Opening Statement of Sen. Chris Dodd (D-UT).
Re: Senate Y2K Committee hearing on Y2K Litigation Reform
and bill to be introduced by Sen. Dodd.
Date: March 11, 1999.
Source: Senate Special Committee on the Year 2000 Technology Problem. This document was created by Tech Law Journal by scanning a paper copy and converting it into HTML. Copyright 1999, Tech Law Journal.

Chris Dodd
U.S. SENATOR FROM CONNECTICUT

Thank you Mr. Chairman. Your leadership throughout the last eleven months is greatly appreciated. Yours has been the loudest voice of warning about a variety of Y2K issues, and I'm sure the American people are truly grateful. We welcome all in attendance today, and thank the witnesses for their participation and for the effort they have made in taking time out of their busy schedules to be here. We especially thank Senator Hatch for taking time from his day to join us.

Today we are examining the potential effect that the Y2K problem may have on litigation. I believe that our ultimate goal should be to encourage Y2K compliance. Our legal system is already burdened by a tremendous number of cases. The burgeoning caseload in federal courts is well-known, and the problem in the state courts is just as bad. In 1997, there was one case filed in the state courts for every three people living in the United States. A potential escalation in Y2K litigation could further impede the efficiency of our court system, and cost taxpayers billions in inflated costs for products and services, as well as insurance premiums, as companies shift the cost burden to consumers.

In the same spirit that we passed "The Year 2000 Information and Readiness Disclosure Act," which acts to encourage a steady flow of information regarding Y2K- readiness, we should proceed into a discussion of Y2K litigation reform. "The Year 2000 Information and Readiness Disclosure Act" brought about a bipartisan compromise that satisfied industry concerns. It was crafted with a single purpose in mind, and I hope that we would take this same approach in developing Y2K litigation reform.

I agree with Senator Bennett that even with this legislation, fears of Y2K litigation weigh heavily on the minds of business owners. Yet, we hear rumors, almost on a daily basis, of business enterprises which are doing relatively little in the way of remediation. Even with "The Year 2000 Information and Readiness Disclosure Act," corporate attorneys may still be counseling their clients to be wary of full -disclosure. But, the Act has worked to encourage many companies to begin thinking in terms of Y2K remediation. Further reform should shine a stronger light on those who choose to do nothing.

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After examining the various Y2K litigation bills, I am very concerned that they may go beyond what is needed to address the very valid concerns of a Y2K litigation explosion. As some of you may know, in 1995 1 joined with Senator Domenici to author Securities Litigation Reform Legislation. This was a limited, carefully crafted remedy to correct specific known abuse. I have frequently stated that any Y2K litigation should be similarly designed and should avoid overreaching its intended purpose. Many interest groups will therefore have to curb their political appetites. I strongly believe that we must leave broad tort reform for another day. I don't want to make the perfect the enemy of the good. If we seek through this legislation to achieve broad tort reform, we run the risk that we will not have meaningful Y2K liability protection.

Therefore, I intend to introduce a bill that is narrow in scope and does not overreach. The goal of this bill will be to discourage frivolous suits and therefore guard against the potential flood of Y2K litigation. I intend for this bill to provide for the following:

An opportunity for defendants to cure - I endorse a 90-day period, where litigation would be stayed giving a defendant an opportunity to correct and therefore, hopefully mitigate Y2K-related damages.

Voluntary Alternative Dispute Resolution (ADR) - I strongly believe that alternative dispute resolution, commonly termed ADR, is a very effective tool in avoiding the time consuming and expensive proposition of litigation for both plaintiff and defendant. Certainly ADR could be an extremely useful tool in resolving the complex and disparate legal claims that may arise from Y2K-related failures.

Specificity in pleadings - Embedded within the requirement for a specificity in pleadings is the proposition that Y2K suits should definitively outline the causes of action which form the underlying claim for damages. By requiring plaintiffs to detail the elements of their claim, courts can more accurately judge, and if necessary, dismiss frivolous or legally unsupportable suits.

Requirements of minimal injury in class action suits - During securities litigation reform we worked to eliminate "strike" suits and other attorney-generated class actions. Similarly I am concerned that we potentially face an onslaught of suspect Y2K class action suits. By requiring any alleged defect to be material we help ensure that superficial or frivolous Y2K class action suits do not occur.

Contract Preservation - In civil actions involving contracts it is the terms of those very contracts that should be strictly construed. It is important, however, to evaluate whether this might eliminate state law causes of action based on implied warranty.

Reasonable Efforts Defense - In a claim for money damages, except in contract, a defendant should be entitled to enter into evidence that it took measures that were reasonable under the circumstances to prevent the Y2K failure from occurring or from causing the damages upon which the claim is based.

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Negligence - In an overall discussion of negligence claims and in our desire to limit frivolous law suits, it is appropriate that we review the standards of proof and determine whether those standards need to be raised.

Duty to Mitigate - In the complex and unknown world of potential Y2K failures, it is important that prospective plaintiffs make all reasonable efforts to avoid damages in circumstances where information was readily available. And yet, we must not bar the plaintiff from their fundamental legal rights.

I hope that a bill based on these principles will meet our objectives without overstepping the bounds of our intentions. I welcome the perspective and insight that each of our witnesses bring to us today. Thank you Mr. Chairman