Copyright 1999 Federal Document Clearing House, Inc.
Federal Document Clearing House Congressional Testimony
March 11, 1999, Thursday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 1057 words
HEADLINE:
TESTIMONY March 11, 1999 CHRISTOPHER J. DODD SENATOR SENATE
SPECIAL YEAR 2000 TECHNOLOGY PROBLEM IMPACT ON BUSINESS OF Y2K - RELATED
LAWSUITS
BODY:
FOR IMMEDIATE RELEASE Contact: Unice
Lieberman March 11, 1999 (202) 224-7286 United States Senate Special Committee
on the Year 2000 Technology Problem Opening Statement of Senator Christopher J.
Dodd Hearing on Y2K Litigation Legislation Thank you Mr. Chairman. Your
leadership throughout the last eleven months is greatly appreciated. Yours has
been the loudest voice of warning about a variety of Y2K issues, and I'm sure
the American people are truly grateful. We welcome all in attendance today, and
thank the witnesses for their participation and for the effort they have made in
taking time out of their busy schedules to be here. We especially thank Senator
Hatch for taking time from his day to join us. Today we are examining the
potential effect that the Y2K problem may have on litigation. I believe that our
ultimate goal should be to encourage Y2K compliance. Our legal system is already
burdened by a tremendous number of cases. The burgeoning caseload in federal
courts is well-known, and the problem in the state courts is just as bad. In
1997, there was one case filed in the state courts for every three people living
in the United States. A potential escalation in Y2K litigation could further
impede the efficiency of our court system, and cost taxpayers billions in
inflated costs for products and services, as well as insurance premiums, as
companies shift the cost burden to consumers. In the same spirit that we passed
"The Year 2000 Information and Readiness Disclosure Act," which acts to
encourage a steady flow of information regarding Y2K- readiness, we should
proceed into a discussion of Y2K litigation reform. "The Year 2000 Information
and Readiness Disclosure Act" brought about a bipartisan compromise that
satisfied industry concerns. It was crafted with a single purpose in mind, and I
hope that we would take this same approach in developing Y2K litigation reform.
I agree with Senator Bennett that even with this legislation, fears of Y2K
litigation weigh heavily on the minds of business owners. Yet, we hear rumors,
almost on a daily basis, of business enterprises which are doing relatively
little in the way of remediation. Even with "The Year 2000 Information and
Readiness Disclosure Act," corporate attorneys may still be counseling their
clients to be wary of full-disclosure. But, the Act has worked to encourage many
companies to begin thinking in terms of Y2K remediation. Further reform should
shine a stronger light on those who choose to do nothing. After examining the
various Y2K litigation bills, I am very concerned that they may go beyond what
is needed to address the very valid concerns of a Y2K litigation explosion. As
some of you may know, in 1995 I joined with Senator Domenici to author
Securities Litigation Reform Legislation. This was a limited, carefully crafted
remedy to correct specific known abuse. I have frequently stated that any Y2K
litigation should be similarly designed and should avoid overreaching its
intended purpose. Many interest groups will therefore have to curb their
political appetites. I strongly believe that we must leave broad tort reform for
another day. I don't want to make the perfect the enemy of the good. If we seek
through this legislation to achieve broad tort reform, we run the risk that we
will not have meaningful Y2K liability protection. Therefore, I intend to
introduce a bill that is narrow in scope and does not overreach. The goal of
this bill will be to discourage frivolous suits and therefore guard against the
potential flood of Y2K litigation. I intend for this bill to provide for the
following: - An opportunity for defendants to cure - I endorse a 90-days period,
where litigation would be stayed giving a defendant an opportunity to correct
and therefore, hopefully mitigate Y2K-related damages. - Voluntary Alternative
Dispute Resolution (ADR) - I strongly believe that alternative dispute
resolution, commonly termed ADR, is a very effective tool in avoiding the time
consuming and expensive proposition of litigation for both plaintiff and
defendant. Certainly ADR could be an extremely useful tool in resolving the
complex and disparate legal claims that may arise from Y2K-related failures. -
Specificity in pleadings - Embedded within the requirement for a specificity in
pleadings is the proposition that Y2K suits should definitively outline the
causes of action which form the underlying claim for damages. By requiring
plaintiffs to detail the elements of their claim, courts can more accurately
judge, and if necessary, dismiss frivolous or legally unsupportable suits. -
Requirements of minimal injury in class action suits - During
securities litigation reform we worked to eliminate "strike"
suits and other attorney-generated class actions. Similarly I
am concerned that we potentially face an onslaught of suspect Y2K class action
suits. By requiring any alleged defect to be material we help ensure that
superficial or frivolous Y2K class action suits do not occur. - Contract
Preservation - In civil actions involving contracts it is the terms of those
very contracts that should be strictly construed. It is important, however, to
evaluate whether this might eliminate state law causes of action based on
implied warranty. - Reasonable Efforts Defense - In a claim for money damages,
except in contract, a defendant should be entitled to enter into evidence that
it took measures that were reasonable under the circumstances to prevent the Y2K
failure from occurring or from causing the damages upon which the claim is
based. - Negligence - In an overall discussion of negligence claims and in our
desire to limit frivolous law suits, it is appropriate that we review the
standards of proof and determine whether those standards need to be raised. -
Duty to Mitigate - In the complex and unknown world of potential Y2K failures,
it is important that prospective plaintiffs make all reasonable efforts to avoid
damages in circumstances where information was readily available. And yet, we
must not bar the plaintiff from their fundamental legal rights. I hope that a
bill based on these principles will meet our objectives without overstepping the
bounds of our intentions. I welcome the perspective and insight that each of our
witnesses bring to us today. Thank you Mr. Chairman
LOAD-DATE: March 16, 1999 
