Mixed reaction to Senate's Y2K Act

After Senate approval of a bill that would limit lawsuits arising from the Year 2000 problem, reaction from those outside Washington is decidedly mixed.

4 min read
In the wake of this week's Senate approval of a bill that would limit lawsuits arising from the Year 2000 technology glitch, reaction from those outside Washington is decidedly mixed.

Those who will be most affected by any legislation that limits Y2K litigation--lawyers, consumer advocates, and business leaders--vary in their assessments of how the bill, if made into law, will affect courtrooms and boardrooms across the country.

After months of debate, the Senate approved a controversial bill Tuesday that looks to limit lawsuits arising from the Year 2000 technology problem.

Back to Year 2000 Index Page With a 62-37 vote, Senators passed a bill that would provide disputing parties with a 90-day "cooling-off" period to mitigate their grievances out of court; set some caps on punitive damages for small businesses; protect government entities including municipalities, school, fire, water, and sanitation districts from punitive damages; and protect those not directly involved in a Year 2000 bug failure.

The passage of the measure brings to an end a lengthy stalemate among senators over how to limit what some consider a potential flood of litigation that could arise from Y2K problems--which by some estimates could cost $1 trillion and cripple the economy.

Supporters of the bill, chiefly sponsored by Sen. John McCain (R-Arizona), primarily business groups form the technology and manufacturing industries, said it protects the economy from frivolous litigation, while critics said it protects the interests of big business at the expense of consumer rights.

"The bill, S. 96, proposes unprecedented preemption of state consumer protection laws and would make it difficult, if not impossible, for individual consumers and small businesses to recover fair compensation and hold wrongdoers accountable for Y2K failures," Joan Claybrook, president of Public Citizen, a consumer rights advocacy group, said in a statement. The organization is calling for the president to veto the bill.

"Nothing in S. 96 would require that a single computer chip or defective product to be fixed. Last week the Senate refused to amend the bill to allow a modest amendment by Sen. [Barbara] Boxer (D-California) giving consumers and small business a free or low-cost fix for Y2K defective products if such a fix were available. Worshiping at the high-tech altar, senators rejected this and other attempts to help consumers and small businesses with Y2K failures," Claybrook said.

Of course people in the technology industry disagree. As reported earlier, industry leaders have been stumbling over themselves in praise of the Senate's vote yesterday.

Harris Miller, the president of the Information Technology Association of America, said the Y2K Act is a good bill. "There have to be incentives to mediate not mitigate and not just allow a fishing expedition for lawyers," Miller said.

The bill doesn't exonerate those who don't do their best to fix Y2K problems. "It's not protection for companies that ignore the problem." If you go the extra mile to fix your systems the trial lawyers won't get their day in court, Miller said.

Beyond the consumers, and the tech industry, a law based on the Y2K Act would also impact the way lawyers do their job as well.

"This is a big deal. It will have a significant impact on many kinds of litigation," said Dean Morehous, a partner at Thelen, Reid and Priest, a California-based law firm. He has represented clients who have both been plaintiffs and defendants in tech industry suits.

Morehous said the Y2K Act would introduce a good amount of legal reform without protecting companies cart blanch, but there is some merit behind legislation's detractors.

"Some of the criticism makes sense. There are protections for companies in the common law already," so this may be giving multiple layers of protections for businesses. "It is special interest legislation in that it protects a certain sector of the economy."

In addition, the legislation adds a number of procedural hurdles for a limited class of businesses, said Morehous. The bill provides for limits in the discovery process--a stage in the litigation process in which both sides of a dispute can look over materials tied to the case.

"This is important because it prevents plaintiffs from rummaging through a defendant's files, computer hard-drives, and other material?. Discovery, especially in computer cases, can be an expensive stage. Personally, I think this should be done in general to cut down on cases," through out the system, Morehous said.

Despite the limits on certain procedures within Y2K lawsuits, Morehous thinks there is still places for grievances to be brought to court. "It will keep a lid on Y2K litigation, but not prevent it totally."

There may be collateral litigation because of the Y2K Act itself because companies that lawyers represent will be forced to find out if the new law would apply to a certain case. "It will have to be proven that this is Y2K failure and not something else. Plaintiffs will try to plead around Y2K failure so defendants can't claim the protections."

In all, Morehous, who spoke out against a California bill that would have limited Y2K lawsuits in that state, said the Y2K Act introduces modest reform and is well thought out. "I suspect the White House will get some concessions out of McCain before it becomes a law."