i have been listening to senate debate on Year 2000 Liability. live coverage will continue after recess until 215 pm eastern on cspan 2 for anyone interested (available on cable tv and computer). in view of recent political statements on this thread, i would be interested on anyone's views on this issue.
regards
February 24, 1999
Legislation Limiting Year 2000 Liability Is Introduced
By JERI CLAUSING
ASHINGTON -- A bipartisan group of House members introduced business-backed legislation Tuesday that would limit litigation, lawyers' fees and damages from breakdowns related to the Year 2000 computer problem.
A similar bill is being prepared in the Senate, and sponsors of both bills said they hoped to win quick passage of the liability limitations. Trial lawyers, however, are expected to lobby strongly against the measure, and the White House has called it unnecessary.
John Koskinen, the White House adviser on the Year 2000 problem, said Tuesday that the Administration was taking a position of "studied neutrality" on the legislation, which was sponsored by Thomas M. Davis 3d, Republican of Virginia, and five other House members.
"We do not view this as a Year 2000 readiness issue," said Koskinen, chairman of the President's Council on Year 2000 Conversion. "It's related to the Year 2000 in terms of who pays for whatever the problems are, but it is not an issue that is going to positively effect a solution." He said the bill was less about the computer problem than about a long-running Congressional battle over liability limits and tort reform.
Supporters, however, say the legislation will provide an incentive for companies to fix the problem by protecting businesses and individuals who make reasonable efforts to prevent failures resulting from the programming glitch.
Last year, Congress approved legislation intended to protect businesses from being sued for statements about Year 2000 preparedness that had been made in good faith, even if they turned out to be false. But efforts to include liability limits in that legislation failed.
The Year 2000 problem stems from the way some computers, software and electronic devices store dates as two digits, like 99 for 1999. As a result, they may malfunction when confronted with the year 2000.
The House proposal would bar most Year 2000 claims from Federal courts, unless plaintiffs provided notice to sue within 30 days of a breakdown and gave defendants 90 days to fix the problem.
Lawsuits for personal injuries would not be affected, but punitive damages could be sought only if there was clear and convincing evidence that the defendant specifically intended to cause injury, and the damages would be capped at $250,000. Lawyers' fees would be limited to $1,000 an hour.
Additionally, the bill attempts to protect large companies from responsibility for the actions of less wealthy co-defendants by limiting each defendant's liability to a direct proportion of its responsibility for breakdowns.
Fewer than 50 Year 2000 lawsuits have been reported so far in the United States
The measure encourages mediation and arbitration over lawsuits and establishes a Federal loan program for small businesses that need help fixing their computer systems.
Groups pushing for the legislation include the United States Chamber of Commerce, the National Association of Manufacturers, the National Retail Federation and the National Federation of Independent Businesses, the main small business trade group. Trade associations for the information technology, software and insurance industries also back the proposal.
The House sponsors promoted the new proposal as necessary for insuring that companies focus their resources and efforts on getting computer systems ready for the year 2000, not on preparing or defending themselves from lawsuits.
"Too much time, talent and money is being spent on efforts to avoid litigation," said Representative James P. Moran, a Virginia Democrat. "These resources should be directed toward fixing the Y2K problem and trying to avoid computer disruptions."
But Koskinen said he disagreed that the threat of litigation was hampering efforts to fix the problem. "The lawyers who are preparing either side of this issue are not the people who are fixing systems," he said. "And at this juncture I don't know of any major company that says, 'If I didn't have my lawyers working here I'd get more systems fixed.' "
Fewer than 50 Year 2000 lawsuits have been reported so far in the United States, most of which are pending. One resulted in a $250,000 settlement last fall from Tec America Inc. for a Michigan grocer whose checkout equipment could not handle Year 2000 dates. And a class-action lawsuit on behalf of medical groups stuck with faulty software resulted in a settlement with the Medical Manager Corporation providing for free repairs.
In general, though, judges have served notice that many of the lawsuits will be an uphill battle for plaintiffs. In most cases, vendors of business software have been cleared of any responsibility for Year 2000 fixes that were not detailed in their contracts. And class-action suits over faulty financial software from Intuit Inc. were dismissed after judges pointed out that Intuit was providing free repairs and that no damage had been done.
Business groups, however, are worried by predictions from some legal experts that Year 2000 disruptions will eventually unleash an unprecedented tidal wave of lawsuits covering an almost unimaginable variety of claims. Lloyd's of London, the insurance exchange, has projected that the worldwide legal costs may reach $1 trillion.
Jeri Clausing at jeri@nytimes.com welcomes your comments and suggestions.
Copyright 1999 The New York Times Company
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