MOST OF THIS IS CONTRACT LAW. AND WHAT WE'RE TALKING ABOUT ARE
           COMPANIE THAT ARE GOING TO HAVE AN INTEREST CONCEIVABLY IN
           SUING ANOTHER COMPANY. BECAUSE THE PRODUCT THEY BOUGHT FROM
           THAT COMPANY DOESN'T DO WHAT THE COMPANY THAT SOLD IT TO THEM
           SAID IT WOULD DO. NOW, MAYBE UNDER THEIR WARRANTIES AND JUST
           UNDER THE CONTRACT, IT WILL BE TAKEN CARE OF. BUT WHAT THE
           MCCAIN BILL WANTS TO DO IS SAY TO EVERY AMERICAN CONSUMER,
           YOU'RE GOING TO HAVE TO WAIT THREMONTHS, YOU'RE GOING TO HAVE

           TO WAIT THE 30 DAYS FOR THE FILING, YOU'RE GOING TO HAVE TO
           REFILE IF YOU WEREN'T FILING WITH PLEADINGS THAT WERE SPECIFIC
           ENOUGH ACCORDING TO THE -- TO WHAT THE CORPORATION HAD TO GO
           THROUGH. AND IT IS A REMARKABLE THING IN MY JUDGMENT TO THRUST
           THAT KIND OF BURDEN ON A LOT OF SITUATIONS THAT WOULD BE VERY
           DIFFICULT. LET ME GIVE YOU AN EXAMPLE. THIS IS A VERY SPECIFIC,
           AND I APOLOGIZE IT'S GOING TO TAKE A MINUTE BUT I WANT TO GO
           THROUGH IT. LET'S TAKE A MRS. BARNES, WHO OWNS A HOME SEVERAL

           STREETS AWAY FROM THE ACME CHEMICAL COMPANY. NOW, THERE ARE 85
           MILLION AMERICANS WHO LIVE OR WORK WITHIN A FIVE-MILE RADIUS OF
           ONE OR MORE OF THE 66,000 FACILITIES THAT HANDLE OR STORE
           HIGH-HAZARD CHEMICALS. LET ME REPEAT THAT. 85 MILLION OF OUR
           FELLOW CITIZENS LIVE IN HOMES NEAR A CHEMICAL COMPANY. AND ON
           JANUARY 1, 1999, LET'S -- EXCUSE ME, JANUARY 1, 2000, LET'S

           ASSUME ACME'S SAFETY SYSTEM FAILS AND HAZARDOUS CHEMICALS ARE
           RELEASED INTO THE AIR AND ONTO THE LAND IN THE NEIGHBORHOOD. IT
           FORCES MRS. BARNES AND OTHERS TO EVACUATE THEIR HOME. PEOPLE
           ARE ALLOWED BACK INTO THEIR HOMES AFTER TWO DAYS, BUT HER
           PROPERTY IS CONTAMINATED, INCLUDING HER WELL. SO SHE RETAINS AN
           ATTORNEY AND SHE FILES A TORT CLAIM FOR RECOVERY. ACME CHEMICAL
           CLAIMS THAT A Y2K COMPUTER FAILURE WAS PARTIALLY AT FAULT FOR
           THE SAFETY SYSTEM MALFUNCTION. MRS. BARNES DIDN'T KNOW THAT Y2K

           WAS A DEFENSE, OF COURSE, BECAUSE MOST AVERAGE CITIZENS WILL
           NOT KNOW THIS. AND UNDER THE NEW LAW, THE ACME COMPANY WILL
           TREAT THE COMPLAINT AS THE NOTICE. SO SHE HAS TO WAIT 30 DAYS
           FOR ACME TO RESPOND. IN 30 DAYS, THEY RESPOND BY SAYING, "WE
           CAN'T PAY FOR THE CLEANUP AND LOST VALUE," BUT SHE HAS TO WAIT
           MOTHER 60 DAYS TO REFILE HER LAWSUIT NOTWITHSTANDING THAT THEY
           TELL HER THAT. SO NOW, AVERAGE CONSUMER, AMERICAN CITIZEN IS
           OUT 90 DAYS DAYS, DON'T KNOW WHERE THEY'RE GOING BECAUSE WE'VE

           PROTECTED THE ENTITY. ALL DISCOVERY IS STAYED DURING THIS
           PERIOD. AND THERE ISN'T ANYBODY IN OUR SYSTEM OF JUSTICE WHO
           DOESN'T KNOW WHAT HAPPENS WHEN YOU STAY DISCOVERY FOR 90 DAYS.
           IN TWO MONTHS, MRS. BARNES REFILES HER SUIT AND SHE RESTORES --
           SHE REFILES IT AGAINST THE COMPANY THAT INSTALLED THE SAFETY
           SYSTEM. UNDER THE MCCAIN BILL, SHE HAS TO PLEAD HER CASE WITH
           THE PARTICULARITY IN THE COMPLAINT. SHE CAN STATE HER DAMAGES

           AS REQUIRED BUT SHE'S GOING TO HAVE A LOT OF TROUBLE SPECIFYING
           THE MATERIALITY DEFECT BECAUSE SHE WON'T KNOW WHAT THAT IS
           BECAUSE THERE'S BEEN NO DISCOVERY. SO THE CASE IS DISMISSED
           BECAUSE THE COMPLAINT FAILED TO MEET THE PLEADING REQUIREMENTS.
           ASSUME THAT SOMEHOW LATER SHE CAN MEET THE PLEADING
           REQUIREMENT, SO SHE COMES BACK. SHE FINDS ENOUGH INFORMATION TO
           SURVIVE ANOTHER MOTION TO DISMISS AND SHE FINALLY GETS A DAY OF
           -- A DAY IN COURT. AFTER HEARING THE CASE, THE JURY FINDS THAT
           BOTH DEFENDANTS ACTED RECKLESSLY AND OUTRAGEOUSLY FOR NOT
           IDENTIFYING AND FIXING THE PROBLEM AND IT AWARDS HER $300,000

           COMPENSATION FOR THE PROPERTY AND THE NEED TO REPLACE HER WATER
           SUPPLY. THEY MAY FIND THAT ACME IS 70% RESPONSIBLE AND SAFETY
           SYSTEMS 30% LIABILITY UNDER THE PROPORTIONALITY. SO THE TOTAL
           AMOUNT OF HER AWARD MIGHT BE $1.3 MILLION WITH THE COMPENSATORY
           AND PUNITIVE. AND ADJUSTED AND REDUCED BY THE NUMBER OF PEOPLE,
           ACCORDING TO THE CAP, BECAUSE SHE ONLY HAS 40 PEOPLE WHO WORK
           FOR HER. SO UNDER THE CAP IN THE SENATE 96, THAT WOULD BE AN

           ADJUST ADD WARD OF $550,000. -- AN JUSTED AWARD OF $ $550,000.
           WELL, WE FIND THAT ACME CAN'T PAY FOR ALL THE DAMAGE AND FILES
           FOR BANKRUPTCY. SAFETY SYSTEMS PAYS MRS. BARN BARNES $90,000
           UNDER THEIR PERCENTAGE BUT THAT'S NOT ENOUGH TO CLEAN UP HER
           PROPERTY, CAN'T GET A NEW WATER SUPPLY, ESPECIALLY AFTER SHE
           PAYS THE LEGAL BILLS. SHE TRIES TO COLLECT FROM ACME BUT
           WITHOUT SUCCESSES. IN THE END UNDER THE STATE LAW, SHE WOULD
           HAVE RECEIVED HER $1.3 MILLION, BUT BECAUSE WE'RE GOING TO TAKE
           THAT AWAY, AT THE END, BECAUSE OF THE SENATE BILL THAT IS

           CONTEMPLATED BEING PASSED HERE, THAT DOESN'T PROTECT THIS
           INDIVIDUAL CONSUMER, SHE WILL BE LEFT WITH ONLY $135,000
           $135,000, NOT NEARLY ENOUGH TO COMPENSATE FOR HER LOSS, PAY HER
           LEGAL FEES, REPLENISH HER WELL AND MAKE HER WHOLE. SO WHAT'S
           THE PUBLIC POLICY HERE?
           THAT'S -- THAT'S LITERALLY HOW THIS BILL WOULD WORK. THAT IS
           TAKING US STEP BY STEP THROUGH THE REQUIREMENTS THAT ARE BEING
           PUT ON THE AVERAGE AMERICAN HERE. EVEN THOUGH WHAT WE'RE REALLY
           TALKING ABOUT DOING HERE IS PROTECTING COMPANIES FROM LAWSUITS

           BY COMPANIES. NOW, TO THE DEGREE THAT MY COLLEAGUES SAY, WAIT A
           MINUTE, SENATOR. WE KNOW ABOUT THOSE NAUGHTY THINGS CALLED
           CLASS ACTIONS. AND WE DON'T WANT TO HAVE A CLASS ACTION BROUGHT
           AGAINST US US. I SAY TO MY COLLEAGUES, I AGREE. WE WANT TO HAVE
           A TOUGH STANDARD FOR THE POTENTIAL OF ANY CLASS ACTION. SO WE
           HAVE PUT IN OUR BILL SOMETHING LAWYERS DON'T LIKE. WE'VE PUT IN
           OUR BILL A MATERIALITY REQUIREMENT THAT MEANS THEY'VE GOT TO
           SHOW THE VERY SPECIFICITY OF THE DEFECT AND IT HAS TO BE

           SPECIFICALLY MATERIAL TO THE IMPACT ON THAT PARTICULAR DAMAGE
           THAT TOOK PLACE FOR THAT PERSON. AND THE MAJORITY OF THE PEOPLE
           WHO MAKE UP THE CLASS HAVE TO HAVE THE SAME LINKAGE TO THE
           MATERIALITY. THAT MAKES IT VERY HARD TO GO OUT AND JUST
           CONSTRUCT A CLASS. SO CLASS ACTIONS WOULD, IN FACT, BE
           SERIOUSLY REDUCED AND I THINK IMPACTED IN AN APPROPRIATE WAY, I
           MIGHT ADD. SO WE'RE RAISING THE BAR, WE'RE RAISING THE

           STANDARD. NOW, MR. PRESIDENT, OUR BILL, THEREFORE, IN MY
           JUDGMENT PROTECTS CONSUMERS. THE MCCAIN BILL WOULD APPLY ALL OF
           ITS PROCEDURAL BURDENS AND DAMAGE LIMITATIONS TO INDIVIDUAL
           CONSUMERS. I KNOW THAT THIS IS ONE OF THE THINGS THAT THE WHITE
           HOUSE, THE PRESIDENT IS PARTICULARLY CONCERNED ABOUT. WE NEED
           TO TRY TO FIND SOME KIND OF REASONABLE COMPROMISE. WE HAVEN'T.
           AND THAT BEGS A VETO. IN ADDITION, I'VE TALKED ABOUT THE
           PROPORTIONALITY ISSUE. IT IS HARD TO BELIEVE THAT COLLEAGUES

           WOULD NOT BE WILLING TO VOTE THAT A COMPANY OUGHT TO ENGAGE IN
           GOOD CITIZEN BEHAVIOR OF A TWO-STEP EFFORT TO IDENTIFY MERE
           POTENTIAL -- I UNDERSCORE THAT, "NEAR POTENTIAL." THE COMPANY
           DOESN'T HAVE TO FIND THE PROBLEM. THE COMPANY DOESN'T HAVE TO
           CURE THE PROBLEM. THEY HAVE TO FIND THE MERE POTENTIAL THAT
           SOMETHING THAT THEY HAVE CREATED MAY HAVE DONE IT. AND TO LET
           PEOPLE KNOW THAT THEY'VE DONE THAT. IT'S HARD TO BELIEVE THAT
           WE WOULDN'T VOTE TO DO THAT. IN ADDITION TO THAT, WE IMPOSE AN

           ADDITIONAL DUTY ON THE PLAINTIFF. MY COLLEAGUE FROM AIR -- MY
           COLLEAGUE FROM ARIZONA SAID THIS IS TO KEEP THE REVENUE STREAM
           GOING. WELL, WE IMPOSE AN ADDITIONAL DUTY ON THE PLAINTIFF,
           BECAUSE WE -- EXISTING STATE LAW GENERALLY REQUIREMENTS
           PLAINTIFFS TO MITIGATE THEIR LOSSES IN THE CASE OF A BREACH OF
           CONTRACT. AND SENATE 96 PUTS ON THE PLAINTIFF AN ADDITIONAL
           BURDEN TO MITIGATE THAT ISN'T PART OF ADDITIONAL CONTRACT LAW,
           WHICH ALLOWS A DEFENDANT TO ARGUE THAT THE PLAINTIFF SHOULD
           HAVE AVOIDED THE DAMAGES BASED ON INFORMATION THAT WAS IN THE

           PUBLIC DOMAIN. AND SO WHAT WE'VE DONE IS TO ENCOURAGE
           INFORMATION SHARING. AND IN ORDER TO ENCOURAGE THE REMEDIATION
           THAT WE WANT, WE LEAVE THE EXISTING STATE LAW DUTIES IN PLACE,
           SUPPLEMENTING THEM WITH AN ADDITIONAL MITIGATION REQUIREMENT IF
           THE DEFENDANT ITSELF MADE THE INFORMATION AVAILABLE. NOW, WHY
           IS THAT GOOD POLICY?
           BECAUSE AGAIN, IT ENCOURAGES THE GOOD BEHAVIOR THAT OUR
           COLLEAGUES ARE SAYING EVERYBODY'S GOING TO ENGAGE IN BUT FOR

           WHICH THERE'S NO CERTAINTY AND THERE'S NO LEVERAGE. HERE YOU
           HAVE AN ADDITIONAL BURDEN ON THE PLAINTIFF IF THE DEPARTMENT
           UNDERTOOK TO SHARE THE INFORMATION. WHAT DOES THAT DO?
           THAT HE MEANS THAT THE COMPANY IS GOING TO SAY, OH, BOY. IF WE
           GO OUT AND GET THE INFORMATION AND WE TUT IT OUT TO THE PEOPLE
           WE'VE SOLD IT TO, THEY'RE GOING TO HAVE THE BURDEN OF SHOWING
           THAT WE SOMEHOW DIDN'T DO WHAT WE WERE SUPPOSED TO. WE'VE
           SHIFTED THE BURDEN TO THE PEOPLE WHO THEN WOULD BE THE
           PLAINTIFFS. MAKES IT HARDER TO BRING A CASE CASE. IT ALSO DOES

           MORE TO ENCOURAGE THE MITIGATION THAT WE WANT TO GET IN THIS
           PARTICULAR EFFORT. MR. PRESIDENT, I WANT TO MAKE IT VERY CLEAR.
           I THINK IT WAS BACK IN APRIL, THE SENATOR FROM ARIZONA, THE
           CHAIRMAN, PUT A LETTER IN THE RECORD FROM ANDY GROVE OF INTEL
           INTEL. AND IN THE LETTER THAT WAS PART OF MR. GROVE'S
           COMMUNICATION TO THE CHAIRMAN -- AND I READ
           
           IT -- "DEAR SENATOR MCCAIN:" AND I READ TO THE RELEVANT PORTION

           OF IT. "THE CONSENSUS TEXT THAT HAS EVOLVED FROM CONTINUING
           BIPARTISAN DISCUSSIONS WOULD SUBSTANTIALLY ENCOURAGE
           COOPERATIVE ACTION AND DISCOURAGE FRIVOLOUS LAWSUITS LAWSUITS."
           AND HE CITED SEVERAL KEY MEASURES THAT ARE ESSENTIAL TO ENSURE
           FAIR TREATMENT OF ALL PARTIES UNDER THE LAW. ONE WAS PROCEDURAL
           INCENTIVES, THE REQUIREMENT OF NOTICE AND AN OPPORTUNITY TO
           CURE BEFORE A SUIT IS FILED. SENATOR MCCAIN HAS THAT IN HIS
           BILL. WE HAVE THAT IN OUR BILL. SAME PROCEDURAL REQUIREMENT TO

           CURE. SAME PROCEDURAL EFFORT TO HAVE ALTERNATIVE DISPUTE
           RESOLUTION RESOLUTION. WE BOTH ENCOURAGE ALTERNATIVE DISPUTES
           AND MITIGATION. SECOND POINT. A REQUIREMENT THAT COURTS RESPECT
           THE PROVISIONS OF CONTRACTS, PARTICULARLY IMPORTANT IN
           PRESERVING AGREEMENTS OF THE PARTIES ON SUCH MATTERS AS
           WARRANTY OBLIGATIONS AND DEFINITION OF RECOVERABLE DAMAGES.
           SENATOR MCCAIN DOES THAT. WE DO THAT. WE PROVIDE THE EXACT
           PROVISION OF CONTRACT PROTECTION EXCEPT WHERE THERE IS AN

           INTENTIONAL -- INTENTIONAL -- INJURY TO A PARTY.
           
           AND I ASK MY COLLEAGUES: WHAT IS THE PUBLIC POLICY RATIONALE
           FOR EXEMPTING A COMPANY FROM AN INTENTIONAL WRONGDOING TO AN
           INDIVIDUAL THAT IS NOT A -- A SPECIFIC INTENT TO THAT
           INDIVIDUAL BUT NEVERTHELESS FITS UNDER THE CONCEPT OF A
           RECKLESS, WILLFUL OR WANTON ACT?
           THIRD, MR. GROVE SAID HE WOULD THRESHOLD PLEADING PROVISIONS

           REQUIRING PARTICULARITY AS TO THE NATURE, AMOUNT OF FACTUAL
           BASIS FOR THE DAMAGES AND MATERIALITY OF DEFECTS. WE DO THE
           SAME THING. SENATOR MCCAIN DOES THAT. WE DO THAT. AND FINALLY,
           APPOINTMENT OF LIABILITY ACCORDING TO FAULT ON PRINCIPLE
           APPROVED BY THE SENATE IN TWO PREVIOUS MEASURES. THAT'S THE
           SECURITIES REFORM BILL AND I'VE ALREADY SPOKEN TO THAT. SENATOR
           MCCAIN GIVES IT TO THEM NO MATTER WHAT. YOU GET IT. YOU JUST
           GET IT BECAUSE YOU'RE WHO YOU ARE. WE GIVE IT TO THEM IF THEY
           TAKE
           

           TWO STEPS: IDENTIFY THE POTENTIAL FOR A Y2K PROBLEM, WHICH IS
           WHAT THIS BILL IS ALL ABOUT, AND LET THE PEOPLE THEY'VE DEALT
           WITH KNOW ABOUT THAT POTENTIAL. AGAIN, WE DON'T REQUIRE THAT
           THEY FIX IT. WE DON'T REQUIRE WITH A CERTAINTY THAT THEY FIND
           IT. WE REQUIRE THAT THEY JUST SAY THERE'S A POTENTIAL. AND
           THAT'S WHAT THEY HAVE TO GO OUT AND FIX. THE FACT IS, MR.
           PRESIDENT, THAT IS A MINIMALIST STANDARD THAT MOST COMPANIES
           OUGHT TO BE PREPARED TO LIVE BY. MOST COMPANIES -- EVERY
           COMPANY I'VE TALKED TO TELLS ME THEY'RE DOING THAT, OF COURSE

           THEY'RE GOING TO DO THAT, AND THEY WOULD HAVE NO REASON TO BE
           CONCERNED ABOUT THAT. SO THE REAL FIGHT HERE, I SUPPOSE, IS
           OVER PUNITIVE DAMAGES AND OVER THE BREADTH OF REACH THAT SOME
           PEOPLE ARE MAKING WITH RESPECT TO SOME OTHER EFFORTS, WHICH I
           CAN GO INTO LATER AS THEY ARISE IN THE COURSE OF THE DEBATE. WE
           HAVE A CONSUMER CARVEOUT. WE HAVE A DUTY TO MITIGATE. WE HAVE
           PROPORTIONAL LIABILITY. WE HAVE -- ORK THE MCCAIN BILL ALSO

           CREATES JURISDICTION FOR ALL Y2K CLASS ARCSS -- CLASS ACTIONS
           IN FEDERAL COURT FOR ALMOST ALL CASES. WELL, WE DON'T DO THAT.
           FIRST OF ALL, THE FEDERAL BAR HAS TOLD US THEY CAN'T HANDLE IT,
           THEY DON'T HAVE ROOM, FOR WHATEVER THAT MIGHT MEAN. AND,
           SECONDLY, I CAN'T THINK OF ANYTHING LESS RESPECTFUL OF STATES'
           RIGHTS, OF THE STATES' ABILITIES TO MANAGE THEIR OWN AFFAIRS
           WITH RESPECT TO HOW THEY WANT TO PROCEED. AND THERE IS NO
           SHOWING THAT THAT IS, IN FACT, NECESSARY. SO THE REACH OF THE
           BILL, IN FACT, MR. PRESIDENT, GOES FURTHER THAN THAT WHICH IS

           NECESSARY TO FIX Y2K. AND I WANT TO EMPHASIZE HERE, I WOULD
           STILL HOPE MAYBE WE CAN FIND SOME HE MEDIUM HERE WHERE PEOPLE
           WILL COME TOGETHER. IT MAY BE THAT THE SENATE ISN'T IN A MOOD
           TO DO THAT RIGHT NOW. SO IT WILL JUST GO AHEAD AND PASS THE 96.
           IT WILL GO TO CONFERENCE COMMITTEE. AND THEN GO TO THE
           PRESIDENT AND HE'LL VETO IT AND WE'LL COME BACK. OR MAYBE WHEN
           THE PRESIDENT GETS INTO THE NEGOTIATIONS IN THE CONFERENCE
           COMMITTEE, THE VERY THINGS I'M TALKING ABOUT WILL BE RESOLVED
           AND IT WILL COME BACK TO US IN A WAY THAT PEOPLE OF GOOD
           CONSCIENCE CAN SAY THIS IS GOOD PUBLIC POLICY BECAUSE IT

           PROTECTS CONSUMERS EVEN AS IT CREATES A FAIR PROCESS FOR THE
           AVOIDANCE OF FRIVOLOUS SUITS AND THE AVOIDANCE OF THE BURDENING
           OF AN INDUSTRY THAT WE ALL RESPECT AND CARE ABOUT. I THINK OUR
           BILL DOES THAT. I THINK OUR BILL JUSTIFIABLY PROTECTS THE
           CAPACITY OF COMPANIES TO BE FREE FROM FRIVOLOUS LAWSUITS.
{END: 1999/06/09 TIME: 13-30 , Wed.  106TH SENATE, FIRST SESSION}