Summary: Year 2000 Litigation Bills in the 106th Congress.

Summary of Year 2000 Litigation Bills
in the 106th Congress

This page summarizes the following bills:

This page was last updated on June 13, 1999.

S 96 and S 1138, The Y2K Act, (McCain).
HR 775, The Year 2000 Readiness and Responsibility Act, (Davis).
S 461, The Year 2000 Fairness and Responsibility Act, (Hatch-Feinstein).
S 738, Y2K Fairness in Litigation Act, (Dodd).
HR 192, Year 2000 Consumer Protection Plan Act of 1999, (Manzulla-DeLay-Dreier).

Introduction

While many bills have been introduced to reform Y2K litigation and liability rules, the two being considered are S 96 and HR 775. The sponsor of S 96 is Sen. John McCain. However, he has negotiated several compromises to his bill with Senators Wyden, Hatch, Dodd, Feinstein, and others.

The House passed HR 775 on May 12. It is a much stronger bill than the current version of S 96, the "McCain-Dodd compromise." There is likely enough opposition in the Senate to sustain a filabuster of any bill containing the terms of HR 775.

S 96, The Y2K Act

Sponsor. Sen. John McCain (R-AZ).

Summary. This bill covers procedure and remedies available in suits over Y2K technology problems. Sen. McCain stated the purpose of the bill at the Senate Commerce Committee hearing on February 9: "It is my belief that our nation will be better off if people work together on solving the Y2K problem rather than spend their time and money in court."

The bill has gone through many major versions, including an original version introduced on January 19, a version passed by the Commerce Committee on March 3, a compromise version announced by McCain, Wyden, and others on April 19, and a further compromise version announced by McCain, Dodd, and others on April 28. Basically, it has been weakened step by step.

The version currently being considered, which is usually referred to as "McCain-Dodd," is the product of negotiations beteween McCain, Dodd, Wyden, Hatch, Feinstein, Bennett, Lieberman, Gorton, Lott, Abraham, Santorum, Smith, and others. The major provisions of the McCain-Dodd bill are as follows.

Table of Contents of the
Y2K Act - "McCain-Dodd" Version

Sec. 1. Short title; table of sections.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Application of Act.
Sec. 5. Punitive damages limitations.
Sec. 6. Proportionate liability.
Sec. 7. Pre-litigation notice.
Sec. 8. Pleading requirements.
Sec. 9. Duty to mitigate.
Sec. 10. Application of existing impossibility ...
Sec. 11. Damages limitation by contract.
Sec. 12. Damages in tort claims.
Sec. 13. State of mind; bystander liability ...
Sec. 14. Appointment of special masters ...
Sec. 15. Y2K actions as class actions.

The bill applies to any "Y2K failure occurring before January 1, 2003". However, it does not apply to a claim for personal injury or for wrongful death. Nor does it interfere with any contractual terms regarding Y2K liability.

It replaces joint and several liability with proportionate liability, but provides several exceptions. (Section 6.) This section is hotly contested by the opponents of the bill.

It provides for a 90 day cooling off period before litigation. That is, it requires a prospective plaintiff to give a 30 day notice to a prospective defendant of the plaintiff's intent to sue, along with a description of the Y2K problem. If the defendant responds with a plan to remediate, then the defendant is allowed an additional 60 days to resolve the problem. (Section 7.)

It provides punitive damage caps for small businesses, and exempts municipalities and governmental entities from punitive damages. However, the punitive damage caps for large businesses (over 50 employees) that had been in the earliest versions of the bill are gone. (Section 5.)

The personal liability caps for corporate officers and directors that had been in the earliest versions of the bill are gone.

It provides an economic loss rule which is a restatement of law in the majority of states. (Section 12.) Sen. McCain explained in his June 9 statement, "It is critical, however, because it confirms that damages not available under contract theories of law cannot be obtained through tort theories. This is particularly important here where personal injury claims have been excluded."

It also contains pleading requirements. (Section 8.) It also contains a duty to mitigate. (Section 9.)

It provides that in most Y2K class actions where the amount in controversy exceeds $1,000,000 the suit may be brought in, or removed to, federal district court. (Section 15.)

Status. This bill was introduced on January 19, 1999. The Senate Commerce Committee held a hearing on February 9, 1999, and approved a subsitute bill on a straight party line vote on March 3, 1999. On April 19 Sen. McCain, Sen. Wyden, and other members of the Commerce Committee announced a compromise bill intended to be introduced as a substitute amendment. On April 26 the Senate began consideration of the bill. The Executive Office of the President released a statement on April 27 suggesting that the bill would be vetoed. On April 28 a second compromise bill was announced ("McCain-Dodd"). On April 29 the Senate failed to adopt a motion to cut off debate, and proceed to voting on the bill. The vote was 52-47, with all Democrats voting no (except Moynihan, who did not vote). Three Republicans also voted no (Cochran, Shelby and Specter). A 60 vote majority was required for adoption. On May 18 another cloture vote was held. It failed 53-45-2. All Democrats vote no (except Moynihan, who did not vote). All Republicans votes yes (except Brownback, who did not vote, and Shelby, who voted no). Sen. McCain introduced a "McCain-Dodd compromise bill" as a separate piece of legislation, S 1138, on May 27, 1999. The Senate again took up the bill on June 9. On June 9 the Senate tabled an amendment offered by Sen. Kerry (D-MA) that would have furthered weakened the bill, by a vote of 57-41, with several Democrats voting to table. The Senate is scheduled to resume consideration on June 15.