mr. chairman , i thank the ranking member , and i thank my good friend and colleague from texas ( mr. smith ) xz4003811 . 
there are many opportunities that we have to agree . 
i believe in his unabiding commitment to the integrity to the judicial system . 
that is why i rise to quote him when he says that there is a premise that we all deserve justice and that justice , in essence , should not be denied . 
he agrees with that , and i agree with that . 
frankly , however , this legislation is not merely a denial of justice . 
it is an obliteration , a complete destruction of justice . 
it is interesting in the backdrop of the united states promoting democratization in iraq , challenging iran , and now with the proceedings against saddam hussein and the very basis of our dependence upon a fair and impartial judicial system that will allow lawyers to be able to petition for their client or defend their client , that we would stand here on the floor of the house today and in essence create the lawsuit elimination legislation rather than the suggestion that we are preventing abuse . 
let me tell you what this legislation intends to do . 
this legislation intends to ride roughshod over states ' rights , forcing state courts to enact burdensome procedures and even stripping their jurisdiction over certain cases . 
that means that , in essence , it forces state judges within 30 days of a case being filed to conduct an extensive and lengthy pretrial hearing to determine whether federal rule 10 must be imposed . 
we already know that federal rule 11 has given the court system an effective tool to ensure , if you will , that if there is frivolous activity in the courthouse , or a lawyer files a frivolous case , that lawyer can be sanctioned . 
this now protects foreign corporations at the expense of consumers . 
why ? 
because you may be able to sue in a state court , but the state court may not have jurisdiction over that foreign corporation , leaving the victim of products liability , the victim of a terrible heinous accident left without remedy in a state court . 
it makes sanctions mandatory rather than discretionary . 
it undermines the federal judiciary system and the court system . 
it says to our judges that although you have gone to the highest litmus test , confirmation on the federal bench , elections and bar scrutiny , we are telling you that we are going to pierce your courtroom and we are going to take away the rights of rule 11 where you have discretion and we are going to simply tell you to throw a lawyer out . 
then for myself as an african american and someone whose very existence is based upon the privileges that thurgood marshall had , and many other lawyers , to go into the courthouse , and at that time and era in the early 1940s and 1950s , speak language that could have been considered frivolous , i would suggest that just in a general sense , whether or not this particular legislation speaks particularly to that issue , there are many times in our history where lawyers may be considered frivolous because they are speaking a language that opposes society . 
the question of an equal education under brown v. topeka might have been frivolous . 
i do not want to have a federal law that suggests that you can not go into the courthouse . 
this bill allows judges to order individuals to reimburse litigation costs , including attorneys ' fees , by specifically stating that reasonable attorneys ' fees should be taken into account when assessing the amount of the sanction . 
that means that the poorer client is going to be thrown out . 
this is supposed to help small businesses . 
at the same time , it may be the small business that is a petitioner . 
they may think their case is legitimate . 
for example , what about this lawsuit for one business against another . 
that is frivolous lawsuits , when you had enterprise , a very big company , filed a lawsuit against rent-a-wreck of america , a tiny rental company , and hertz corporation and threatened to file lawsuits against several other rental car companies that used the phrase , `` pick you up , '' claiming that `` we 'll pick you up '' is enterprise 's slogan . 
then there was a whole bunch of other lawsuits around who will pick you up , and who is not picking you up and why you are being picked up . 
we could label frivolous lawsuits across the board . 
it should be left to the judges in rule 11 . 
this legislation removes the safe harbor provision of the rule which allows an attorney a period of 21 days to withdraw an objectionable pleading . 
that undermines justice . 
maybe the lawyer made a mistake and therefore we do not have that opportunity . 
mr. chairman , i would simply say this is a bill that has no basis in need , and we should unanimously defeat it . 
mr. chairman , i rise in opposition to the base bill before the committee of the whole h.r. 4571 , the lawsuit abuse reduction act of 2005 and state my support for the substitute offered by the gentleman from as california , mr. schiff . 
as i mentioned during the committee on the judiciary 's oversight hearing on this legislation during its iteration in the 108th congress and reiterated in my statement for the markup , one of the main functions of the congress before it passes legislation is to analyze potentially negative impact against the benefits that it might have on those affected . 
the base bill before the house today does not represent the product of careful analysis . 
in the case of h.r. 4571 , the lawsuit abuse reduction act , the oversight functions of the judiciary committee allowed us to craft a bill that will protect those affected from negative impacts of the shield from liability that it proposes . 
this legislation required an overhaul in order to make it less of a misnomer -- to reduce abuse rather than encourage it . 
the goal of the tort reform legislation is to allow businesses to externalize , or shift , some of the cost of the injuries they cause to others . 
tort law always assigns liability to the party in the best position to prevent an injury in the most reasonable and fair manner . 
in looking at the disparate impact that the new tort reform laws will have on ethnic minority groups , it is unconscionable that the burden will be placed on these groups -- that are in the worst position to bear the liability costs . 
when congress considers pre-empting state laws , it must strike the appropriate balance between two competing values -- local control and national uniformity . 
local control is extremely important because we all believe , as did the founders two centuries ago , that state governments are closer to the people and better able to assess local needs and desires . 
national uniformity is also an important consideration in federalism -- congress ' exclusive jurisdiction over interstate commerce has allowed our economy to grow dramatically over the past 200 years . 
this legislation would reverse the changes to rule 11 of the federal rules of civil procedure , frcp , that were made by the judicial conference in 1993 such that ( 1 ) sanctions against an attorney whose litigation tactics are determined to harass or cause unnecessary delay or cost or who has been determined to have made frivolous legal arguments or unwarranted factual assertions would become mandatory rather than discretionary to the court , ( 2 ) discovery-related activity would be included within the scope of the rule , and ( 3 ) the rule would be extended to state cases affecting interstate commerce so that if a state judge decides that a case affects interstate commerce , he or she must apply rule 11 if violations are found . 
this legislation strips state and federal judges of their discretion in the area of applying rule 11 sanctions . 
furthermore , it infringes states ' rights by forcing state courts to apply the rule if interstate commerce is affected . 
why is the discretion of the judge not sufficient in discerning whether rule 11 sanctions should be assessed ? 
if this legislation moves forward in this body , it will be important for us to find out its effect on indigent plaintiffs or those who must hire an attorney strictly on a contingent-fee basis . 
because the application of rule 11 would be mandatory , attorneys will pad their legal fees to account for the additional risk that they will have to incur in filing lawsuits and the fact that they will have no opportunity to withdraw the suit due to a mistake . 
overall , this legislation will deter indigent plaintiffs from seeking counsel to file meritorious claims given the extremely high legal fees . 
furthermore , h.r. 4571 , as drafted , would allow corporations that perform sham and non-economic transactions in order to enjoy economic benefits in this country . 
therefore , i planned to offer an amendment that would preclude these entities from so benefiting . 
the text of the amendment defined the term `` benedict arnold corporation '' and proposed to prevent such companies from benefiting from the legal remedies that h.r. 4571 purports to offer . 
the `` benedict arnold corporation '' refers to a company that , in bad faith , takes advantage loopholes in our tax code to establish bank accounts or to ship jobs abroad for the main purpose of tax avoidance . 
a tax-exempt group that monitors corporate influence called `` citizen works '' has compiled a list of 25 fortune 500 corporations that have the most offshore tax-haven subsidiaries . 
the percentage of increase in the number of tax havens held by these corporations since between 85.7 percent and 9 , 650 percent . 
this significant increase in the number of corporate tax havens is no coincidence when we look at the benefits that can be fund in doing sham business transactions . 
some of these corporations are `` benedict arnolds '' because they have given up their american citizenship ; however , they still conduct a substantial amount of their business in the united states and enjoy tax deductions of domestic corporations . 
such an amendment would preclude these corporations from enjoying the benefit of mandatory attorney sanctions for a rule 11 violation . 
by forcing these corporate entities to fully litigate matters brought helps to put their true corporate identity into light and discourages them from performing as many domestic transactions that may be actionable for a claimant . 
in the context of the judiciary 's consideration of the terrorist penalties enhancement act , h.r. 2934 , my colleagues accepted an amendment that i offered that ensured that corporate felons were included in the list of individuals eligible for prosecution for committing terrorist offenses . 
the amendment that i would have offered for this bill has the same intent -- to increase corporate accountability and to encourage corporate activity with integrity . 
i ask that my colleagues support the substitute offered by mr. schiff xz4003610 and defeat the base bill . 
we must carefully consider the long-term implications that this bill , as drafted , will have on indigent claimants , the trial attorney community , and facilitation of corporate fraud . 
