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Commentary: A Better Vaccine Against Y2 K Lawsuit Fever


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Commentary: A Better Vaccine against Y2K Lawsuit Fever

It's starting. As the Year 2000 looms, lawsuits over the bug are piling up. Already, some 38 suits over Y2K glitches have been filed in the U.S. And according to GartnerGroup Inc., a technology think tank, 711 More disputes are at the pre-filing stage. Says Jim Wooten, director of the U.S. Chamber of Commerce's Institute for Legal Reform: "Y2K litigation could virtually shut down companies and cost jobs."

That may be hyperbole. But as more companies report serious Y2K testing troubles, and as news of minor breakdowns surface, the dockets are likely to swell, and executives are pressuring Congress for relief.SAME TUNE. Congress has heard the call. Unfortunately, it sounds like the same old tune--a replay of the holy war between trial lawyers and business over tort reform. The Chamber is floating draft legislation called the Year 2000 Readiness & Jobs Protection Act, which urges Congress to set up special tribunals modeled after bankruptcy courts. Y2K judges would be appointed by the U.S. Court of Appeals, and defendants would not be liable for punitive damages if they could prove they took reasonable steps to fix the bug before problems surfaced. The measure would limit punitive damages and require Y2K suits to be filed within two years of bug-related harm or injury. Attorneys' fees would be capped at $1,000 an hour. Says Richard Middleton Jr., president-elect of the American Trial Lawyers Assn. (ATLA): "This is simply tort reform in sheeP's clothing."

Technology-company lobbyists want to keep the disputes out of court altogether. Harris Miller, president of the Information Technology Association of America, an industry trade group, says Congressshould create a forum for pre-trial discussions overseen byarbitrators, where most settlements would be only for actual damages. Jan Amundson, general counsel for the National Association of Manufacturers, says this route could be "less contentious and more realistic politically." Of course, it's also a good way to keep settlements private--and cheaper for defendants.

Trial lawyers vow to defeat either proposal. Middleton says mandatory arbitration and mediation "ends up favoring companies who supply bad products." And the proposed Y2K court? "We don't need a whole new court structure," he says.

Even if there were general agreement on the need for a special court, there might not be enough time to create one. It takes months to appoint new federal judges, for example. And the whole matter could become hostage to President Clinton's looming impeachment hearings, since proposals for Y2K litigation relief would have to go through the Senate Judiciary Committee. "There's no question that the impeachment issue will slow the whole legislation train," says David Karl, spokesman for Senator Patrick Leahy (D-Vt.), a Judiciary Committee member who is also an expert in technology law. "The fate of key issues, including Y2K, could be poisoned at the well."

Lawmakers should consider another approach. Why not adjudicate Y2K cases in the existing system but consolidate them in one court? That's what happens in Delaware's chancery court, which deals with corporate law. Business could get a central forum and judges with expertise on the issues. And trial lawyers could keep Y2K cases in the civil-justice system. The stakes are too high to leave this to chance. It's time for lawyers and tech companies to stop bickering and start dealing with this part of the Y2K threat.By Marcia StepanekReturn to top

BW/HARRIS EXECUTIVE POLL: Slow but Steady Progress

SITTING PRETTY OR SITTING DUCK?

How prepared do you think your company's computer systems will be to accommodate the year 2000 when it arrives?

1998 1997

Very prepared 89% 86%

Somewhat prepared 10% 12%

Somewhat unprepared 0% 1%

Very unprepared 0% 0%

Don't know 1% 1%

WEAK LINKS IN THE SUPPLY CHAIN

Howprepared do you think the computer systems at your company'S suppliers and customers will be to accommodate the year 2000 when it arrives?

Very prepared 31%

Somewhat prepared 61%

Somewhat unprepared 4%

Very unprepared 0%

Don't know 4%

TRUST, BUT VERIFY

Has your company developed requirements for suppliers and/or customers to demonstrate their computer systems' readiness for the year 2000?

Yes 84% No 10%

Don't know 6%

Survey of 303 senior executives at large public corporations. Interviews were conducted Dec. 8-17, 1998 for BUSINESS WEEK by Louis Harris & Associates Inc.Return to top


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