Senate Passes Year 2000 Legislation
June 15, 1999

Washington, D.C. – The United States Senate today approved legislation to address the potential flood of frivolous lawsuits stemming from the Year 2000 computer problem, one that many experts say could cost U.S. businesses as much as one trillion dollars.

The following is Senator Feinstein’s statement on the legislation:

“The Y2K legislation is critically important to California, where over 20 percent of the nation’s high tech jobs are located. This bill is a once in a millennium, three year law to stave off what many have called a “trillion dollar litigation headache.” Without it, I believe we could see the destruction or dismemberment of America’s cutting edge lead in technology. With the legislation, we will discourage the frivolous lawsuits which could result in horrendous costs to a large, quickly growing industry.

Concerned Members of Congress, including myself and Senators Hatch, McCain, Dodd and others, have been working for more than six months in an attempt to craft a solution to this potential problem. The bill was requested by dozens of companies and more than 80 industry groups -- including the Semiconductor Industry Association (SIA), the National Association of Manufacturers (NAM), the Chamber of Commerce and the Information Technology Association of America -- to develop legislation to prevent frivolous and baseless lawsuits that could jeopardize companies ability to quickly solve Y2K problems.

After months of negotiating and a combined effort between Senators from both sides of the aisle, we have reached what I believe is a fair compromise. Without this bill, companies may not have an incentive to make reasonable efforts to fix Y2K problems. Companies may also find that they must devote far too many resources to preparing for lawsuits rather than mitigating damages and solving Y2K problems.

In fact, consultants have come to us and said that they refuse to become involved in helping companies solve Y2K problems, for fear that they will open themselves up to being sued later on. They would rather just not get involved. One group in particular, representing 400 companies and more than 15,000 consultants, told me that they would refuse to enter into any Y2K consulting contract. As a result, the very people capable of fixing Y2K defects are unavailable to perform those fixes.

In crafting this bill, we have spoken with the White House, the Department of Justice, and with representatives from every sector of society -- product sellers and consumers, environmental groups, physicians and patients, federal and local government and countless others.

In fact, we have made dozens -- if not hundreds -- of changes to the measure. We addressed every concern we could, we have limited its scope, and we have clarified many sections to ensure that plaintiffs and defendants alike will find an even, uniform playing field once the bill passes.

Nothing in this bill is permanent -- rather, it is a three-year bill limited to certain specific cases. The bill applies only to Y2K failures, and only to those failures that occur before January 1, 2003. The legislation:

• Provides a 90-day “cooling off period” during which time no suit may be filed, so that businesses can concentrate on solving Y2K problems rather than on fending off lawsuits.

• Offers proportionate liability in many cases, so that defendants are punished according to their fault, with three exceptions:

• for plaintiffs with a low-net worth;
• for defendants who act with an intent to injure or defraud a plaintiff; or
• for cases in which certain defendants are “judgement proof.”

• Provides for the use of Alternative Dispute Resolution at any time during the 90-day cooling off period.

• Requires that, for Y2K class action suits, a majority of plaintiffs have suffered some minimal injury, in order to avoid cases in which thousands of unknowing plaintiffs are lumped together in an attempt to force a quick settlement.

• Limits punitive damages to $250,000 or three times compensatory damages, so as to deter frivolous suits for small businesses of up to 50 employees.

The bottom line is that this is a 3-year-bill – no more, no less which will allow companies to fix Y2K defects and proceed to remediation of damages in an orderly and fair manner.”