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News In Review

June 21, 1999

Senate Passes Y2K Bill

Despite concessions, hurdles remain before bill can be signed into law

By Bruce Caldwell

Related links:
  • CIOs, Senate Divided On Y2K

  • Year 2000 Resource Center
    • And from our sister publication:
  • VARBusiness Y2K Liability Bill Passes In the House of Representatives
    • The U.S. Senate last week passed the Year 2000 Remediation Encouragement Act, a bill aimed at heading off a flood of lawsuits over year 2000 problems. The Senate and House of Representatives must work out differences before the final bill can be presented to President Clinton for signing, possibly by mid-July.

    "The bill isn't veto-proof right now," says Marc Pearl, general counsel for the Information Technology Association of America, a trade group lobbying for the bill. Among the Clinton administration's concerns is a lack of protection for consumer rights, including the right to sue for punitive damages or money over and above the costs of actual damages because of Y2K problems.

    An amendment by Democrats to protect those consumer rights was voted down earlier this month but was embraced to some extent in the bill approved last week. The bill exempts government organizations from punitive damages and sets a cap on such damages of $250,000 or three times actual damages, whichever is less, for companies with 50 employees or less. But there are no liability caps for larger companies and for directors and officers of companies, as proposed earlier in the legislative process. However, the bill makes it difficult to sue for punitive damages when a contract is involved.

    What seems to remain undisputed are important measures that will "head off frivolous litigation," says Pearl. Specifically, a 30-day notice of a Y2K problem and a 60-day period to fix the problem must be provided before a lawsuit can be filed; actual economic loss, rather than potential loss, must be stated in the legal complaint; and when blame for Y2K problems is shared, any court-ordered judgments must be in proportion to the amount of responsibility that can be identified.

    "This will be a good thing if it goes through," says Ted Herman, IS director at American Tissue Corp., a paper-products manufacturer in Hauppauge, N.Y. Without limits, he says, lawsuits could tie up the legal system for years.


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