Politicians reach a compromise on Y2K bill

After months of political wrangling, the White House and Congress reach a compromise on limiting lawsuits arising from the year 2000 technology problem.

3 min read
After months of political wrangling, Congress and the White House reached a compromise on a measure that would limit lawsuits arising from the year 2000 technology problem.

The agreement Back to Year 2000 Index Page is based on the proposed Y2K Act, which would limit lawsuits by providing disputing parties with a 90-day "cooling-off" period to settle grievances out of court, according to Senate sources. The agreement would also set some caps on punitive damages for small businesses, and protect government entities (including municipalities, school, fire, water, and sanitation districts) as well as those not directly involved in a computer systems failure related to the year 2000 bug, from punitive damages.

In a letter from the White House to Sen. Chris Dodd (D-Connecticut), White House chief of staff John Podesta wrote that he was prepared to recommend that President Clinton sign the bill. Dodd worked as a liaison between Republican senators and the White House during the lengthy negotiation process.

Today's agreement is a clear sign that the White House is prepared to sign the bill into law.

Supporters of the measure hope both the House and Senate will approve the compromise this week, so the President can sign off on the bill before Congress leaves for summer recess.

According to the letter, the compromise would make it harder for firms to file class-action lawsuits. In addition, the two sides agreed to increase the monetary cap for class-action lawsuits from $1 million to $10 million before a case can be moved to federal court.

The final bill includes language stating a defendant would be liable only for a proportion of the damage he or she causes in a year 2000 glitch scenario.

One of the key sponsors of the Y2K Act, Sen. John McCain (R-Arizona), said he was happy with the agreement.

"I believe a compromise has been reached and that our economy will not be derailed by frivolous lawsuits," McCain said in a prepared statement.

The agreement ends a lengthy stalemate over how to limit what some consider a potential flood of litigation arising from year 2000 problems. Experts have estimated that the cost of potential damages from Y2K-related system failures could total more than $1 trillion.

A compromise between Democrats and Republicans was reached last month after McCain agreed to eliminate caps on punitive damages for big businesses and dropped a provision that would have protected individual corporate officers and directors. The White House, some Democrats in Congress, trial lawyers, and consumer groups had argued that the Y2K Act would sacrifice consumer protection to save big business interests.

The proposed Y2K Act is specifically crafted to address Y2K-related litigation only as reflected in its provision to sunset, or end, after three years, its supporters argue. The Y2K Act will not prevent consumers who have been harmed from exercising their right to seek redress in the courts, nor does it preclude legitimate suits from going forward.

The compromise was "a victory for common sense instead of politics as usual," said Harris Miller, president of the Information Technology Association of America, a strong backer.

"This is good for the tech industry, the economy and consumers. The agreement has everything we originally wanted and still doesn't protect" companies that have neglected Y2K compliance work, he added.

The Year 2000 problem, also known as the millennium bug, stems from an old programming shortcut that used only the last two digits of the year. Many computers now must be modified, or they may mistake the year 2000 for the year 1900 and may not be able to function at all.