Opening Statement of Sen. Orrin Hatch (R-UT).
Re: Senate Judiciary Committee hearing on S 461, the 'Year 2000 Fairness and Responsibility Act.'
Date: March 1, 1999.
Source: Senate Judiciary Committee.

STATEMENT OF SENATOR ORRIN G. HATCH
SENATE JUDICIARY COMMITTEE HEARING
THE YEAR 2000 FAIRNESS AND RESPONSIBILITY ACT

Today’s hearing is entitled, “The Y2K Bill: The Next Generation.” It is a hearing on S. 461, the Year 2000 Fairness and Responsibility Act that Senators Feinstein, McConnell, and I introduced last week. This bill is the “next generation” or follow-up legislation to the Senate Judiciary Committee-reported “safeharbor” bill that passed the Congress last year. Passage of this measure is important for consumers, business, and the economy - especially in Utah which has quickly become one of the nation’s leading high tech states.

In working together to develop this legislation, Sen. Feinstein and I have sought to produce a bill that encourages Y2K problem-solving, rather than encouraging a rush to the courthouse. It is not our goal to prevent any and all Y2K litigation. It is to simply make Y2K problem-solving a more attractive alternative to litigation. If we are to enact worthwhile Y2K problem-solving legislation this year, we must work together in a bipartisan manner on a fair and narrowly tailored bill. S. 461 gives us that opportunity.

* Preserving Cause of Action: First of all, while our bill encourages problem solving, nothing in it prevents injured parties from eventually bringing legitimate Y2K actions. The bill merely creates an opportunity for companies to correct problems and an incentive to settle cases. This will spur technology providers to spend resources in the repair room instead of diverting needed capital to the courtroom.

* 90-Day “problem-solving” period: A main feature of our bipartisan bill is its requirement that there be a 90-day delay before any Y2K-related litigation may begin. More specifically, this mandatory cooling-off - or problem-solving - period is designed to allow a consumer to notify—in a simple communication—the technology provider, the supposed source of the Y2K problem, about the exact nature of the problem, how the consumer has been injured as a result, and what remedy is sought. The technology provider then has the chance to fix the problem. If no agreement is forthcoming, the consumer has the full right to sue.

* Proportionate Liability: Our bill provides that the liability of a defendant would be limited to the percentage of the company’s fault in causing the harm. This will discourage the targeting of so-called deep-pocketed defendants.

* Alternative Dispute Resolution: The bill specifically encourages the parties to a dispute to request alternative dispute resolution (ADR) during the 90-day problem-solving period. In the event that the parties do engage in ADR, the bill requires the defendant to promptly pay any settlement. By insuring expeditious payment of settlements, the bill makes out of court resolution a more attractive avenue for all parties.

* Contract Preservation: The bill insures that if a contract does not limit liability for Y2K actions - or if there was not a true meeting of the minds in a contract which limits liability - recovery is available. Where, however, the contract specifically limits liability for actions that include Y2K claims, the bill justly limits recovery.

*Prevents Careless Y2K Class Action Lawsuits: By requiring courts to determine whether an alleged Y2K defect was material as to a majority of class action members and whether members of the class are seriously engaged in the litigation, the bill guards against plaintiffs lawyers gathering large numbers of plaintiffs that have not really been harmed by a given Y2K defect or have only a passing interest in the case.

*Other Features: The bill also limits punitive damages and insures that our federal courts have jurisdiction over this national problem.

In summary, it is clear that consumers and businesses have been - and will be - harmed by Y2K defects. And it is true that the Y2K problem could very well disrupt distribution systems and certain key sectors of our economy. It is also true, however, that the Y2K problem could spawn a rash of litigation that will inevitably shift scarce resources from fixing the Y2K problem to defending lawsuits—many of which will be frivolous. Indeed, one expert estimated that the worldwide cost of Y2K litigation could well be more than one trillion dollars. We will hear much more about this from our witnesses.

Our bill will give companies an incentive to fix Y2K problems right away, knowing that if they don’t make a good-faith effort to do so, they will shortly face costly litigation. The natural economic incentive of industry is to satisfy their customers and, thus, prosper in the competitive environment of the free market. This acts as a strong motivation for industry to fix a Y2K problem before any dispute becomes a legal one. This will be true, however, only as long as businesses are given an opportunity to do so and are not forced, at the outset, to divert precious resources from the urgent tasks of the repair shop to the often unnecessary distractions of the court room.

In the end, a business and legal environment which encourages problem-solving while preserving the eventual opportunity to litigate may best insure that consumers and other innocent users of Y2K defective products are protected.

Finally, I want to stress that we hope to proceed on a bipartisan basis—one that is modeled on the cooperation we achieved last year in passing the Year 2000 Information Readiness Disclosure Act. That kind of bipartisan cooperation will be indispensable if we are to pass legislation in time for it to be of any use to consumers and businesses.

I want to welcome our esteemed witnesses, who I believe will shed new light on the Y2K problem and how our bill helps to resolve that predicament.