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Mr. SANTINI. The urgency of vote compels me to abandon all my 17 pages of questions. I'll defer to the chairman.

Mr. KASTENMEIER. In all seriousness, do you have questions?

Mr. SANTINI. No. Thank you, Mr. Chairman.

Mr. KASTENMEIER. Otherwise, I would like to thank Mr. Ehrlich again for his distinguished appearance here this morning, and for his assistance on these issues; I would also like to state that on our return, we will have a representative from the Association of Trial Lawyers of America, Mr. Robert Begam, as our next witness.

So again, the committee will recess for 10 minutes.

Mr. EHRLICH. Thank you very much, Mr. Chairman. [Brief recess.]

Mr. KASTENMEIER. The committee will come to order. Having concluded with the first witness, Mr. Ehrlich, the chair is pleased to greet Mr. Robert G. Begam, who is past president and chairman of the National Affairs Department of the American Association of Trial Lawyers, which I guess technically is an arm of the American Trial Lawyers Association?

Mr. BEGAM. Association of Trial Lawyers of America, Mr. Chair

man.

Mr. KASTENMEIER. Association of Trial Lawyers of America. Thank you. You have a brief statement, Mr. Begam, and you may proceed as you wish.

TESTIMONY OF ROBERT G. BEGAM, PAST PRESIDENT AND CHAIRMAN, NATIONAL AFFAIRS DEPARTMENT, ASSOCIATION OF TRIAL LAWYERS OF AMERICA

Mr. BEGAM. Thank you, Mr. Chairman, members of the subcommittee, members of the staff. My name is Robert G. Begam and I am a practicing trial lawyer in Phoenix, Ariz.

I appear for the Association of Trial Lawyers of America, which is a national bar association with chapters in all 50 States.

We currently have 34,000 members, consisting of not only trial lawyers but judges and teachers who are interested in improving the litigation and dispute-resolving process in this country.

Trial lawyer members, for the most part, represent individuals who are injured and consumers, rather than corporate and insurance company interests.

Let me say at the outset that it is a great privilege for me to be testifying before the subcommittee and to be speaking for the trial bar on this particular matter. Since our clients are for the most part plaintiffs in litigation, it goes without saying, I assume, that our particular clients and my particular constituents are the last segment of the American population who would be indifferent to problems caused by court congestion and delay in getting to trial.

Nor do we blindly oversimplify our position by joining those who say, in this debate, "All we really need is more judges.

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We think we do need more judges. We think we need a lot more judges. We hope that favorable consideration will be given to pending legislation that will get us more judges, particularly in the Federal system.

But we don't think that the effort to get faster delivery of justice should end there. We join those who are in constant search for fair and evenhanded methods and procedures for combating delay and congestion, both in State and Federal courts.

For example, while there is no comment in our written statement on the magistrates bill, because we are focusing and particularly interested in the diversity proposal, we did announce our support during the Senate hearings for the magistrate bill, and authorized John P. Frank, who testified before Senator DeConcini's subcommittee, to so report that to Senator DeConcini's subcommittee of the Senate Judiciary Committee, and he did so.

We think that's an experiment that is worthwhile.

Arbitration: We have been on record for years as supporting arbitration across the board, in all smaller civil cases, and cases involving up to $25,000 in fields like medical malpractice and product liability; product liability, a field which is of particular concern to those looking at what is being litigated in the Federal courts, and other complicated civil litigation matters.

We think that arbitration is something which should be looked at as an alternative to litigation. As a method of combating delay and congestion, ATLA has been engaging over the past several months in a series of conferences with Department of Justice attorneys on this subject.

And as some of the members of the subcommittee might well know, there are proposals in the embryonic stage now in the Justice Department, and particularly in that office of the Justice Department that authored the DOJ proposals on diversity.

We urged, for many years, beefing up mandatory pretrial conferences, looking at mandatory settlement conferences, and other procedural methods of handling the delay problem.

But we come down hard in favor of preserving the diversity option in those cases which should not be arbitrated and cannot be settled, and require and deserve a litigation process in a Federal forum, for all of the reasons stated in our written statement which I won't burden you at this hour by repeating here.

I would, however, particularly direct the attention of the subcommittee to what I have called the "justice factors" in our written statement; those factors which require a Federal jury; typically, an urban jury with an ethnic and political and geographic and vocational mix that may not be available in a small rural community in a country courthouse.

Let me conclude by commenting on the alleged compromise aspect of the proposal to bar in-State plaintiffs from invoking diversity.

We submit that this is no compromise at all. Indeed, from the standpoint of the tort victims and consumers who we represent, it may be worse than the extreme solution of eliminating diversity jurisdiction altogether.

There is, in a real practical sense, a kind of "double whammy" in the proposal that would bar diversity to in-State plaintiffs. In-State plaintiffs will be barred in cases where they would benefit from the Federal court option, but under the proposal, in-State plaintiffs would be hurt in those cases in which they would prefer to stay in the State courts, but are removed under the diversity rule by the insurance com

pany or the large corporate defendant, who takes the case over to the Federal side in order to delay judgment there.

Now, this isn't far-fetched or academic. This is what happens in the real life world out there.

Let me tell you about my real-life world in Arizona, where it's happening now. These things are cyclical. Ten years ago, we could get to trial in Federal court in 6 months, and we had a 30- to 36-month delay on the State court side; so whenever we had an opportunity to invoke diversity and get into Federal court, we did, in order to get to trial quicker.

That has now completely reversed as a result of a large number of factors, primary among which has been the failure to respond to our need in a very fast-growing State for more judges; but also because of an absolutely exploding criminal caseload, nothing gets tried in Arizona in Federal court these days other than criminal cases.

You can abolish diversity cases and you are not going to change their caseload problem or their delay problem one iota, because they're not trying civil cases. They just-You just can't get them to try them, and haven't been able to for some time.

I trust that will change if and when we get more judges. So as a result, now, where we have cut back somewhat on our civil calendar on the State side, we file in my office, and I think my office is representative, about 90 percent of the cases in which there is diversity, we file in State court, in order to get to trial faster.

And we are routinely removed to Federal court, usually by insurance companies for a nonresident, because the insurance company benefits from the delay. They get to use the plaintiff's money a little bit longer.

So in short, under what is alleged to be a compromise between no change in diversity and complete abolition of diversity, we get none of the benefit of diversity, but suffer all of the detriment. And that's what I mean by a "double whammy."

We in no way impugn the motives of the proponents of this diversity proposal, but we urge the members of this subcommittee to take a hard look at a compromise which really sharpens both edges of the sword, and swipes the people whom we represent both coming and going; people who have been injured, or the survivors of those who have been killed, and who are trying to enforce their rights against large institutional defendants, insurance companies or other advantaged corporate defendants.

Thank you very much.

[The prepared statement of Mr. Begam follows:]

STATEMENT OF THE ASSOCIATION OF TRIAL LAWYERS OF AMERICA ON THE SUBJECT OF DIVERSITY OF CITIZENSHIP JURISDICTION OF THE UNITED STATES DISTRICT COURTS

My name is Robert G. Begam and I am a practicing trial lawyer in Phoenix, Ariz. I appear for the Association of Trial Lawyers of America, a national bar association with chapters in all 50 States. ATLA currently has a total of 34,000 members most of whom specialize in representing people who are injured. ATLA appears in opposition to those legislative proposals before the Subcommittee which would substantially curtail the availability of the Federal courts on the basis of diversity of citizenship jurisdiction.

Plato tells us that the measure of a civilization is the system it devises for resolving human conflicts. If Plato was right, and we think he was, the civilized

society which we have created in the United States measures up very well indeed. Without question, we have the most comprehensive system of justice which human history has evolved a complex of fact finding and law interpreting bodies, administrative and judicial, public and private. On the public, judicial side we have city, county, State, and Federal court systems, providing our citizens with not only an appropriate forum for dispute resolution but, in many instances, with a choice of forums as well. This, we submit, is good and essential to the grand design of the system of justice which we have devised and refined over the last two centuries.

The basic function of government is to serve the people with respect to those societal functions that cannot be provided as effectively by the private sector. Basic among the various governmental services is the court system. And one of the most basic services provided by the Federal Government is the Federal judicial system. To the extent that it has co-existed with state judicial systems it has always been an alternative rather than primary or sole system of justice. It is in the very offering of an alternative an option as to dispute resolutionthat we believe the Federal Government is providing its citizens with a social service of unquestionable legitimacy.

Why should these broad, somewhat abstract philosophical and historic considerations concern the trial bar? Isn't this a debate to be conducted in the law school faculty lounge rather than in the pit where the trial lawyers toil and battle?

Interestingly, the trial bar seems to have been concerned for as long as the issue has been debated. It is concerned now, and is almost unanimous in opposing any curtailment of the diversity option. For example, it was 11 years ago that Al Cone of Florida, then President of the American Trial Lawyers Association, said:

In most areas around the country, the writer has not been able to find a single trial lawyer who did not believe that a right to the choice of jurisdiction, where diversity of citizenship exists, was not an important right of his client, and one which should be preserved.

And again:

No lawyer who has discussed this matter with the writer has been able to find any basis for justifying this change, except that it would lessen the caseload of Federal court judges. The effect on the caseload of State trial court judges has apparently gone unconsidered.1

In the last several months, since the current proposals first came to my attention, I have attempted to determine whether there has been any discernible change in attitude during the 11 years since Al Cone made his observation. I have talked to dozens of busy, practicing lawyers, in all parts of the country, lawyers who practice on the side of both plaintiffs and the defense, lawyers who are in court day in and day out, and I can report that I, like Al Cone, am still looking for a trial lawyer who does not believe that choice of forum is an important right of his client which should be preserved.

Let's try to examine, briefly, the reasons for this overwhelmingly one-sided attitude. Delay is a concern which is stressed by proponents of this legislation. What is the attitude of the practicing bar toward delay?

In some jurisdictions, such as my State of Arizona, there is now, in 1977, more delay on the Federal than on the State side. This is a relatively recent development. In 1971, when extensive hearings were conducted in the Senate on this subject, the opposite was true. In other States, such as Illinois, there was then and still is considerably more delay in State courts than Federal. Given a choice of forums, there is a natural tendency for a plaintiff to stand in a shorter line, absent some countervailing consideration of profound impact. An Arizona plaintiff seeking redress for a wrong is not likely to wait 3 or 4 years for a Federal trial when he can get to court in 12-16 months in State court, unless he would be seriously prejudiced in the available state courthouse by other factors. So, with the present "choice of forum" system, differences in delay time between State and Federal courts tend to be self-adjusting. History demonstrates that these differences are cyclical. Ten years ago in Arizona, by way of example. plaintiffs chose Federal court whenever possible because there was less congestion. This movement to the Federal courts, along with an exploding criminal load and the failure to provide an adequate number of judges, has converted Federal courts in Phoenix from current to congested. In 1977, plaintiffs invariably choose. State courts because they are faster.

1 Trial Magazine, December 1966/January 1967, p. 9.

One can foresee that the pendulum will soon start swinging the other way, as these natural forces generate another cycle. Severe curtailment of diversity jurisdiction will push everything into State court and give the plaintiff no option when State courts are again badly congested and Federal courts are again relatively current.

Of more importance, when there are factors of bias or inconvenience or hostility on the State side strong enough to persuade a plaintiff to put up with Federal delay, from the standpoint of justice, the Federal forum should, of course, be available. Fortunately, these "justice" factors do not press in large volume on in-state plaintiffs, so preserving diversity for in-state plaintiffs will not have a heavy impact on case load; but they recur often enough to deserve consideration. A few examples:

(1) A Navajo couple is killed in a highway accident in northern Arizona with an interstate tractor-trailer registered in Texas. Three minor children survive. They have the choice, now, between a State court action in Holbrook, Ariz., with an all-white rural jury, and a Federal jury action in Phoenix.

(2) A student at Northern Arizona University has established residence in Flagstaff to participate in local political affairs. He loses an eye when a beer bottle manufactured by a Colorado company explodes. His choice is between a Flagstaff jury before whom he has a controversial reputation, a jury not overly sympathetic to college lads anyway, and a Federal jury in Phoenix.

(3) There are in Arizona, surviving relatives of eight people killed in the KLM-Pan Am crash in Tenerife, Canary Islands. Under present law they can sue in Federal court in Arizona and obtain the benefits of consolidation under multidistrict complex litigation rules. If deprived of the diversity option, they would have to try an isolated State court action, or go to Federal court in New York to file suit, with significant extra expense and legal fees.

The above examples are taken from my actual experience, one trial lawyer practicing in Arizona. I am confident that all active practitioners who oppose limiting diversity could provide the Subcommittee with similar examples.

Another reason for trial bar opposition may be overlooked by non-practitioners. We trial lawyers see each other all the time in both State and Federal court. Quite clearly, a drastic reduction of diversity cases would lead to a Federal specialty bar. This would be regrettable. In most States, as a practical matter, both the Federal and State systems have benefitted from the free circulation of lawyers and legal ideas between the two. In my State, Arizona, a State which has always been the first in the Nation to adopt Federal rules, there has always been productive cross-fertilization with respect to desirable procedural practices. This is because the trial bar in Arizona practices meaningfully and regularly on both sides. Limiting diversity jurisdiction would isolate the Federal bar and damage the healthy exchange which presently exists.

Most trial lawyers would agree that those who propose change should bear the burden of proof. We have heard no substantial reason advanced for limiting diversity except the chance of lessening delay in Federal courts, and a desire to lighten the case load. My friend and teacher, John P. Frank, has summarized my viewpoint with respect to this argument when he said:

"Manure is not made more attractive by moving it from one pile to another." This is a colorful but terribly accurate observation. We submit that it also puts into perspective the blind advocacy of “judicial efficiency" which has become so voguish in this, and other, contemporary legal debates. Court congestion is certainly not a virtue; but it may well be symptomatic of a virtue-the virtue of a calm, deliberative and thorough legal system which values the protection of human rights above all else. We should always remember that there is no court congestion in Uganda.

Mr. KASTENMEIER. Thank you, Mr. Begam. From what we have just concluded, namely, that in a number of cases you file suit in State court and the defendant insurance company removes to the Federal court, does it not follow that if diversity jurisdiction was abolished you would receive an advantage?

You also stated that insurance companies remove diversity cases for purposes of delay, using the plaintiff's money, and so forth and so on. So would there not be some advantage to plaintiffs in these types of cases if we totally eliminated diversity?

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