition, knowledgeable employees who fail to pass along this information to appropriate government agencies should be held criminally responsible. Without this important information, government watchdog agencies are ineffective. Furthermore, we believe the scope of any bill should be broad enough to underlie the entire marketplace and include not only traditionally manufactured products, but also vehicles, foods and drugs. A company representative that knowingly allows the introduction of tainted meats or hazardous pharmaceuticals to the market should be just as culpable as manufacturers that produce unsafe vehicles. We believe that the triggers for determining when a product is defective must be clearly defined and that an appropriate definition of ``defective'' is when a product could potentially cause a repeated serious injury or death. Finally, this legislation should be expanded and address head-on how a company whose employees are prosecuted under the law must deal with removing their defective product from the marketplace. While it sends a strong message to make corporate officials responsible for their misdeeds, it is also important to take timely and effective measures to inform and assist consumers who still have the unreasonably dangerous product in their home. To prevent future death and injury, the product itself should also be placed behind bars so that it cannot cause anymore harm. Therefore, we urge you to consider expanding corporate duties to include an intensive effort on the part of the manufacturer to get the defective products off the market. Companies should at least be required to spend advertising dollars to inform consumers about their defective products with as much splash and sophistication as they spend on marketing it in the first place. Effective legislation to ensure responsible corporate behavior must focus on appropriate liability in a court of law and accountability in the court of public expectations. I thank the Chairman and other members of the Committee for the opportunity to testify and I look forward to answering questions. Thank you. [The prepared statement of Mr. Mays appears as a submission for the record.] Chairman Specter. Thank you very much, Mr. Mays. We will now proceed with 10-minute rounds of questions by the Senators on the panel, Senator Sessions and myself. Beginning with you, Mr. Mays, you made reference to a case involving Wal-Mart. What are the facts of that case? Mr. Mays. Wal-Mart continued to sell some exercise devices in their stores even after they knew that they were causing injury to customers who were actually trying the equipment out in their stores. Their failure to report that information to the Consumer Products Safety Commission, as required by Section 15(b), resulted in a civil penalty of only $750,000. Chairman Specter. Are there many similar matters called to the attention of the Commission? Mr. Mays. There are many similar matters. Failure to report incident data to the Commission is probably the most common cause of civil penalties. Chairman Specter. Mr. Schwartz, do you think that the possibility of a criminal sanction would have any effect at all on judgments of corporate officials in evaluating safety precautions which are expensive, contrasted with the evaluation of what their damages would be if the safety precautions are not undertaken? Mr. Schwartz. That is a good question and it does call for speculation, but I don't think so. I think that right now they can lose their jobs and they can lose their market share completely on a product once it is branded in the product liability system as being bad. It takes some time, and that threat, potentially millions and billions of dollars, is sufficient. I think if there are additional penalties in the CPSC, that may be needed. That is a different question as to whether you introduce something that is very vague, very hard to understand, and illusory to kind of grab onto. So I don't think it will. Specific penalties, sir, that would be very clear and easy to understand might be needed in some areas, and they may help proper decisionmaking. Chairman Specter. In what areas? Mr. Schwartz. Well, let's take the CPSC. If there isn't proper reporting of defective products to the CPSC, current penalties may be insufficient. People have a reason to know when they are supposed to report to the CPSC. Chairman Specter. Those penalties go against the company, not the individuals. Mr. Schwartz. That is right. The separation of individuals and the companies is nothing that I have seen in my practice in 30 years. They are the company. Chairman Specter. You think there would be no difference between an impact of a decisionmaker, say a chief executive officer, if he or she faced criminal sanctions, contrasted with the punitive damages in a civil case which would be awarded against the company and a cost really to the shareholders? Mr. Schwartz. As the appendix to my testimony shows, there are criminal sanctions for very serious acts by individual executives, and State attorneys general have power, which you would know, to go after people personally if they have the evidence that they have done something criminally wrong. Chairman Specter. On defects in products? Mr. Schwartz. Well, not on defects in the products, and that is, I guess, the core of my testimony. ``Defect'' is one of those words that we think we know what it means, but not when it gets down to actually defining it, it is hard enough to define it in tort law. It is one of those words that we think, ah, I know what that means, like we may think we know what a reasonable person is in tort law. Chairman Specter. I take it your answer is no. Mr. Schwartz. Well, I began with ``no,'' but then you wanted to get me to ``yes,'' so I went back to ``no.'' Chairman Specter. I didn't hear a ``no.'' If I had heard a ``no,'' I would have moved on to the next question. The question isn't whether there are some penalties scattered through the State law books. The question is whether there is any real program which deals with defects. And I will use that word; I think we can define it. I think there are many terms that are difficult to define. You started to move on to the definition of ``reasonable.'' There are tens of thousands, hundreds of thousands of cases written on it, but on individual cases we deal with it. That is why, Mr. Schwartz, I come back to the question as to whether the existing laws which you refer to involve products, and your answer to that was no. Mr. Schwartz. Well, the product liability laws are amazingly strong, over-strong, in my view, and this separation of somehow an executive, because he may not feel personally that he is going to go to jail, needs additional deterrence I have answered. I think when people are working in the companies--I work with them every single day of my life--they are thinking carefully about what decisions they are making, what warnings are to be on products. I have spent hundreds of hours on this and I don't see the need for any additional criminal deterrence to get to the right decision. That is just based on my experience. Chairman Specter. Well, summarize for us again what are existing criminal deterrents. Mr. Schwartz. Well, there are existing criminal laws on manslaughter, negligent homicide and other provisions, and they are spelled out more carefully in the appendix to my statement. But I think that the power of---- Chairman Specter. But those don't refer specifically to products. Mr. Schwartz. No, they don't, but they can capture somebody who has knowingly and willfully tried to intentionally kill another person. I mean, those words we understand. We know what those words mean. We have always been kind to one another and we just happen to differ here, but the tort law classes--I was thinking of Fleming James, who may have been your teacher back at Yale. Chairman Specter. He was. Mr. Schwartz. In tort law classes, they will say, ``Well, what about this? What about that? '' It is all vague. You step over into the criminal law and then there are very precise rules that govern conduct, and I think the two worlds shouldn't be put together. Chairman Specter. When you describe the sequence of events, including manslaughter, those are not available to the Federal prosecutor. Mr. Schwartz. Well, there are State prosecutors and State tort laws. I don't see a need for Federal intervention and the Department of Justice getting into the area of defective products. Chairman Specter. I take it your answer then to my question is they do not apply for Federal prosecutions. Mr. Schwartz. That is right. Chairman Specter. OK, we got there. Dr. Maron, tell us a little bit about the defibrillator. How does it work? What is its structure? What are the functions? Dr. Maron. Well, it is a sophisticated device that has been in the marketplace for 25 years that is intended to---- Chairman Specter. And what happened to your patient? Dr. Maron. Well, what happened was the device short- circuited, literally, and therefore the electrical energy that was intended to go into the heart to defibrillate, to restore normal rhythm, did not. It was dissipated. As a consequence, it was a non-functioning device at the precise moment that it was intended to function and was implanted for that reason. Chairman Specter. And did Guidant, the manufacturer, know about that kind of a defect? Dr. Maron. Yes. At the time of the death, they had 25 other examples, including 4 near-deaths, with precisely the same defect, the short-circuiting. Chairman Specter. How do you know that Guidant knew that? Dr. Maron. They told us. It is a matter of record. There is no dispute. Chairman Specter. Professor Steinbuch, you mentioned the Dalkon Shield case. In passing, could you amplify what the facts were in the Dalkon Shield matter? Mr. Steinbuch. Senator, I am not an expert on that case, but I can tell you that the company put out a product for women to use, an IUD, that turned out to be severely flawed. It made women much more prone to infection, and then the company discovered this defect and did not disclose it to the public. And many women were injured, and I believe some women died as a result of this product. Chairman Specter. And what were the facts, as you understand them, with respect to the knowledge on the part of the A.H. Robins Company which manufactured the Dalkon Shield IUD? Mr. Steinbuch. Well, I think it is the same issue that Dr. Maron just spoke about, and this is the same issue that pervades product defect cases. Companies discover that there is a defect. They have complaints and the complaints are processed and they are analyzed and they are evaluated. And they don't share this information with the public. They don't allow the public to make these choices. Today, we live in a complex world where a strict application of the concept of caveat emptor is no longer appropriate. Chairman Specter. My time is almost up, so I want to come to a core question. Do you think the response from corporate executives would be different in notifying in the public, as you put it, if a potential criminal sanction was present? Mr. Steinbuch. Absolutely, Senator. Corporate tenure has been on the decline. People move from company to company, and the response of civil liability often comes after corporate actors leave individual corporations. Putting the responsibility on them criminally will carry along with them wherever they are and their actions will reflect that. Chairman Specter. Thank you very much, Professor, and I will turn now to my distinguished colleague, Senator Sessions. By way of a brief introduction, you might be interested to know that yesterday at this time we had the tables arranged differently and we had a dozen Senators in this room going over a 300-page statute on immigration reform. And one of our most active participants was Senator Sessions, who had an array of amendments, and we went through them one by one. We did our best to focus on an issue and, when we had a Committee consensus, to move on so that we could have some prospect at some time of finishing that bill. One of the most interesting moments that Senator Sessions and I were both involved in was a complex amendment offered by Senator Feingold which no one understood. I won't say Senator Feingold didn't. You would have to examine the transcript. But the way we function is we have papers and we have assistants behind us and when we come to a question that we don't know the answer to--and I know this will be hard for you to believe that there are some questions we don't know the answers to--we turn to our assistants. And the communication is not very good on these complex questions, and we had gone around for about 30 minutes on an issue and we were getting nowhere. And as Chairman, I set the question aside until we could find out what we were talking about. We were analogizing it to Charlie McCarthy and Edgar Bergen, with the staff assistants trying to tell us what was happening here. But it just wasn't working, so we moved on. That is what you call a 1- minute digression. Senator Sessions. STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM THE STATE OF ALABAMA Senator Sessions. Thank you, Mr. Chairman, and you have done a good job with immigration. It is a very difficult, difficult issue and people have some various views about it and it is important. You have also moved the asbestos bill, which is also hugely important. Some of these witnesses are aware of that or have even testified with regard to that. We have had the PATRIOT Act, a Supreme Court Justice, and what else this year? Chairman Specter. Class action. Senator Sessions. Class action. Chairman Specter. Bankruptcy. Senator Sessions. Bankruptcy. Chairman Specter. Chief Justice Roberts, Justice Alito. I could go on and on. Senator Sessions. I don't think there has been a Committee that has been this busy--and then he had the gall to tell us yesterday that if we didn't want to show up at the hearing, we ought not to be on the Committee. I was glad I was there, so I knew you weren't talking about me. Chairman Specter. Well, that kind of talk is very seldom engaged in in the Senate. But you can't transact business--you need a quorum--unless Senators are present. It is a high- visibility Committee, a very popular Committee, and as Chairman I want the members present if they want to be on the Committee. Senator Sessions. Well, it was a correct comment. Mr. Chairman, I would just---- Chairman Specter. Would you begin Senator Sessions's time again at 10 minutes? Thank you. Senator Sessions. I would just note that as a person who spent the better part of my political or governmental career as a prosecutor, almost all of that as a Federal prosecutor, and 2 years as attorney general, I have become somewhat uneasy about the vague criminal laws that we are passing. I think that is a legitimate criticism of what Congress and State legislatures are doing. You remember the old burglary statute, you know, breaking and entering. You had to break in the door, then you enter with intent to commit a felony therein. Robbery was the taking by force and violence of a thing of value from a person. These were the elements, and you knew what the elements were and you knew what you had to prove. And this is where you are talking about a person's liberty, where you are going to put them in the slammer and send them off to the big house. Now, we have not been quite so scrupulous about taking people's money, you know. You need less proof to take people's money, and Mr. Panish has probably done that more than once. I have tried to a few times, but probably haven't been as successful as he has been in suing people for money. It is a different deal, so I just want to point that out. I would note that the bill itself uses the words ``knowing and reckless introduction of a defective product.'' My understanding of current law in most States--and I missed most of the colloquy you had over manslaughter or other type things--most States do have laws that deal with reckless misconduct. But if you read the legislation that has been introduced, ``reckless'' is in the description of the bill, but not in the words of the statute. In fact, it just says any person who introduces into commerce a product known by that person to be defective and capable of causing death shall be fined. So it is getting pretty scary here a little bit. And you mentioned corporate executives come and go. You come in and you are president of a corporation and somebody sends you a memo, and then the next thing you know, you have been indicted by a Federal prosecutor under this new law. So I do think we have a responsibility to draw the statute clearly before we put somebody in jail, particularly in light of the fact that they can be sued for punitive damages today. Mr. Vandall, I think you raised a very valid point about the likelihood or the ability to prosecute. I think we can have a very, very uneven, aberrational type of prosecution depending on the mood of their prosecutor or their predilection almost entirely. It is hard to have a basic standard, it seems to me, with regard to these cases. I got a note from George Terwilliger that you had invited him, former Deputy Attorney General of the United States and a longtime prosecutor, who was going to be a witness on this panel and couldn't come for personal reasons. I got his statement during the hearing, so I haven't read it, but I think he expressed some of those same concerns, in general. With regard to a civil case, Mr. Panish, what do you have to have before you can file that complaint and ethically maintain a cause of action? What are your standards there? Mr. Panish. Well, Senator, you need to have some evidence that support the various elements. As you mentioned in your criminal example, you need to have evidence that supports your elements that you need to prove for your case. Senator Sessions. You are not totally free to sue somebody. Mr. Panish. No, sir. Senator Sessions. I mean, you, as a lawyer, can be sued if you over-reach. What is the basic standard for a plaintiff lawyer in a defective suit, preponderance of the evidence? Mr. Panish. In a court of law, depending on the various elements, preponderance is one standard. In California, the standard---- Senator Sessions. You can file a suit for less than preponderance of the evidence, can't you? Mr. Panish. Anyone can file any lawsuit they want, but in a product liability case, when you are a lawyer taking on a case like that against the manufacturer, you better have your ducks lined up if you think you are going to be successful for your client. The manufacturers are not going to roll over. It is going to be a---- Senator Sessions. Well, I know that, but I guess I would just make the obvious point that you can file and commence an action, a civil action, easier than a prosecutor can commence a criminal action, assuming there is a responsible prosecutor. Second, with regard to obtaining information, when you file a suit, Professor Schwartz, you can take the deposition of the person and compel them to testify and provide evidence, can you not? Mr. Schwartz. Yes, you can, extensively. Senator Sessions. And in a criminal case, of course, you can't. If the defendant is a target of the grand jury, they are able to refuse to answer and refuse to produce any documents in their personal control. But if you are suing someone civilly, you can obtain all kinds of documents from them in an easier fashion, isn't that correct? Mr. Schwartz. Sure, warehouses full. Senator Sessions. Warehouses full. And it is out of this that good plaintiff lawyers have found the Ivey memo, have found the memo in asbestos that proved that asbestos companies knew that this was a dangerous product and people shouldn't be exposed to it. Yet, they took no action. This was 50 years ago. I think you have a lot less of it today than you used to have. But 50 years ago, they had this information and they didn't tell people and people died as a result of it. So we kind of know how that all plays out. But it is a much easier thing to pursue a civil suit and we have set it up that way. When it goes to the jury, the question is do you believe by a preponderance of the evidence that they violated the standards of care that are called for, and therefore how much damages do you want to give them, an award. That is how it works. In a criminal case, you have got to take a case before a grand jury. You can't get as much evidence and you have to prove the case beyond a reasonable doubt, and the leeway for a prosecutor to try a case at trial is much more difficult. So I say that, as a practical matter, if you are going to take out after a corporation who you may have some reason to believe through the Vioxx deal is doing something wrong, you are committing yourself to a very long period of time with many more roadblocks than a good civil lawyer would have in pursuing the same case. So I don't think you are going to have a whole lot of them. Now, Professor Schwartz, you are the author of the most widely used torts textbook in America today. Is the descendent of Prosser on Torts that I had, I guess. You may have been on the book then, I think--perhaps you were--when I was in school. So I guess I would ask you about your Vioxx example. That was curious to me that you had such aberrational verdicts. It is one thing to have aberrational verdicts when a person might have to pay some money out of his pocket. It is another to have aberrational verdicts when it comes down to putting somebody in jail for 15 years. Would you agree? Mr. Schwartz. Absolutely. That is at the core of my testimony. You don't want to import the tort casino over to criminal law. The risks of being wrong are too great. Somebody is going to prison, or even an indictment where there is no real good basis for it. I mean, Mr. Panish knows, and we all know who practice that if there were an indictment against a particular product, that company would probably not be around very long because it would be followed by product liability suits because of the publicity that would be on television. People watch, oh, ``x'' company is being indicted for selling a product. I wouldn't want to have to defend a case, frankly, on behalf of a company after that flashed over all three networks. So it is not even the conviction. It is the weapon, and the weapon has many effects. And as you have said--I am restating-- tort law in a way has a right to be wrong. The Vioxx cases still are playing out, but that is not unusual to have a case won, a case lost, a case won, a case lost. And sometimes they go away and sometimes they don't, but it takes years to sort out whether or not the product really was defective. And in part that is because people at a higher level than I am--Bill Prosser thought he knew what ``defect'' was. Dean Wade thought that it was less likely that he knew, and as the low person on the totem pole I find it even vaguer than they did. Senator Sessions. Well, that would be a concern to me, Mr. Chairman, whether we would be carrying over into the criminal justice system an area that is awfully disputable about whether an indictment should ever be brought, whether a verdict should be rendered, whether a person should be sent to jail. The more you get into these complex areas, the more potential for abuse I think we can see. Thank you. Chairman Specter. Thank you very much, Senator Sessions. Your introductory comments about being as precise as we can on tightening the language, I think, is very, very valid. That is something that at markup we really work that over, and we have a lot of experienced people. Senator Sessions was a U.S. Attorney and an attorney general, and Senator Leahy was a district attorney in Vermont and I was district attorney in Philadelphia. One of the grave, difficult problems in evaluating this issue is to what extent this is a prevalent problem, to what extent it exists, how much of it there is. I am going to ask Governor Engler and Mr. Panish and others on the panel, but I will start with Governor Engler and Mr. Panish on this issue as to whether cases we have examined are anecdotal, just random occurrences, or whether there is really a prevalent problem in the commercial world. There have been a number of references made to the Firestone-Ford situation. There were some 271 deaths and more than 700 injuries on the defective tires that were put on the Ford from Firestone, and concealed. Finally, we legislated on it and it was my amendment which imposed criminal liability there, so that we do have precedent for criminal liability where there are defects which were known to both the manufacturer and the automobile company which put the tires on the cars. We have a situation with Zylon bullet-proof vests where the company knew as early as 1997 that the material had failed to comply with quality tests and deteriorated. And the company made a decision, and these are documented in internal memoranda, that they would continue to operate as though nothing was wrong until one of their customers was killed or some agency disclosed the defect publicly, but the company decided not to. Then in June of 2003, a police officer was shot to death wearing one of these so-called bullet-proof vests which had, in fact, deteriorated. There are the famous cases involving Oraflex anti-arthritis drug where Eli Lilly failed to tell the FDA that it knew of over 25 deaths in different countries that were linked to the drug. Then there were the Playtex and Tambrands cases where there was a substance known as polyacrylate which caused toxic shock syndrome. And here again it was well-known to the company and more than one hundred women died from the exposure there. Then we had the Ford Mustang case, where again it was a design defect and it was a cost/benefit analysis. And it wasn't really brought to light or it wasn't emphasized until there was a taped conversation between President Nixon and the president of Ford which disclosed that Ford had saved almost $20 million over 3 years by delaying the safety modifications to the Mustang. Governor Engler, you are the head of the National Association of Manufacturers, and I would say a very effective president in articulating the views, and it is a judgment call. You don't know what goes on in all the corporate board rooms, all the research and development, so it is a matter of an evaluation. Are we dealing here with an issue which comes up now and then, or do we have a problem which really is serious enough to call for Congressional action? Governor Engler. Mr. Chairman, I think it is a very good question. You know, being here under oath, the obvious answer is I don't know. The speculation is a little bit like with Sarbanes-Oxley. I mean, we had a few companies that through their behavior resulted in a sweeping law being passed which many would say, particularly the smaller and medium-sized manufacturers, has been overkill. When it comes to defective products or allegations of defects in products, you have got the collision of innovation trying to bring especially in the pharmaceutical example some of the supplies that we would like to see into commerce. I mean, I think you push the envelope to try to bring those out, and you try to understand what it takes to make them better. The examples you use, I think, are small in number, but any time there is a single death that one can point to, one can say, well, was that avoidable? It is impossible, I think, to de-risk our society. There are in all of these cases, I think, pretty heavy penalties that have been paid by these companies. Some of these companies that were involved have changed dramatically. In some cases, management has lost their jobs and their careers. In other cases, the publicity has led to dramatic reforms. But, again, the question here is, you know, given all of what may have happened in the past, do we have a cure? Would anything be different in the future? I think there is some question about is this the solution. I think that we probably as a Nation spend more on safety and more on prevention and trying to get it right than anyplace in the world. I think we do a pretty good job of that. Would this bill in some way help us do a better job? Would it focus the attention of an executive, or in this case all the way down the line, because I assume a middle management employee touching a product who is part of that production might herself or himself have to ask do I let this go forward? So the ambiguity is very difficult to deal with. There are certainly challenges, and you will hear a different perspective in just a moment, but I think that by and large the record of safety is commendable in this country and that what is a focus on every company's mind today is how do we make the products we make better and can we afford to take new ideas to the market with whatever risk that might present to consumers. Chairman Specter. Well, thank you for that answer. What we are looking toward is the situation where there is solid proof and the kinds of cases we have cited here where there are internal documents which show a cost analysis that it would cost $8 to make a change in the location of the gas tank, as opposed to $2.40, where they calculate the payment on tort claims. A criminal penalty requires proof beyond a reasonable doubt, so there would have to be very specific proof that the corporate executive knew what was going on and had made the decision, participated in the decision, to reach that standard. I think you are right. There are enormous efforts at product safety, but we do have these cases come up where they have known about it for a long time, documented, and not disclosed in the interest of corporate profits, and many injuries and many deaths. Mr. Panish, how would you evaluate the question as to whether this is anecdotal, happens from time to time, or a real, major problem in our stream of commerce? Mr. Panish. Well, Mr. Chairman, once again I would say that the problem does exist. It is the civil justice system that allows the attorneys that are able to uncover these memos and documents and knowledge of the corporate executives. Chairman Specter. Well, is that sufficient, a lot of able lawyers like you who are doing the job? You are motivated. Sometimes, you even get a good fee. Mr. Panish. Well, we are motivated about helping our clients, No. 1, and our clients have been seriously injured by these defective products. Chairman Specter. I am not suggesting that it was a mercenary motive. It is a part of your work. Mr. Panish. I understand, but the problem does exist. Safety is paramount in this country and all manufacturers know that. These situations of putting profits over safety do occur. It is not an isolated incident. You have just brought up five or more examples of specifics, from your bullet-proof vests to the Ford Pinto, all the way down the line. And in a way, personal accountability and having somebody on the line knowing that when they are making these decisions that they could be held personally accountable--they are going to think twice before they try to up the bottom line. That can act in and of itself as a deterrent. Both yourself and Senator Sessions being prosecutors know if you are prosecuting a case like this, you are not going to be filing every case. You are going to want to have a solid evidentiary case, you are going to want to have witnesses, and you are going to know the higher standard of proof that you have to meet to convict somebody in a criminal case. I don't think the courts are going to be flooded with cases like this, but it is important for personal accountability for people to know that if they make the wrong choice, not to try to put out a more creative product or innovative product, but if they know that there is a problem and they do put profits over safety that they can be personally held accountable. I believe that that would act as a deterrent effect to corporate executives who, as the professor said, move from company to company and by the time this surfaces they are no longer with the company. It also penalizes the companies that are doing the right thing, that are spending the extra money for safety. And to allow these other companies that aren't doing that to profit by that would be unfair to the companies that are actually doing the right thing. Chairman Specter. Senator Sessions. Senator Sessions. Well, you are correct about the challenge and responsibility of corporations to make their products safe, and there is no doubt about that. We are willing to take some risk in civil actions to get justice based on a preponderance of the evidence. I am thinking of the example of brakes, Professor Schwartz. Let's say somewhere in the development of a new form of brakes for a vehicle an engineer does a memo that under certain circumstances there might be a problem and he sends that through the system. And the brakes go fine for 5 years, and they are even maybe better than other brakes in most instances. But this very thing occurs and something happens and somebody gets killed. Then this document appears. Ah-hah, you knew this could happen; you go to jail 15 years. How does that strike you? You have been studying these cases and all the complexities of proof and defect that are so critical to American tort law. How would you evaluate it? Mr. Schwartz. Well, your question goes to the two sides of the coin here. If that executive knew that he might be subject to a criminal penalty, he might not have written the memo and we wouldn't have it. That is why this is not an easy area. In the TREAD Act which the Chairman referred to, in the beginning for a while there was a provision about defective products and there was debate about that. But ultimately when the bill passed, they eliminated that and they went to making false or misleading statements. Well, I can understand what that is, but as you go into this area one little change is like a child's kaleidoscope. It may change the picture, but I don't think anybody on the panel under oath can swear to what that new picture would be. And again we take that employee who has now the courage to write the memo, but if he says, boy, if I write something like this I could get in trouble--or he could write more memos if he knew about it. It is just not that easy in the context of the real world, it isn't. Senator Sessions. On the question of recklessness, which is not in the statute but is only in the preamble or the heading, I do believe that most States have a standard for reckless disregard. The classic case is driving through a neighborhood where children are playing at high rates of speed in reckless disregard of the consequences. A person can be held criminally liable for that. I don't see any prosecutors at the table here. Could not a person who introduces a product into the highway of life not be held to that reckless disregard standard? Would that standard not be available in criminal court for products liability cases? Does anybody want to comment on that? I mean, what normally happens is that they are sued and if they are actually in reckless disregard, then you are entitled to punitive damages, aren't you, Mr. Panish? Mr. Panish. In our State, California, there is a higher burden of proof for punitive damages. California requires a clear and convincing standard to be proved. It is conscious disregard for the rights and safety of others, and it is pretty narrowly drawn. Senator Sessions. Clear and convincing evidence, but it is a conscious disregard? Mr. Panish. A conscious disregard for the rights and safety of others. And there are other provisions; there are three different prongs under which it can be awarded. Senator Sessions. So I guess my concern would be, or my point would be that there are ways now to prosecute criminally under the reckless disregard standard that we have classically had in criminal law for really egregious actions that were knowingly and deliberately done or done with reckless disregard. If you knowingly and deliberately drive into a crowd of people, then you are going to be held liable for first-degree murder, whether you actually intended anybody to be murdered or not. If you do it with reckless disregard, it may be second- degree murder, depending on the State law. But there are ways to do that under current law. I am concerned about the standards here and that we create now a Federal criminal action based on more vague standards that look more like civil lawsuit standards. Mr. Schwartz. It does look like civil standards. That is the line between tort and crime, and law schools package this stuff separately. You know, you go to torts class and then you go over to criminal class, and they never have the two people together. I used to try. I used to bring the criminal law professor in and we would discuss the very things that are being discussed in this Committee today about the difference between tort and crime, the difference between standards. And there are criminal standards, just like what happened ultimately with the TREAD Act where a criminal standard which was easy to understand was incorporated. And there are criminal statutes about reckless disregard for life. Whether that is going to be used in the context of product liability, I don't know. If the Chairman would ask me has it ever been used, I do think that they tried in Indiana, as the Chairman averted to, in the Pinto case, but the case fell apart. The article I submitted tells why. But there is a difference in drawing lines and how you express things in criminal law versus tort law, and there are good reasons for the differences. Senator Sessions. Professor Steinbuch, on your advertisement there, I am concerned about these advertisements. Some of them look like newspaper articles, No. 1. I don't like that. No. 2, they make statements that I know are not true. So you could do that through giving some regulatory agency administrative authority to gain an injunction to shut down the advertisement, which I think we have done pretty aggressively, sue for damages, and/or you could put the person in jail. I am not against either one. I mean, I think all three are appropriate, depending on the clarity of the proof and the clarity of the standard. Would you agree that in a product production thing, whether the head man at Merck--did they do Vioxx, did you say, Professor? Mr. Schwartz. Yes. Senator Sessions. Merck knew everything there was in every report that ever existed about--he might have been hired because of his financial expertise, and whoever gets held liable for something is in a more uncertain area. Mr. Steinbuch. Well, I think, Senator, you raise an interesting point and a good point, and that is that on criminal law we must be confident of who we are prosecuting. But I think we may be paying too much attention to the marginal cases and are less concerned about the clear cases that you have heard about on this panel. It reminds me of a parable that my father once taught me, which was we can tell the difference between night and day easily even though the exact point that one changes to other is often not clear. Everybody knows that 11 p.m., is night. Everybody knows that 11 a.m. is daytime. 5:48 a.m.--I don't know if that is day or night; I don't know exactly. But, we can still easily tell the difference between night and day. And so, yes, there will be marginal cases, but with limited resources and good prosecutors such as yourself and such as Chairman Specter, I am confident that a properly tailored statute would achieve the goals that the Chairman has sought. Senator Sessions. Professor Vandall? Mr. Vandall. Yes. I would like to try to put some of the questions and comments into context, if I could, and responding back to the Chairman's question of anecdotal and Professor Schwartz's comment in regard to the Pinto prosecution. The Pinto prosecution failed because it was underfunded. This was a county D.A. He had $20,000 for the whole year. He spent $20,000 of his own money, so $40,000 total. When you read the book, and it is an excellent book on the Pinto case, it shows that Ford just blew him out of the water. Mr. Schwartz commented that the product liability system is over-heated. I think that is short of the problem. If it was over-heated, we wouldn't be here today. If it was over-heated, we wouldn't have Guidant having the interest, the ability to do and say what they did. Punitive damages are thrown around here---- Chairman Specter. You can be tougher than ``interest'' and ``ability,'' Professor Vandall, when you talk about Guidant. It is pretty blatant and it is pretty current. Mr. Vandall. Exactly. Chairman Specter. No, wait a minute. You haven't been tough enough. Senator Sessions. Do you want to advise him of the libel rules of the Senate? Chairman Specter. Don't lead the witness, Senator Sessions. Go ahead, Professor Vandall. Senator Sessions. No. I mean in the sense that we can say it and not be sued. I don't know about you. I was going to ask the Chairman. Chairman Specter. I didn't want to interrupt you unduly, but when you talk about Guidant, you can be a little tougher than ``interest.'' Mr. Vandall. Thank you. I will keep that in mind. In regard to punitives, the word has been thrown around. Professor Schwartz implies that we have a lively system of punitive damages. And as you all know, there have been several recent Supreme Court cases that have gutted the concept of punitive damages, and it is entirely unclear where punitive damages are going to go for personal injury. If these cases were superseded by the Senate, I don't think we would be having the discussion today; that is, the corporations are all about profit, are all about making money, which is what they should be. I am not challenging that, but we know how to get their attention and that is with substantial, aggressive and appropriate punitive damages. Just to get back to Professor Schwartz's comment and something that we have been talking about all day, and that is corporations deal with risk in everything they do. They deal with it in terms of marketing, they deal with it in regard to products. Products have a degree of risk for just about every product. Let's talk about motorcycles at one end of the spectrum and white flour at the other end. We know motorcycles are dangerous. We all know someone who has been killed on a motorcycle. That doesn't make them defective. Let's put cars and drugs in the middle of the spectrum. Those are tough cases. So what are corporations about? They are about figuring out what the niche is, figuring out the cost of the product. The reason the Pinto was poorly designed was because it had to come in at $2,000. Honda had just introduced its wonderful car, the Civic. The Vega, the worst car ever designed by GM, was there at about $2,300. So Ford said we have got to make it priced in the showroom at not a penny over $2,000. That is why it was a cheap car. Now, we are talking about Federal prosecution. Let's remember who the father of the Pinto was. The father of the Pinto was Lee Iacocca. How do you feel about going after him and locking him up? I think the Governor from Michigan might have something to say about that because Lee Iacocca single- handedly became president of Chrysler and appealed to Congress and brought Chrysler out of the depths that they were in with their unfortunate automobile line. So I do not think we want to talk about Lee Iacocca as the kind of person that we should be thinking about locking up. He was responsible; he signed off on the Pinto. Thank you. Chairman Specter. Professor Vandall, we impeach presidents of larger entities than motor companies. No one is immune, no one is exempt. Senator Sessions. I agree with that. In the course of these things, there oftentimes have to be many documents and statements filed. That is what we did on Sarbanes-Oxley, I guess, was say when you file a document, you have got to take some effort to make sure it is correct. You can't just say, well, I didn't have time to look at it. There are some legitimate problems out here. I thank the Chairman for raising them and I just think we need to be cautious and not over-reach. Mr. Schwartz. I do find intriguing something that Professor Vandall said. Thank you for mentioning my name a few times; that is always good--but you suggested that the application of the Constitution of the United States gutted punitive damages. The application of the Constitution to criminal law occurred in Miranda. Did that gut criminal law? In punitive damages, they applied the Due Process Clause. It was more than a majority. The mixture of the Justices, Mr. Chairman, were not your usual conservative versus liberal. There was overkill in the punitive system under the Constitution of the United States, and the application of punitive damages has continued to ferret out wrongdoers. Mr. Vandall. Could I respond to that? Chairman Specter. Of course, Professor Vandall. Mr. Vandall. Justice Scalia wrote a dissent in that case and he said there is no constitutional issue. So I think it is a debatable question as to whether the restricting of punitive damages rests on constitutional principles. Chairman Specter. Well, that is a complex issue which we won't be able to really explore here today. We are going to leave the record open for 1 week, which is our custom, and we very much appreciate your coming in. We have had a fair amount of response. One caller representing a big company said we have caught the attention of the American corporate community. Are you nodding in the affirmative, Mr. Schwartz? Mr. Schwartz. Yes. You did catch their attention. Chairman Specter. I have caught their attention. The final question I have, but we are running a little late as it is, would be whether having a hearing, whether introducing a bill--the readership of the Congressional Record is not too heavy. Not too many people read the Congressional Record, so you put a bill in. There is a question whether anybody notices it. You have a hearing and you get a little more attention. I don't know that anybody watches C-SPAN except for me when I get home. Our Judiciary Committee hearings have a favorite spot at about 3 a.m. We have a tremendous following among insomniacs in America. Do you think a hearing like this helps to catch attention and might have some deterrent effect, Mr. Schwartz? Last question, yes or no. Mr. Schwartz. Yes, I do. Chairman Specter. Thank you all very much. 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