Remarks to Members of the American Tort Reform Association
May 30, 1986
It's an honor to be here today with the members of the American Tort Reform Association. You know, we'd originally planned to meet across the street in the White House, but it turned out there was so much interest, we had to find a bigger hall. And many thanks to the U.S. Chamber of Commerce and the chamber president, Dick Lesher, for permitting us to come here. Now, I know that you've already heard from the Attorney General and the Secretary of Commerce and a number of others, so I'll try to keep my own remarks brief. Given the subject, I wouldn't want anyone to mistake me for a lawyer. [Laughter]
But looking out, I can see what a diverse group we make up -- from Boy Scouts to businessmen, from campers to child-care workers. This is an all-American event, because this problem affects all of America -- every man, woman, and child. Originally, of course, tort law protected innocent people against wrongful damage or injury. Rooted in the Middle Ages, tort law became especially important at the onset of the Industrial Revolution, when ordinary men and women began to find themselves presented with services and products they'd never before encountered. By providing consumers with a measure of protection, tort law enabled them to enter this new marketplace with a certain confidence and ease. Back in the days when toothpaste was a newfangled invention, for example, consumers could purchase it with a much greater sense of assurance when they knew that, because of tort law, the manufacturers had to take all reasonable steps to make certain that the product was both effective and safe.
Maybe some of you'll remember a passage in ``Huckleberry Finn'' that deals with this very subject. Huck met a swindler who told him that: ``I'd been selling an article to take the tartar off the teeth, and it does take it off, too, and generally the enamel along with it.'' [Laughter] Twain never mentions tort law, but it is there in the background, the force that kept this character in the book constantly on the run up and down the Mississippi. And in the real world it was, in large part, tort law that reduced such swindlers from an actual presence in our economic life to figures that we remember with laughter.
So, over the years, tort law has helped us drive the malevolent and the negligent out of the marketplace. This, in turn, has permitted legitimate economic innovation to take its course and raise living standards throughout the Nation. More recently, however, tort law began to go terribly wrong. Twisted and abused, tort law has become a pretext for outrageous legal outcomes -- outcomes that impede our economic life, not promote it. Listen to just a few cases, and I hope I won't be repeating some that maybe have already been told to you.
In California, a man was using a public telephone booth to place a call. An alleged drunk driver careened down the street, lost control of her car, and crashed into the phone booth. Now, it's no surprise that the injured man sued. But you might be startled to hear whom he sued: the telephone company and associated firms. That's right, according to Chief Justice Rose Bird of the California Supreme Court, a jury could find that the companies responsible for the design, location, installation, and maintenance of the telephone booth were liable. In another case, suit was brought by a man who suffered a heart attack while having some trouble starting a lawnmower. He claimed that pulling the starter rope was the cause of the attack. His award? More than a million dollars.
I suppose all this might be amusing if such absurd results only took place occasionally. Yet today they have become all but commonplace. In the past two decades the number of awards involving a million dollars or more has climbed from just 1 a year to more than 400 a year. Between 1975 and 1985, the average award in a product liability case more than quadrupled, to some $1.8 million. During the same period, the average medical malpractice verdict -- I said average -- went up more than 350 percent, to over a million dollars. This expansion of tort liability penalizes virtually every American -- manufacturers, doctors, small businessmen, government at all levels, nonprofit organizations, entrepreneurs, and perhaps most severely, the consumer. Again, listen to a few more cases.
On one of the Hawaiian islands, all the doctors on that island who had once delivered babies have stopped doing so because their malpractice premiums were outstripping their fees; pregnant women must now travel elsewhere, to another island, for their needs. In 1984 Connaught Laboratories discontinued distribution of an important vaccine for children because it could not obtain liability insurance. It later succeeded in doing so, but only at a very high cost. As a result, in just 3 years the cost of this vaccine rose from 11 cents per dose to $4.50. Hundreds of American cities and towns find themselves unable to afford basic liability coverage. The city of Blue Lake, California, has been forced to shut its skating rink, tennis court, and parks. And at New York's famous Coney Island Amusement Park, they've had to close the roller coaster.
Even everyday items contain hidden costs that arise from the expansion of tort liability. It's been estimated, for example, that 20 percent of the cost of an ordinary stepladder goes to pay for liability insurance, lawyers, and related costs. And because the Boy Scouts of America have been forced to increase their insurance coverage, it's feared that every Boy Scout and Cub Scout troop may have to be assessed some $20 -- not an insignificant sum in the underprivileged neighborhoods that perhaps need the Boy Scouts most. These problems have begun to eat away at the fabric of American life. My friends, I think you will agree: There's still such a thing as common sense, and this ain't it! The time has come for action.
Earlier this year I endorsed the report of my Domestic Policy Council's Tort Policy Working Group. This report contains a number of recommendations, recommendations that include fixed-dollar limitations for certain kinds of awards and the establishment of assurances that liability judgments go to those actually wronged or injured and not to the lining of their attorney's pockets. Now, one of the report's most important recommendations urged our administration to submit reform legislation to the Congress.
This legislation, carefully drafted, has now been introduced in the Congress by Senator Robert Kasten and Congressman Hamilton Fish. It restores the fault standard, which requires that actual fault or wrongdoing must be established in most cases before liability can be assessed. It limits pain-and-suffering and punitive damage awards, awards the amount contingency-fee lawyers could earn, and restricts the joint and several liability doctrine that can force a single defendant to pay all damages even if he is only partly to blame. To be sure, much tort law would remain to be reformed by the 50 States, not the Federal Government. And in our Federal system of government this is only right. Many of the Tort Policy Working Group recommendations, for example, would have to be implemented at the State level to be fully effective. This administration's bill represents a much-needed overhaul of Federal laws governing interstate commerce -- one of the fields of authority the Federal Government is specifically granted by the Constitution -- and sets an example of common sense for the rest of the Nation to follow.
Many here have been following this issue closely. Indeed, there are stalwarts in this hall who have been out front since the beginning, and I'm grateful for your support. Now I ask you to join me in urging the Congress to pass this bill and to do so with dispatch. I said at the outset that tort law is a practical matter that affects us all, but in making the case for reform I find that I may have had to be a little more technical than I intended.
Maybe with the Boy Scouts' help I can bring it all back down to Earth. Boy Scouts know a code by heart, a list of characteristics that they promise they will try to live up to; and the first word on that list is ``trustworthy.'' A scout is trustworthy. That's really what tort reform comes down to -- asking our fellow citizens to be trustworthy. It means writing laws that tell all those who provide us with goods and services that we expect them to pay attention to their work and to do a good job. But it also means eliminating legal constraints that place upon these same people undue burdens. Trustworthiness, my friends -- let us make this our ideal, and let's see to it that our laws reflect that ideal for the good of all.
Thank you all for you patience and for being here, and God bless you all.
Note: The President spoke at 1:23 p.m. at the Chamber of Commerce of the United States.