House Passes Y2K Litigation Bill

(May 13, 1999) The U.S. House of Representatives passed HR 775, the Year 2000 Readiness and Responsibility Act, by a vote of 236 to 190 on Wednesday, May 12.

The vote on final passage, and earlier votes on amendments, roughly followed party lines, with Republicans supporting Y2K litigation reform, and Democrats opposing it. However, 28 Democrats voted for passage, while nine Republicans voted against.

The bill would replace joint and several liability with proportionate liability in Y2K actions. It would create a 90 "cooling off period" before a Y2K suit could be filed. It would also limit punitive damage awards, limit attorneys fees to $1,000 per hour, and limit the personal liability of corporate officers and directors.

	Rep. Davis

The bill's sponsor is Rep. Tom Davis (R-VA). He represents the northern Virginia suburbs of Washington DC. This district has a high concentration of high-tech companies. Rep. Jim Moran (D-VA) is a lead co-sponsor of the bill, and another Representative from northern Virginia.

Rep. Bob Goodlatte (R-VA), another co-sponsor, shepherded the bill successful through the House Judiciary Committee, and managed the bill on the House floor. He represents a rural and small town district in western Virginia. All five Republicans and three of the six Democrats from the "Silicon Dominion" voted for the bill.

Rep. Goodlatte stated Wednesday that "the Year 2000 Readiness and Responsibility Act frees the best people to fix Y2K problems, instead of tying them up in endless litigation. This legislation is a common sense approach to preparing the country and the high technology economy for the next century."

Rep. Chris Cox (R-CA), one of the original cosponsors of the bill, argued that "the Y2K bug may crash the nation's justice system--not for days or weeks but for years. Our justice system, already plagued by intolerable delays and expense, could be submerged under a deluge of cases--both meritorious and frivolous--sparked by Y2K. Though estimates of legal liability have ranged as high as a trillion dollars (Lloyd's of London), no one can confidently predict the scale of the liability crisis because no consensus has developed--even among the best informed experts on the subject--about how serious and widespread the underlying Y2K problems will be."

In contrast, Rep. John Conyers (D-MI), the Ranking Member of the House Judiciary Committee stated that, "as presently written, The Y2K Readiness and Responsibility Act, which I prefer to call the 'Y2K Industry Overreaching Act,' is nothing more than another poorly crafted product liability reform effort, disguised as legislation to address the Y2K problem. Much of the bill is left over from the discredited 'Contract with America,' which has already been rejected by Congress and the American people."

Several amendments were offered in an attempt to weaken the bill. Rep. Jerrold Nadler (D-NY) offered an amendment that would have stricken Title IV, regarding limiting Y2K class actions lawsuits. It failed on a roll call vote of 180 to 244.

Rep. Robert Scott (D-VA) offered an amendment that would have stricken Section 304 of the bill, which caps punitive damage awards. Rep. Scott explained his amendment: "This amendment would eliminate section 304 of the bill. That section, if it is not removed, would overturn the discretion of States to determine when and how punitive damages should be paid, and prescribes an inflexible Federal standard and process for arbitrarily limiting such awards. The bill overturns State punitive damage laws without any findings that they are inadequate or inappropriate." It failed 192 to 235.

Finally, Rep. John Conyers (D-MI) offered an amendment in the nature of a substitute which failed 190 to 236.

There is also a Year 2000 problem litigation reform bill in the Senate -- S 96. It was approved by the Senate Commerce Committee in March on a straight party line vote. It has since been revised twice, and picked up some support from Democrats, including Sen. Ron Wyden (D-OR), Sen. Chris Dodd (D-CT), and Sen. Dianne Feinstein (D-CA).

S 96, in its current form, would replace joint and several liability with proportional liability in most situations. It would require a prospective plaintiff to submit a 30 day notice to a prospective defendant of the intention to sue, and allow 60 days for the problem to be resolved. It would also establish punitive damage caps for small businesses.

If S 96 came up for a vote on the Senate floor, it would likely pass easily. However, Democrats opposing the bill have prevented it from coming up for a vote. A cloture vote to cut off further dilatory debate failed on April 29 by a vote of 52 to 47. (60 votes are required to cut off debate.) All Democrats -- even the bill's Democratic supporters -- voted no.

Senate Democratic leaders are trying to bring several other matters to the Senate floor, such as Sen. Ted Kennedy's (D-MA) minimum wage bill. They are holding up the Y2K bill until the Senate Republican leadership agrees to their scheduling demands.

A bipartisan group of Senators, including Sen. John McCain (R-AZ), Sen. Ron Wyden (D-OR), Sen. Chris Dodd (D-CT), and Sen. Slade Gorton (R-VA), are scheduled to hold a press conference on Thursday morning, May 13, to urge passage of S 96 by the Senate.