Businesses, trial lawyers face off over Y2K liability

A giant, buzzing insect menaces San Francisco and New York City in a televised warning to Congress to approve legislation restricting lawsuits over the Year 2000 computer bug.

The $500,000 ad campaign debuting Sunday is the latest push to limit businesses' liability for fallout from Y2K computer glitches. Business leaders sought out likely sponsors, helped draft the bills and have made them a top priority.

The millennium issue is the latest twist in a long-standing feud between business leaders and trial lawyers, another powerful lobbying group, over proposed limits on lawsuits.

This time, the looming deadline may give the issue more urgency and force a decision that would frame future debates.

"They are trying to make Y2K the poster child for liability reform for 1999," said Joan Mulhern, legislative counsel for Public Citizen, a consumer advocacy group affiliated with Ralph Nader.

Supporters of the legislation say that without limits, lawsuits related to computer glitches could cost all sorts of businesses $1 trillion and swamp the court system.

More than 80 businesses that formed a coalition to push the bill meet weekly. The National Association of Manufacturers has told lawmakers that this vote would help determine their rankings on the group's annual legislative scorecard. Seventy-eight executives signed a letter urging the Senate to pass the bill.

The U.S. Chamber of Commerce, part of the business coalition, is spending $500,000 for the TV ad campaign. Viewers are urged to support "a bill that will protect consumers with legitimate problems, while preventing a swarm of frivolous lawsuits over minor glitches."

The commercials were scheduled to debut in Washington on the Sunday talk shows, then air nationally on the cable news networks CNN, MSNBC and CNBC, chamber officials said.

The Y2K glitch could occur when computers that use only two digits to read dates mistake the year 2000, or "00," as 1900. That could result in computer errors or shutdowns.

The Senate bill, sponsored by John McCain, R-Ariz., and Ron Wyden, D-Ore., would require a 90-day waiting period in which companies could try to resolve complaints before a Y2K lawsuit is filed against them. The legislation also would limit class action lawsuits and cap punitive damages.

Businesses would be liable for only $250,000 or three times the amount of compensatory damages awarded, whichever is greater. Small companies with fewer than 25 workers would not have to pay more than $250,000.

Attorneys' fees would be capped at $1,000 an hour in similar legislation introduced in the House, sponsored by Reps. Tom Davis, R-Va., and Jim Moran, D-Va. Both represent districts in Northern Virginia, home to a booming high-tech industry. Davis is a former vice president and general of a high-tech company.

Business groups seeking Y2K legislation started the process by targeting Davis, Moran and California lawmakers who represent high-tech companies.

They reached out to many Democrats who traditionally side with trial lawyers. In the Senate, they won the support of Republican McCain, chairman of the Senate Commerce Committee, which has jurisdiction over the issue, and Sen. Dianne Feinstein, D-Calif., among others.

They gave the lawmakers a list of what they wanted in the legislation and were delighted when most of their requests were granted.

Davis' spokesman, Trey Hardin, said the business groups made a compelling case.

"They represent the people on the front lines of the business community," Hardin said. "They have the real-life examples so they can provide the real-life input."

The Clinton administration and many Democrats oppose the bills, which they contend would strip consumers of their rights.

Lawyers, meanwhile, are fighting back with horror stories of computer companies refusing to take responsibility for selling equipment that is not Y2K compliant.

They told lawmakers about grocers whose cash registers would not accept credit cards having "00" as an expiration date, and a doctor who was not told his new software would have problems until the company offered to fix it for $2,410.

The bills would reward "irresponsible corporate executives who ignored the millennium bug for years and now are demanding special immunity protection," said Mark Mandell, president of the Association of Trial Lawyers of America.


 

 

 


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