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http://www.nytimes.com/library/tech/99/02/cyber/articles/24year.html

February 24, 1999

Legislation Limiting Year 2000 Liability Is Introduced

By JERI CLAUSING

WASHINGTON -- A bipartisan group of House members introduced business-backed legislation Tuesday that would limit litigation, lawyers' fees and damages from breakdowns related to the Year 2000 computer problem.

A similar bill is being prepared in the Senate, and sponsors of both bills said they hoped to win quick passage of the liability limitations. Trial lawyers, however, are expected to lobby strongly against the measure, and the White House has called it unnecessary.

John Koskinen, the White House adviser on the Year 2000 problem, said Tuesday that the Administration was taking a position of "studied neutrality" on the legislation, which was sponsored by Thomas M. Davis 3d, Republican of Virginia, and five other House members.

"We do not view this as a Year 2000 readiness issue," said Koskinen, chairman of the President's Council on Year 2000 Conversion. "It's related to the Year 2000 in terms of who pays for whatever the problems are, but it is not an issue that is going to positively effect a solution." He said the bill was less about the computer problem than about a long-running Congressional battle over liability limits and tort reform.

Supporters, however, say the legislation will provide an incentive for companies to fix the problem by protecting businesses and individuals who make reasonable efforts to prevent failures resulting from the programming glitch.

Last year, Congress approved legislation intended to protect businesses from being sued for statements about Year 2000 preparedness that had been made in good faith, even if they turned out to be false. But efforts to include liability limits in that legislation failed.

The Year 2000 problem stems from the way some computers, software and electronic devices store dates as two digits, like 99 for 1999. As a result, they may malfunction when confronted with the year 2000.

The House proposal would bar most Year 2000 claims from Federal courts, unless plaintiffs provided notice to sue within 30 days of a breakdown and gave defendants 90 days to fix the problem.

Lawsuits for personal injuries would not be affected, but punitive damages could be sought only if there was clear and convincing evidence that the defendant specifically intended to cause injury, and the damages would be capped at $250,000. Lawyers' fees would be limited to $1,000 an hour.

Additionally, the bill attempts to protect large companies from responsibility for the actions of less wealthy co-defendants by limiting each defendant's liability to a direct proportion of its responsibility for breakdowns.

The measure encourages mediation and arbitration over lawsuits and establishes a Federal loan program for small businesses that need help fixing their computer systems.

Groups pushing for the legislation include the United States Chamber of Commerce, the National Association of Manufacturers, the National Retail Federation and the National Federation of Independent Businesses, the main small business trade group. Trade associations for the information technology, software and insurance industries also back the proposal.

The House sponsors promoted the new proposal as necessary for insuring that companies focus their resources and efforts on getting computer systems ready for the year 2000, not on preparing or defending themselves from lawsuits.

"Too much time, talent and money is being spent on efforts to avoid litigation," said Representative James P. Moran, a Virginia Democrat. "These resources should be directed toward fixing the Y2K problem and trying to avoid computer disruptions."

But Koskinen said he disagreed that the threat of litigation was hampering efforts to fix the problem. "The lawyers who are preparing either side of this issue are not the people who are fixing systems," he said. "And at this juncture I don't know of any major company that says, 'If I didn't have my lawyers working here I'd get more systems fixed.' "

Fewer than 50 Year 2000 lawsuits have been reported so far in the United States, most of which are pending. One resulted in a $250,000 settlement last fall from Tec America Inc. for a Michigan grocer whose checkout equipment could not handle Year 2000 dates. And a class-action lawsuit on behalf of medical groups stuck with faulty software resulted in a settlement with the Medical Manager Corporation providing for free repairs.

In general, though, judges have served notice that many of the lawsuits will be an uphill battle for plaintiffs. In most cases, vendors of business software have been cleared of any responsibility for Year 2000 fixes that were not detailed in their contracts. And class-action suits over faulty financial software from Intuit Inc. were dismissed after judges pointed out that Intuit was providing free repairs and that no damage had been done.

Business groups, however, are worried by predictions from some legal experts that Year 2000 disruptions will eventually unleash an unprecedented tidal wave of lawsuits covering an almost unimaginable variety of claims. Lloyd's of London, the insurance exchange, has projected that the worldwide legal costs may reach $1 trillion.

------- on the Op/Ed page ------------

http://www.nytimes.com/yr/mo/day/editorial/24wed3.html

America's Amazing Economy

These are astounding economic times. Overseas, Europe is slowing, most of Asia is in recession and Brazil threatens to drag down much of South America.

But in the United States, consumers are spending with abandon and economists continue to be surprised by how robust the economy is.

It was against that background that Alan Greenspan, the chairman of the Federal Reserve Board, testified before the Senate Banking Committee yesterday. He again predicted that the economy would slow this year, and again warned that stock prices appeared to be overvalued.

Wall Street may hang on every word from Mr. Greenspan, but most Americans seem quite unconcerned. They continue to buy stocks, pushing prices higher and allowing them to feel and act richer. As Mr. Greenspan noted, the net worth of households is up about 50 percent since 1994, and personal consumption expenditures rose more last year than at any time since the mid-1980's. The Conference Board reports that Americans think current conditions are better than at any time since the board began its consumer confidence surveys in 1967.

Most economists, including Mr. Greenspan, have been overly pessimistic about the American economy for several years, and consumers seem to have decided to believe their own eyes rather than heed the warnings of fallible forecasters. In retrospect, it appears that growth was enhanced by technological change and aided by plunging commodity prices that reflected weakness abroad. Economists also underestimated the degree to which soaring stock prices would encourage spending, and the Fed's lowering of interest rates late last year, as it feared a weakness that did not materialize, only moved stock prices higher.

It is certainly enjoyable to see things constantly come out better than expected. But it is also slightly unnerving to realize that the experts are so confused. "We are, in a sense, learning as we are doing," Mr. Greenspan said yesterday. "There is no Economics 101 which carries us through what's going on today.

We're probably writing the textbooks, but we don't have them to read yet."

-- pshannon (pshannon@inch.com), February 24, 1999

Answers

"Too much time, talent and money is being spent on efforts to avoid litigation," said Representative James P. Moran, a Virginia Democrat. "These resources should be directed toward fixing the Y2K problem and trying to avoid computer disruptions."

Excuse me. Do these arrogant morons expect us to believe that they have computer scientists working on legal problems? Or is it that they would rather have their wing-tipped attorneys getting down and dirty on some Cobol? What a beautiful name for one uttering such claptrap, Moran, that's rich. Maybe if we remove all incentive big business would have this thing solved by June and then rebate us all several hundred dollars we've spent on emergency rations.

Thank you, Sir. May I have another!?

-- Puddintame (dit@dot.com), February 24, 1999.

pshannon,

Is this the correct spelling of ... "Aaaarrrrrgghhhh?"

Just want to make sure I get that right. Suspect we'll have lot's of uses coming up.

Diane

-- Diane J. Squire (sacredspaces@yahoo.com), February 24, 1999.

2nd grade jokes:

Why did the Pirate go see the new movie?

'Cause it was rated AAAAAARRRRRRRRRRGGGGGGHHHHH

Why was six afraid of seven?

Because seven eight nine. (geddit?)

-- Lisa (lisa@work.now), February 24, 1999.

Cute - ;)

the Wall Street Journal ain't much better in it's coverage of this than the NYTimes. Page B5 - "Health Industry Called Ill-Prepared For Y2K Problem" (I don't have an on-line subscription) Anyway, it's 7 paragraphs buried in the paper of the same old claptrap...

-- pshannon (pshannon@inch.com), February 24, 1999.

The NYTimes just got into the act. This is now on their website. From its placement, it looks like it'll be on the front page of Thursday's paper.

http://www.nytimes.com/yr/mo/day/late/ap-y2k-problem.htmlproblem.html< /a>

C.I.A. Predicts Serious Y2K Problems in Foreign Countries

By THE ASSOCIATED PRESS

WASHINGTON -- The Year 2000 computer problem could cause serious disruptions abroad, including breakdowns in nuclear reactors and strategic missile systems, midwinter power outages and disruptions in world trade and oil shipments, a CIA official warned on Wednesday.

Air Force Gen. John Gordon, deputy director of the CIA, emphasized at a Senate Armed Services Committee hearing that gaps in information make it hard to assess the scope of the damage in foreign countries, although it is evident that most countries, particularly Russia, are far behind the United States in preparing for the crisis.

Gordon said Russia has exhibited a low level of awareness for the "Y2K" problems that could occur if computers misread the year 2000 as 1900, causing them to shut down or produce erroneous information.

Midwinter power outages, he said, could have "major humanitarian consequences" in countries such as Russia and Ukraine.

Gordon stressed: "We currently do not see a danger of unauthorized or inadvertent launch of ballistic missiles from any country due to Y2K problems."

But he said there could be serious local problems with missiles if temperature or humidity monitors malfunction, and that problems in early-warning systems could lead to incorrect information.

The developing world faces the greatest threats of disruptions, Gordon said. China will probably experience failures in key sectors such as telecommunications, electric power and banking.

The United States is regarded as the world leader in fixing the Y2K problem, but the draft of a report being prepared by two senators who have been studying the issue, Sens. Robert Bennett, R-Utah, and Christopher Dodd, D-Conn., said the consequences within the country should not be underestimated.

During this year, they said in a letter to other senators, "We will be confronted with one of the most serious and potentially devastating events this nation has ever encountered."

Their report also pointed to foreign countries as very vulnerable, as well as many private U.S. industries such as health care, food processing and shipping,

"This problem will affect us all individually and collectively in very profound ways, from the availability of electrical power to the quality of our health care," they said.

Deputy Defense Secretary John Hamre, at the Senate hearing, said 93 percent of the Pentagon's mission-critical computer systems will be fixed by the end of March, the deadline President Clinton set for federal agencies to repair their computers.

"I would also like to take this opportunity to state unequivocally that our nuclear command and control system has been thoroughly tested and has performed superbly," he said.

"Rest assured, although there will be increasing unpredictability and some degradation in some systems, the armed forces will be ready to ensure national security before, on and after the Year 2000," Hamre said.

-- pshannon (pshannon@inch.com), February 24, 1999.