Summer 1999Volume 2: Issue 2
Damages at stake in Y2K bills
By Barbara Tomovick
Punitive damage awards could take a hit as state and federal lawmakers scramble to clamp a lid on “frivolous” litigation caused by year 2000 computer problems.
At this writing, bills were pending in both houses of Congress to eliminate frivolous year 2000, or Y2K, lawsuits. Various measures would limit punitive damage awards, establish a waiting period before Y2K suits could be filed, mandate mediation, encourage voluntary alternative dispute resolution, set minimum injury standards for class-action suits, allow a reasonable-efforts defense, eliminate joint liability and place other limits on claims.
Most states are working on, and a few have passed, their own legislation that in some cases limits or bans punitive damages in Y2K actions.
Claims estimates range as high as $1 trillion for complications stemming from computers’ inability to read the year 2000. The glitch, known as the Y2K or millennium bug, is rooted in the technology’s infancy, when computer memory was costly and in short supply. Using two digits to designate the year in dates became standard, but that practice has led to system interruptions as Year 2000 dates come into use. Predictions for system failures on Jan. 1, 2000, range from doomsday to minor inconvenience.
Lawsuits already have been filed, but whether predictions of Y2K gridlock in the nation’s courts are sound remains to be seen. Still, legislative bodies aren’t taking any chances.
Two bills in the U.S. Senate, S 461 (the “Year 2000 Fairness and Responsibility Act” introduced by Sen. Orrin Hatch, R-Utah), and S 96 (the “Y2K Act” of Sen. John McCain, R-Ariz.), call for limiting punitive damages to three times the amount of actual damages or $250,000. McCain’s bill also requires plaintiffs to prove that the applicable standard for awarding damages has been met, and it bars punitive damage awards against government entities. In the House of Representatives, HR 775 (the “Year 2000 Readiness and Responsibility Act” from Rep. Tom Davis, R-Va., et al), goes further still by restricting attorney fees and directing that punitive damage awards be paid into a small-business assistance fund.
Jeff Jinnett, president of LeBoeuf Computing Technologies and head of the Year 2000 Practice Group for LeBoeuf, Lamb, Greene & MacRae law firm in New York, said limiting punitive damages is appropriate, because the Y2K problem grew out of accepted business practices.
“The theory is that punitive damages are meant to punish someone who has done something really egregious and is likely to do it again, and to send a message to others,” Jinnett told The Frankenfeld Report. The Y2K problem is a one-time occurrence, he said, and, moreover, “It’s a societal problem; we’re all at fault to a certain extent.”
Read about Jinnett at http://www.cutter.com/consortium/consultants/jjbio.html.
The Association of Trial Lawyers of America in Washington, D.C., however, opposes all efforts to limit plaintiffs’ ability to collect damages. ATLA maintains such measures would deny justice to businesses and individuals, reward procrastinators and actually create more litigation as questions arise over proper interpretation of new laws.
“Congress and major business organizations ought to be helping and encouraging businesses to fix the Y2K defect, not distort the system so the only winners are those irresponsible corporate executives who ignored the millennium bug for years and now are demanding special immunity protection from those they hurt,” ATLA President Mark Mandell said in a prepared statement.
To read more about ATLA’s position on Y2K, turn to http://www.atlanet.org/.
U.S. Sen. Chris Dodd, D-Conn., vice chairman of the Senate’s Special Committee on the Year 2000 Technology Problem, has offered a so-called “compromise” bill. S 738 (and its counterpart in the House, HR 1319), the “Y2K Fairness in Litigation Act,” contains many of the same constraints as other bills but would not cap punitive damages.
“What we are trying to do is put forward a moderate bill that offers some reasonable measure for people to fix the problem and not fight it out in court.” said Unice Lieberman, minority press secretary for the Special Committee and a Dodd spokesperson on the Y2K issue.
See http://www.senate.gov/~dodd/ for more on the Special Committee.
According to a prepared statement from Dodd, a flood of Y2K cases would not only jam already overloaded courts, it could cost consumers billions of dollars as companies pass on the costs of settling claims.
Meanwhile, a New Jersey suit settled at the end of 1998 is being touted as a model for resolving Y2K lawsuits. In the federal class-action Courtney vs. Medical Manager Corp., the defendant software maker agreed to provide $30.5 million in free upgrades and rebates to doctors. (For more details, see the story in the Dec. 21, 1998, edition of the New Jersey Law Journal.)
Contact Jeff Jinnett at:
Year 2000 Practice
LeBoeuf, Lamb, Greene & MacRae LLP
125 W. 55th St.
New York, N.Y. 10019
Phone: (212) 424-8292
E-mail: jinnett@llgm.com
Contact the Association of Trial Lawyers of America at:
1050 31st St. N.W.
Washington, D.C. 20007-4499
Phone: (202) 965-3500, (800) 424-2725, Fax: (202) 342-5484
E-mail: help@atlahq.org