Statement by Sen. John McCain (R-AZ).
Re: McCain-Wyden substitute amendment to the S 96, the Y2K Act.
Date: April 26, 1999.
Source: Office of Sen. John McCain.

MONDAY, APRIL 26, 1998
FOR IMMEDIATE RELEASE
CONTACT:
NANCY IVES (202)224-7130
PIA PIALORSI (202)224-2670

McCAIN STATEMENT ON Y2K BILL, S.96

WASHINGTON, D.C. -- Today the Senate resumed consideration of S.96, the Y2K Act. Senator John McCain (R-AZ), Chairman of the Committee on Commerce, Science, and Transportation, made the following statement:

"I intend to offer with my friend and colleague from Oregon, Senator Wyden, a substitute amendment to S.96, the Y2K Act. The substitute amendment we will offer today is truly a bipartisan effort. We have worked diligently with our colleagues on both sides of the aisle to address concerns, narrow some provisions and assure that this bill will sunset when it is no longer pertinent and necessary. Senator Wyden, who said at our committee mark-up that he wanted to get to ‘yes,' has worked tirelessly with me to get there. He has offered excellent suggestions and comments and I think the substitute we will introduce is a better piece of legislation for his efforts.

"Specifically, our substitute would:

• Provide time for plaintiffs and defendants to resolve Y2K problems without litigation;
  
• Reiterate the plaintiff's duty to mitigate damages, and highlight the defendant's opportunity to assist plaintiffs in doing that by providing information and resources;
  
• Provide for proportional liability in most cases, with exceptions for fraudulent or intentional conduct, or where the plaintiff has limited assets;
  
• Protect governmental entities including municipalities, school, fire, water and sanitation districts from punitive damages;
  
• Eliminate punitive damage limits for egregious conduct, while providing some protection against runaway punitive damage awards; and
  
• Provide protection for those not directly involved in a Y2K failure.

"The bill, as amended, does not cover personal injury and wrongful death cases.

"It is important to keep in mind the broad support that this bill has from virtually every segment of our economy. This bill is important not only to the ‘high tech' industry, or only to ‘big business,' but carries the strong support of small businesses, retailers, and wholesalers. Many of those supporting the bill will find themselves as both plaintiffs and defendants. They have weighed the benefits and drawbacks of the provisions of this bill and have overwhelmingly concluded that their chief priority is to prevent and fix Y2K problems and make our technology work, not divert their resources into time consuming and costly litigation.

"One of the most troubling aspects of the looming Y2K problem is the new industry being created by opportunistic lawyers. Many companies feel that they are ‘damned if they do, damned if they don't' when it comes to acknowledging potential Y2K failures. If they don't say anything, and later have a problem, they will certainly be sued, but if they say something now, they may still be sued, and before anything has even gone wrong. Over 80 lawsuits, mostly class actions, have already been filed and we are still many months away from 2000.

"The SEC reported in February that many companies are not complying with the SEC disclosure requirements, either as to what actions they are taking to prepare, how much the effort is costing, or what contingency plans are being put in place. The Senate Special Committee on the Year 2000 Problem reported February 24, that ‘Fear of litigation and loss of competitive advantage are the most commonly cited reasons for barebones disclosure.'

"It is my hope that S.96 will be the catalyst for technology producers to work with technology users to ensure a seamless transition from 1999 to the year 2000. My goal is to make January 1, a non-event.

"The purpose of this legislation is to ensure that we solve the Y2K technology glitch, rather than clog our courts with years of costly litigation. The purpose is to ensure a continued stable economy, which is beneficial to everyone in our country.

"The bill encourages efficient resolution of failures by requiring plaintiffs to afford their potential defendants an opportunity to remedy the failure and make things right before facing a lawsuit. We should encourage people to talk to each other, to try to address and remedy problems in a timely and professional manner.

"The potential for litigation to overwhelm the nation's judicial system is very real. We must reserve the judicial system for the most egregious cases involving Y2K problems. Litigation costs have been estimated as high as $1 trillion. Certainly the burden of paying for litigation will be distributed to the public in the form of increased costs in technological goods and services.

"The potential drain on the nation's economy, and the world's economy, from both fixing the computer systems and responding to litigation, is staggering. While the estimates being circulated are speculative, the cost of making the corrections in all the computer systems in the country is astronomical. Chase Manhattan Bank has been quoted as spending $250 million to fix problems with its 200 million lines of affected computer codes. The estimated cost of fixing the problem in the United States ranges from $200 billion to $1 trillion. The resources which would be directed to litigation are resources that will not be available for continued improvements in technology, producing new products and maintaining the economy that supports the United States' position as a world leader.

"Time is of the essence, my friends. If this bill is going to have the intended effect of encouraging proactive prevention and remediation of Y2K problems, it has to be passed quickly. This bill will have limited value if it is passed later this fall.

"My Ranking Member, Mr. Hollings, has expressed at Committee his concerns. I want to state up front that while we disagree, we have never been disagreeable. I respect the Ranking Member, we just disagree on this matter and I know we will have a lively debate on this bill.

"While Senator Hollings asserts that S.96 is the ‘camel's nose under the tent' for product liability and tort reform, such is clearly not the case. S.96 contains a ‘sunset' provision to assure that this is considered, as it should be, a temporary measure to deal with a unique situation. The sunset language in Section 4 (a) of the bill provides that the ‘Act applies to ...a Y2K failure occurring before January 1, 2003..." This is hardly a victory for widespread tort or product liability reform. The potential for massive litigation involving virtually every industrial segment of our country -- both small businesses and large -- compels a rational and practical solution to prevent litigation from destroying the economic well-being of the country.

"One example of opportunistic litigation highlights the problem we are facing. Tom Johnson, acting as a ‘private attorney general' under California consumer protection laws, has brought an action against a group of retailers, including Circuit City, Office Depot, Office Max, CompUSA, Staples, Fryes, and the Good Guys, Inc., for failing to warn consumers about products that are not Y2K compliant.

"He has not alleged any injury or economic damage to himself, but, pursuant to state statute, has requested relief in the amount of all of the defendants' profits from 1995, to date from selling these products, and restitution to ‘all members of the California general public' Although he claims that ‘numerous' products are involved, he has not specified which products are covered by his allegations, but has generally named products by Toshiba, IBM, Compaq, Intuit, Hewlett Packard, and Microsoft.

"This is precisely the type of frivolous and opportunistic lawsuit which would be avoided by S.96. Rather than have all of these named companies wasting time and resources preparing a defense for this case, S.96 would direct the focus to fixing real problems. In this instance, it does not appear that Mr. Johnson has an actual problem, but if he does, he would need to articulate what is not working due to a Y2K failure. The company or companies responsible would then have an opportunity to address and fix the specific problem. If the problem isn't fixed, then Mr. Johnson would be free to bring his suit.

"It is crystal clear that the real reason for this lawsuit is not to fix a problem that Mr. Johnson has with any of his computer hardware or software, but to see whether he can convince the companies involved that it's cheaper to buy him off in a settlement than to litigate -- even if the case is eventually dismissed or decided in their favor.

"This case is the tip of the iceberg -- if thousands of similar suits are brought after January 1, the judicial system will be overrun -- and the nation's economy will be thrown into turmoil. This is a senseless and needless abuse that we can avoid by passing S. 96.

"I urge my colleagues on both sides of the aisle to give careful consideration to this substitute amendment and join with me, Senator Wyden, and our other co-sponsors, Senators Gorton, Abraham, Lott, Frist, Burns and Santorum in bringing this substitute to fruition. It makes sense. It is practical. We need to pass it now."

Amendment attached