President Clinton yesterday signed into law the Year 2000 Information and Readiness Disclosure Act, intended to promote the sharing of information between companies on how to best battle the Y2K bug.
The new law provides limited liability protections to encourage companies to share information about products, methods, and best practices, while protecting consumers from misleading statements. But the act does not provide liability protections for failures that may arise from Year 2000 problems, such as selling products that do not work.
Controversy surrounded the bill during and after its passage by Congress, as legal experts debated whether it protected consumer rights. Some Republicans argued it didn't provide enough litigation protection.
Earlier, a representative of the Association of Trial Lawyers of America (ATLA) reaffirmed that the lawyers group will "actively oppose" the bill, which was passed by the Senate in September, and the House earlier this month, because they believe it provides companies too much protection from potential lawsuits filed by consumers.
An ATLA source said the organization opposes the new law because no one person, or company should be relieved of accountability for their actions. The association is also concerned that the law may be the first of many to protect corporations from other Y2K litigation, making it harder and harder to make companies own up to their Y2K compliance responsibilities.
In an official statement released during his signing ceremony yesterday, Clinton directly addressed the critics.
"While I understand that companies have a wide range of concerns related to the Y2K transition and potential litigation, we must also protect the rights of consumers. Therefore, this legislation is focused exclusively on exposure related to information exchange and would not cover statements to individual consumers in marketing a product normally used for personal use," Clinton said.
And the law's traditional defenders say it only limits liability against companies to free up the exchange of information specific to the Year 2000 bug, between companies.
"We made every effort to work with Congress to get [the bill] passed during this session," said Jack Gribben, spokesman for the President's Council on Year 2000 Conversion. "Hopefully it will persuade corporations to share more Y2K information freely."
Corporate executives have expressed fear that they will be engulfed by multimillion-dollar class-action lawsuits spawned by financial losses from malfunctioning computers, broken contracts, and product liability issues caused by computers' incompatibility with dates in the new millennium.
The new law would not stop lawsuits based on Year 2000 computer failures, but instead would make it easier for businesses to have conversations with their suppliers and service companies, according to the language in the law.
The law also protects companies from government lawsuits as well provides protection against antitrust litigation that may be sparked by companies sharing critical business information.
"Although the Justice Department has already indicated that competitors in an industry who merely share information on Y2K solutions would not be in violation of the antitrust laws, this Act creates a specific exemption from the antitrust laws for these activities," the president said. "The limited antitrust exemption created by [the law] will make it easier for firms to cooperate with one another to solve the Y2K problem while continuing to protect consumers from industry agreements to boycott, allocate a market, or fix prices or output."
The president's action yesterday comes just days after the House passed more Y2K legislation, titled the "Year 2000 Preparedness Act of 1998." The Republican sponsored bill urges the president to push for establishing business continuity plans that ensure uninterrupted delivery of federal services and programs to taxpayers. It also provides for Y2K assistance for small and medium-sized businesses and develops consumer awareness programs.