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I am for a fair balance here. I have a lot of companies in Massachusetts that are high-tech companies, a lot of companies that are impacted by this. I know a lot of people in the industry whom I respect enormously who deserve to be protected against greedy, voracious sorts of wrongful, totally

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   I would, in our effort, put restraints on the capacity to bring class actions wrongly. And I think we have an increased standard with respect to materiality that would make it much tougher for people to put a class together without a showing of injury.

   So the real issue here before us in the Senate is, What is really trying to be achieved here? If we are trying to simply achieve a balanced, fair approach to protecting companies from unfair lawsuits and being balanced about the average citizen's approach to the court system there is a way to do that. But if what we are doing is a larger tort reform agenda, because of the bad name that lawyers in general have, and some lawyers in particular have earned for them, if that is the effort, in order to seek some broader change in the legal system that denies people access to the courts, then I think we have a different kind of problem.

   There are many people in this Chamber who have practiced law before, some on the other side of the fence, on the Republican side, who do not believe any legislation is necessary, that this is a one-time problem, that the greatest incentive you can have to avoid a problem is for people to fix it ahead of time, and the greatest way in which you will get the best and biggest and fastest fix ahead of time is to have people required to be open to the possibilities of redress if they did not do that.

   But if we limit people's potential liability, there is a great likelihood that a lot of people will say, Well, I'm not going to fix this. I'm not liable. I don't need to do anything about it. They can't bring suit against me. And you may, in fact, have taken away the very incentive you are trying to create.

   Mr. President, there are very real and legitimate substantive arguments: Access to our court system. What is the best incentive? How do you approach this fairly? How are you going to wind up with a system that is balanced? All of those issues are really at stake in this. I hope colleagues will remember that as they approach the question of what is the best compromise here which would give us the kind of balance that we need.

   Mr. President, I yield the remainder of my time to the Senator from South Carolina.

   The PRESIDING OFFICER. The Senator from South Carolina has 11 minutes remaining.

   Mr. HOLLINGS. Mr. President, I thank my distinguished friend from Massachusetts. He has summed it up.

   I will only point out again this morning's news, the Wall Street Journal. I quote from page B4:

   [By now] the year 2000 bug was supposed to have played havoc with corporate computer spending, with companies supposedly too worried about their mainframes to think of anything else. A cautious attitude about the issue was the theme in comments by big technology companies that released first-quarter results in the past few weeks.

   But with one notable exception, the technology industry has so far escaped any broad year 2000 slowdown.

   Mr. President, I ask unanimous consent to print in the RECORD an editorial from this morning's Washington Post about Y2K liability.

   There being no objection, the editorial was ordered to be printed in the RECORD, as follows:

   Y2K Liability

   The Senate is considering a bill to limit litigation stemming from the Year 2000 computer problem. The current version, a compromise reached by Sens. John McCain (R-Ariz.) and Ron Wyden (D-Ore.), would cap punitive damages for Y2K -related lawsuits and require that they be preceded by a period during which defendants could fix the problems that otherwise would give rise to the litigation. Cutting down on frivolous lawsuits is certainly a worthy goal, and we are sympathetic to litigation reform proposals. But this bill, though better than earlier versions, still has fundamental flaws. Specifically, it removes a key incentive for companies to fix problems before the turn of the year, and it also responds to a problem whose scope is at this stage unknown.

   Nobody knows just how bad the Y2K problem is going to be or how many suits it will provoke. Also unclear is to what extent these suits will be merely high-tech ambulance chasing or, conversely, how many will respond to serious failures by businesses to ensure their own readiness. In light of all this uncertainty, it seems premature to give relief to potential defendants.

   The bill is partly intended to prevent resources that should be used to cure Y2K problems from being diverted to litigation. But giving companies prospective relief could end up discouraging them from fixing those problems. The fear of significant liability is a powerful incentive for companies to make sure that their products are Y2K compliant and that they can meet the terms of the contracts they have entered. To cap damages in this one area would encourage risk-taking, rather than costly remedial work, buy companies that might or might not be vulnerable to suits. The better approach would be to wait until the implications of the problem for the legal system are better understood. Liability legislation for the Y2K problem can await the Y2K .

   Mr. HOLLINGS. I thank the distinguished Chair.

   ``Liability legislation for the Y2K problem can await the Y2K .'' What we are talking about is an instrument, a computer. The average cost for a small business and otherwise is $2,000. They are not going to buy a $2,000 instrument in 1999 that is not going to last past January 1.

   It is quite obvious that it is not the poor, but it is the economically advantaged, the small businesses, and the doctors in America that use this instrument now. And all they have to do is go into Circuit City and say: Now, put it up, let me see that it works, that it is Y2K compliant.

   Why do away with the entire law system, the 10th amendment to the Constitution, the habitual and constitutional control of torts at the State level under article 10 over the 200 years of history? Do you know why? Because they put in this amendment to amendment to amendment. When they put in the first one, even chambers of commerce objected to it. What you had in the McCain bill was still a bad bill. The McCain-Wyden bill is still a bad bill. The McCain-Wyden amendment to the McCain-Wyden amendment is still bad, as evidenced by this editorial here this morning.

   Again, Mr. President, I ask unanimous consent to have printed in the RECORD a letter from Kaiser Permanente Executive Offices, dated April 27.

   There being no objection, the letter was ordered to be printed in the RECORD, as follows:

   KAISER PERMANENTE,

   Oakland, CA, April 27, 1999.
Hon. Barbara Boxer,
U.S. Senate,
Washington, DC.

   DEAR SENATOR BOXER: On behalf of Kaiser Permanente, we would like to address a number of serious concerns regarding S. 96, a bill introduced by Senator John McCain, which addresses disputes arising out of year 2000 computer based problems (Y2K ).

   In brief, S. 96 as currently drafted:

   Threatens the ability of the health care industry to maintain rates;

   Severely limits the rights of small businesses, consumers and non-profit organizations like ours to recover the often excessive costs of Y2K fixes, purchases and upgrades;

   Unfairly prejudices (or completely bars) the ability of the health care community to recover the costs associated with any potential personal injury or wrongful death award from the entity primarily at fault for the defect that caused the injury. S. 96 permits the manufacturers, vendors and sellers of non-compliant Y2K equipment and products to profit at the expense of their customers and leaves the health care industry (and ultimately our employer groups and patients) responsible to bear the costs of their negligence.

   The four provisions in S. 96 that cause us the most concern are as follows:

   The Act would not prohibit a patient injured in a hospital by a Y2K defective product from suing the hospital or health plan providing the medical service in which the defect arose. The Act would, however, limit or bar a claim brought by the hospital or health plan against the manufacturer or vendor of the defective product, leaving the health care providers solely responsible for the damages.

   The 90 day waiting period requirement will impair the ability of the health care industry to complete its Y2K compliance efforts. The health care providers must remedy their Y2K problems quickly to be compliant with internal and external (including state and federal regulatory) timeliness. For a considerable length of time, Kaiser Permanente has been diligently identifying, mediating, validating, and testing equipment and software with respect to Y2K issues. A key component of this process has been demanding information, assistance, and corrective action from manufacturers and vendors, who often have control of the source codes and other information that is necessary to achieve compliance. Vendors who at this late date have still not adequately addressed their Y2K defects in their products, despite repeated requests by us, should not be afforded a 90 day period in which to respond to such requests. Such a delay in pursuing legal remedies could prejudice our ability to complete our Y2K efforts by the year 2000.

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   While the Act limits the liability of manufacturers and sellers of defective equipment and software, it does not require that they fix the problems that they created for a reasonable price. Some manufacturers and vendors sold Y2K defective products in recent years knowing that their products would not be usable past the year 2000. Yet S.96 would allow such tortfeasors to charge exorbitant rates for fixes which should be provided at a discounted or nominal fee. In other words, the Act allows tortfeasors to increase their ill-gained profits at the health care purchaser's expense.

   The Act does not carefully limit the use of the powerful defenses it creates. Rather, it permits a defendant to assert defenses in any action related ``directly or indirectly to an actual or potential Y2K failure''. Manufacturers and vendors will find it useful to assert that there are Y2K issues in cases where a Y2K problem is not alleged, lengthening and confusing litigation and potentially barring claims for other defects.

   The above provisions in S.96 are of the greatest concern to us. However, there are other unfair provisions in the Act which inequitably limit liability, including the abrogation of joint liability, the mandate of proportionate liability, the limitation to economic loss, the increase in the standard of proof for the plaintiff, and the addition of new defenses for the defendant. Please carefully review S.96 again in light of our concerns. We would be happy to discuss this with you further, please do not hesitate to call Wendy Weil at 510-271-2630 or Laird Burnett at 202-296-1314.

   Sincerely,
Mary Ann Thode,

   Senior Vice President,
Chief Operating Officer.

   Mr. HOLLINGS. Quoting from the letter:

   In brief, S. 96 [as currently drafted] threatens the ability of the health care industry to maintain rates; severely limits the rights of small businesses, consumers and non-profit organizations like ours to recover the often excessive costs of Y2K fixes, purchases and upgrades; unfairly prejudices (or completely bars) the ability of the health care community to recover the costs associated with any personal injury or wrongful death award from the entity primarily at fault for the defect that caused the injury. S. 96 permits the manufacturers, vendors and sellers of non-compliant Y2K equipment and products to profit at the expense of their customers and leaves the health care industry (and ultimately our employer groups and patients) responsible to bear the costs of their negligence.

   Mr. President, I could read on and on, but when different industries--the automobile industry, the grocer industry, and otherwise--come to the attention of this 36-page document to change around the 200-year experience of the enforcement of torts, the Uniform Commercial Code nationally, and do away with it and the so-called privilege it required. To come in here and cap punitive damages, describe a small business as any 50 or less--I notice in this most recent amendment, Mr. President, on page 2, a defendant is described as an unincorporated business, a partnership, corporation, association, or organization with fewer than 50 full-time employees. It used to be smaller, 25. But they are going in the wrong direction, all with this so reasonable, so bipartisan, so studied, so compromising, so interested--come on. Give me a break.

   Look at the next sentence: ``No cap with injury specifically intended.'' Paragraph 1 does not apply if the plaintiff establishes by clear and convincing evidence that the defendant acted with specific intent to injure the plaintiff. So there go the class actions. Each plaintiff has got to come in and prove by clear and convincing, not by the greater weight of the preponderance of evidence, but by clear and convincing, that it is specifically intended for that particular plaintiff to be injured.

   Mr. President, what we really have is a fixed jury. We could talk sense, but I notice in the morning paper that Kenneth Starr, the independent prosecutor, is asking the judge down there in Arkansas to go and interview the jurors after the verdict. He ought to come to Washington where they interview the jurors before the verdict.

   That is my problem on the floor of the Senate here this morning; I can tell you that right now. They run around this Chamber, the Chamber of Commerce is in here, the Business Roundtable, this conference board, get all those organizations going. I am tending to my business down home. And you are for tort reform. You know this Y2K liability, $1 trillion for the trial lawyers and all that.

   Yes, I am against that. I am against a trillion dollars for the trial lawyers. Everybody says that, running for office. Sure, the idea of tort reform.

   So they have Kosovo, they have the balanced budget, and the lockbox charade going on, and right in the middle of this they come with all the fixed votes, the jurors, before we even get to debate and show that there is a nonproblem.

   I am getting there. I can see the Parliamentarian blinking his eyes, so I am running out of time here. We are going to have to vote. But here is the biggest fix I have ever seen. We had a difficult time trying to get the truth around to our colleagues about S. 96 here this morning, but I hope we can withhold and get some time to vote against this cloture motion so we will have time to really show what is going on.

   We have problems in this country, but I can tell Senators, it is not the tort system. It is not how the tort system affects business. Business is going through the roof financially in New York. Everybody is making money, particularly in the computer business. Of all the people to ask for special legislation here in the Congress as well as special protections and the revision of all the tort practices, is the computer industry, the richest in the entire world.

   I appreciate the indulgence of the Chair, and I yield the floor.

   Mr. LIEBERMAN. Mr. President, I would like to add my strong support to the bill we are currently considering, the Y2K Act. Although I plan to join my colleagues on this side of the aisle in voting against cloture, I don't want anyone to construe that vote as an indication that I have any doubts about the need for, and the wisdom of, this legislation.

   Congress needs to act to address the probable explosion of litigation over the Y2K problem, and it needs to act now. We are all familiar with the problem caused by the Y2K bug. Although no one can predict with certainty what will happen next year, there is little doubt that there will be computer program failures, possibly on a large scale, and that those failures could bring both minor inconveniences and significant disruptions in our lives. This could pose a serious challenge to our economy, and if there are wide spread failures, American businesses will need to focus on how they can continue providing the goods and services we all rely on in the face of disruptions.

   Just as importantly, the Y2K problem will present a unique challenge to our court system--unique because of the likely massive volume of litigation that will result and because of the fact that that litigation will commence within a span of a few months, potentially flooding the courts with cases and inundating American companies with lawsuits at the precise time they need to devote their resources to fixing the problem. I think it is appropriate for Congress to act now to ensure that our legal system is prepared to deal efficiently, fairly and effectively with the Y2K problem--to make sure that those problems that can be solved short of litigation will be, to make sure that companies that should be held liable for their actions will be held liable, but to also make sure that the Y2K problem does not just become an opportunity for a few enterprising individuals to profit from frivolous litigation, unfairly wasting the resources of companies that have done nothing wrong or diverting the resources of companies that should be devoting themselves to fixing the problem.

   To that end, I have worked extensively with the sponsors of this legislation--with Senators MCCAIN, GORTON, WYDEN, DODD, HATCH, FEINSTEIN and others--to try to craft targeted legislation that will address the Y2K problem. Like many others here, I was uncomfortable with the breadth of the initial draft of this legislation. I took those concerns to the bill's sponsors, and together, we worked out my concerns. I thank them for that. With the addition of the amendment just agreed to by Senators DODD, MCCAIN and others, I think we have a package of which we all can be proud, one which will help us fairly manage Y2K litigation. Provisions like the one requiring notice before filing a lawsuit will help save the resources of our court system while giving parties the opportunity to work out their problems before incurring the cost of litigation and the hardening of positions the filing of a lawsuit often brings. The requirement that defects be material for a class action to be brought will allow recovery for those

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