Lawsuit Abuse Reduction Act of 2004
LAWSUIT ABUSE REDUCTION ACT OF 2004 -- (House of Representatives - September 14, 2004)
Mr. SENSENBRENNER. Mr. Speaker, pursuant to House Resolution 766, I call up the bill (H.R. 4571) to amend Rule 11 of the Federal Rules of Civil Procedure to improve attorney accountability, and for other purposes, and ask for its immediate consideration.
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MOTION TO RECOMMIT OFFERED BY MS. DELAURO
Ms. DeLAURO. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. Is the gentlewoman opposed to the bill?
Ms. DeLAURO. I am opposed to the bill in its current form, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will report the motion.
The Clerk read as follows:
Ms. DeLauro moves to recommit the bill H.R. 4571 to the Committee on the Judiciary with instructions to report the same back to the House forth with with the following amendment:
Section 4, insert at the end the following new subsection:
(e) NOT APPLICABLE TO BENEDICT ARNOLD CORPORATIONS.-
(1) IN GENERAL.-To the extent the defendant is a Benedict Arnold corporation, this section does not apply, notwithstanding subsection (d).
(2) DEFINITIONS.-For purposes of this subsection:
(A) The term "Benedict Arnold corporation" means a foreign corporation that acquires a domestic corporation in a corporate repatriation transaction.
(B) The term "corporate repatriation transaction" means any transaction in which-
(i) a foreign corporation acquires substantially all of the properties held by a domestic corporation;
(ii) shareholders of the domestic corporation, upon such acquisition, are the beneficial owners of securities in the foreign corporation that are entitled to 50 percent or more of the votes on any issue requiring shareholder approval; and
(iii) the foreign corporation does not have substantial business activities (when compared to the total business activities of the corporate affiliated group) in the foreign country in which the foreign corporation is organized.
Ms. DeLAURO (during the reading). Mr. Speaker, I ask unanimous consent that the motion to recommit be considered as read and printed in the RECORD.
The SPEAKER pro tempore. Is there objection to the request of the gentlewoman from Connecticut?
There was no objection.
The SPEAKER pro tempore. The gentlewoman from Connecticut (Ms. DeLauro) is recognized for 5 minutes in support of her motion to recommit.
Ms. DeLAURO. Mr. Speaker, this motion to recommit is designed to help address the problem of domestic corporations reincorporating abroad for the express purpose of avoiding new U.S. taxes and now new legal liability.
As we fight terrorism at home and abroad, when we have hundreds of thousands of troops in harm's way and are trying to find the resources to equip our first responders and ensure the safety of our ports and air transit, the last thing we should be doing is passing legislation that helps what are essentially corporate tax dodgers.
With increasing frequency, companies are setting up shell corporations in places like Bermuda while continuing to be owned by U.S. shareholders and doing business in the United States. The only difference is that this new so-called foreign company escapes substantial tax liability. What these companies have done is a slap in the face of every company which has chosen to stay in America and of every citizen who faithfully pays their taxes.
In my State of Connecticut, Stanley Works once considered incorporating in Bermuda to keep up with their competitors who had already moved overseas. But they changed their mind. They did the right thing.
But the bill before us provides a litigation and financial windfall to corporate expatriates at the expense of companies like Stanley Works. Instead of permitting claims to be filed wherever a corporation does business, or has minimum contacts, this bill requires the suit to be brought where the defendant's principal place of business is located. Perhaps that makes some sort of sense in the abstract, but in the case of a corporate expatriate what that means is that in most cases claims could only be filed in places like Bermuda under their liability laws.
It is bad enough that these companies are essentially cheating on their taxes by arguing, rather unconvincingly, that they are not American companies. But for them to use this rationale to escape liability is outrageous. This is unfair to the victims, and unfair to the domestic company who would be forced to compete against these companies.
The Congressional Research Service has analyzed this bill and wrote: "In certain circumstances a United States citizen injured in this country would not have the judicial forum in the United States in which to seek relief." In other words, in certain cases, American citizens would have no judicial recourse whatsoever.
These are American companies flouting American tax law. They do business here in the United States, and they should be subject to our laws, period. So my motion to recommit amends the underlying bill to say the new limitations on jurisdiction and venue do not apply to a corporate expatriate company. This is a modest, commonsense change to address the irresponsible actions of a handful of companies. It is time for these companies to live up to their obligations as American corporate citizens. I urge my colleagues to vote "yes" on this motion to recommit.
Mr. Speaker, I yield 1 minute to the gentleman from Washington (Mr. Inslee).
(Mr. INSLEE asked and was given permission to revise and extend his remarks.)
Mr. INSLEE. Mr. Speaker, we have a delicious debate before us because we Democrats believe if Stanley Tool tries to avoid taxes by moving to Bermuda and their tool blows up and puts out your eye, an American ought to have access to the American judicial system in front of an American jury.
The Republicans want to outsource the job to Bermuda. If a corporation goes to France and a product blows up and hurts you, we Democrats believe Americans ought to have access to the Americans judicial system. The Republicans want to outsource the jury system to Paris. We do not even have French fries in our cafeteria anymore, and the other side is outsourcing our jobs to France. The same applies to Germany and every other country. The other side has outsourced enough jobs; we are not going to allow the outsourcing of our jury system, too. Support this motion.
Ms. DeLAURO. Mr. Speaker, I urge my colleagues to support this motion to recommit, and I want to thank the gentlewoman from Texas (Ms. Jackson-Lee), who is a member of the Committee on the Judiciary who was going to offer this motion in committee.
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RECORDED VOTE
Ms. DeLAURO. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.