U.S. Senate Seeks Compromise On Y2K Lawsuits

By Adam Entous

WASHINGTON (Reuters) - Under pressure from Democrats and consumer advocates, Senate Republicans said Wednesday they would rework bills that would limit lawsuits against high-tech companies stemming from the year 2000 computer bug.

Democrats welcomed the move, saying it would give lawmakers the time they needed to craft a compromise to cut down on millennium bug lawsuits while protecting the rights of consumers to sue if their computers crash next Jan. 1.

Backed by computer and software companies, legislation introduced by Senate Judiciary Committee Chairman Orrin Hatch and Senate Commerce Committee Chairman John McCain would delay year 2000 computer bug lawsuits during a 90-day ``cooling-off'' period, cap punitive damages and limit the liability of company executives.

The U.S. Justice Department and other critics complained that the bills went too far, giving too much protection to high-tech businesses at the expense of consumers.

The millennium problem arises because many older computers record dates using only the last two digits of the year. If left uncorrected, such systems could treat the year 2000 as the year 1900, generating errors or system crashes next Jan. 1.

Both Republicans and Democrats are under pressure to act fast because of the Jan. 1, 2000, deadline.

Behind the initiatives are powerful industry groups, including the Information Technology Association of America, which represents IBM, Microsoft Corp. (Nasdaq:MSFT - news), AT&T Corp. (NYSE:T - news) and more than 11,000 other high-tech companies.

Supporters say the legislation is needed to cut down on the number of frivolous Y2K lawsuits, which could cost more than $1 trillion worldwide, according to some experts.

But the Justice Department said the bills were ripe for abuse, and might undermine Y2K readiness by taking pressure off the very companies charged with fixing the problem. Consumer advocacy groups said small businesses and computer users should have every right to sue.

Faced with growing Democratic opposition and a presidential veto, aides said McCain and Hatch would spend the coming weeks trying to craft a compromise.

``We're working on amendments and revisions that will address the concerns that have been raised by the Democrats,'' said a spokeswoman for McCain, an Arizona Republican.

An aide for Hatch said the Utah Republican would postpone Thursday's vote in the Judiciary Committee to give lawmakers a week or more to try to work out an agreement.

``A pause in this process right now is a healthy thing,'' said David Carle, spokesman for the Senate Judiciary Committee's ranking Democrat, Patrick Leahy of Vermont. ``If the bill were rushed to the floor, it would lead to party-line votes and dicey chances at best for any legislation like this.''

In current form, the bills would cap punitive damages to $250,000 for many businesses and limit the personal liability of corporate officers and directors to $100,000 in many cases. They would also delay some lawsuits during a 90-day waiting period, and make it harder for some plaintiffs to recover damages.