Interesting bit from the WSJ:
December 10, 1997
Group Seeks a Limit on Damages
Related to Millennium-Bug Suits
By MITCHEL BENSON
Staff Reporter of THE WALL STREET JOURNAL
SACRAMENTO -- An influential business lobbying group and a Republican assemblyman are teaming up to try to restrict the liability in an expected avalanche of lawsuits triggered by the millennium-bug problem -- computers unable to read the year 2000.
Brooks Firestone, a Los Olivos Republican, is expected to introduce legislation next month that his staff says is designed to sharply curtail damage awards in most so-called Y2K (Year 2000) suits.
According to the current draft language now being discussed, the legislation would prohibit punitive damages and payments for pain and suffering. In addition, it would expressly limit awards only to cases of bodily injury and to reflect costs "reasonably incurred" to test, reprogram and replace relevant computers and software.
Those drafting the measure say that this latter provision -- a departure from current law -- would be the most effective way to rein in economic damage claims stemming from Year 2000 troubles.
Decaying Meat
It would work like this: Say, for example, a butcher shop has a freezer full of steaks. And say that freezer shuts down at midnight on Dec. 31, 1999, because of a Y2K malfunction in a computer system. Under existing law, the butcher could recover the value of the meat as "consequential damages." But under the Firestone draft, the butcher could recover only the costs of fixing the computer system that failed.
Just how wedded Mr. Firestone and industry officials are to this element of the legislation isn't clear, however.
"This is going to be a difficult bill" to pass, says Leon Page, an aide to Mr. Firestone. And if giving up on the consequential-damages restriction means getting the rest of the measure implemented, he adds, "we're willing to bargain that chip away."
That tort-reform proponents are starting to grapple with the Year 2000 issue makes perfect sense, given that California is so well known for being home to two things: computer companies and a litigious population. "This is not in any way a bill to absolve people of liability," says John Sullivan, president of the Association for California Tort Reform, the group sponsoring the measure. "But no one reasonably should want this thing to turn into a litigation circus."
Yet Rick Simons, president of the 4,000-member Consumer Attorneys of California, finds it ironic that Mr. Sullivan's group is pushing legislation whose current form "seeks to limit businesses from recovering actual damages." That position, he says, is "certainly anti-small business and seems to me to be generally antibusiness."
Even if the bill was to allow for the recovery of consequential damages -- a change Mr. Sullivan appears willing to make -- Mr. Simons says he's still doubtful that his organization could support it. "I'm not sure why we'd want to prejudge cases in any fashion ... when we don't really know what the underlying facts are," says the Hayward personal-injury attorney.
Problem of Space
The legal and technical ramifications of the Year 2000 problem date to the beginning of the computer age, when magnetic storage of information was expensive and capacity limited. So software writers conserved space by using only two digits instead of four to denote calendar years. But as 1999 turns into 2000, many software applications are expected to malfunction or freeze up altogether as "99" becomes "00."
The computer industry is sure to be supportive of the Firestone bill. But many software and hardware makers may well choose to do their lobbying behind the scenes. Computer companies "are very strange about not wanting to go public on this issue," says Vito Peraino, a Los Angeles lawyer who heads the 12-member Year 2000 working group at his firm, Hancock Rothert & Bunshoft. "They don't want their competitors to know they may have a Year 2000 problem."
Bugged by the Hype
Some contend that the Year 2000 situation is being hyped. Nonetheless, many experts believe that the costs related to these glitches will wind up being extremely high.
For instance, consultant Capers Jones says in a report issued earlier this year that the country faces some $277 billion in overall Y2K costs. Of that amount, he figures, the single largest component will be litigation -- accounting for an estimated $100 billion of the total. "If the problem is not fixed, then the errors in software ... can lead to the most expensive litigation in human history," warns Mr. Jones, chairman of Software Productivity Research Inc. of Burlington, Mass.
Mr. Jones notes that the cost of Y2K technical fixes in California could exceed $9.5 billion. That's more than the estimate for any other state -- and $3.5 billion more than second-place New York.
"Anytime you have that much money floating around, you're going to find lawyers following it," says Todd Eberle, assistant director of the state Department of Information Technology.
As legal counsel to the agency, Mr. Eberle has his hands full trying to figure out how state government can recover its costs of correcting the Y2K problem -- while limiting its own potential liability.
Last month, Mr. Eberle went to San Francisco to attend what is believed to have been one of the first conferences to focus exclusively on Y2K and litigation. "They were turning people away, it was so packed," Mr. Eberle recalls. "I got there late on the first day, and it was like buying one of those cheap, scalped seats at Candlestick. I was stuck behind a pillar."
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