Senate OKs Bill Limiting Y2K’s Legal Backlash

The Senate approved legislation Tuesday aimed at curbing the wave of lawsuits expected to arise from Year 2000 computer glitches, creating a potential standoff between a supportive high-tech industry and a reluctant White House.

President Clinton has threatened to veto the measure, which would restrict class-action lawsuits and put a cap on punitive damages in Y2K cases. He complains that both the Senate bill and a tougher version passed last month by the House go so far in blocking frivolous lawsuits that they would also deter legitimate consumer claims.

Still, the White House is eager to reach a compromise that addresses the concerns of the high-tech industry--an increasingly powerful political player--without alienating the trial lawyers and consumer groups fighting the bill.

Whatever the outcome, the bill’s passage in the Senate marked a coming of age for a relative upstart in the world of Washington influence. To win Senate backing, high-tech officials outflanked trial lawyers through a well-organized campaign of big-money contributions and well-oiled lobbying.

The bill, blocked for weeks by Democratic critics, passed on a 62 to 37 vote. Supporting it were 50 Republicans and 12 Democrats. Voting against it were 33 Democrats and 4 Republicans.

Both sides in Tuesday’s debate accused the other of accommodating special interests. The bill’s opponents were attacked as puppets for the trial lawyers group, a tried-and-true contributor to Democratic candidates and causes. The measure’s GOP advocates were charged with being motivated mainly by a desire to curry favor with the burgeoning high-tech industry.

Dozens of Y2K-related lawsuits already have been filed around the country and Sen. John McCain (R-Ariz.), the bill’s chief sponsor, warned that courthouses could be overrun with litigation--amounting to as much as $1 trillion--once the calendar hits Jan. 1, 2000.

“This legislation will prevent our courtrooms from being clogged with litigation that offers no one prosperity except for the lawyers,” McCain said.

It remains uncertain how catastrophic--or overblown--the millennium bug will prove to be. The problem itself began decades ago when the first computers were programmed to recognize years by their final two digits. That worked fine until the year 2000 neared and computers began recognizing the landmark year as 1900.

Without a programming fix, experts have predicted that key computers will shut down, spew out incorrect data and wreak havoc on an increasingly computer-dependent society. High-tech officials also worry that Y2K-related malfunctions--whether serious or not--will propel many people into court to sue computer makers, software manufacturers and others.

To stem a race to the courthouse, the Senate legislation would force potential plaintiffs to give 30 days’ notice before filing suits. It would then give defendants 60 days to fix problems.

Other provisions would cap punitive damages for businesses with fewer than 50 employees and restrict plaintiffs from filing class-action lawsuits in state courts.

The legislation, which would lapse after three years, would not apply to personal injury or wrongful death cases. Still, opponents argued that legitimate lawsuits might be stymied.

Sen. John F. Kerry (D-Mass.) cited the plight of an imaginary homeowner whose property is destroyed after a computer glitch at a nearby power plant or, less apocalyptically, someone whose home alarm system fails, resulting in an undetected burglary. McCain’s bill, Kerry argued, would unfairly tie the hands of such people.

Kerry proposed a modified approach, favored by the White House, that would have reduced companies’ legal cover. But the Senate last week rejected his proposal, 57 to 41, prompting Minority Leader Tom Daschle (D-S.D.) to urge defeat of the legislation.

Senate Democrats, however, were divided on the bill’s merits.

In recent weeks, Sen. Ernest F. Hollings (D-S.C.) and other Democratic critics have blocked the Y2K legislation from coming up for debate.

McCain worked out a compromise. The 12 Democrats who supported his new version included Dianne Feinstein of California.

“I cannot tell you the depth of the high-tech feelings on this bill in California,” Feinstein said.

Sen. Barbara Boxer (D-Calif.), who voted against the legislation, rejected the notion that the vote was a test of senators’ commitment to the high-tech industry. Boxer said that it is insulting to the innovative industry to assume it is ill-prepared to handle potential Y2K problems.

“We have so many good actors who have already taken care of this problem,” she said during debate.

The bill now goes to a House-Senate conference committee, where lawmakers will attempt to iron out differences between the two versions of the legislation. Administration officials likely will play a role in the negotiations, attempting to influence the final product so it is more to their liking.

Some Republicans were privately relishing a veto in an effort to paint the GOP as the true party of high-tech--and the Democrats as untrustworthy allies.

Political allegiances in the high-tech sector remain up for grabs. According to Federal Election Commission reports, high-tech executives gave about $9 million to congressional candidates in 1997-98, about 57% of that going to Republicans. But in the unfolding presidential race, high-tech has supported Vice President Al Gore with about $75,000 in contributions, compared with $67,000 amassed by the Republican front-runner, Texas Gov. George W. Bush.

Trial lawyers, on the other hand, lean decidedly toward the Democrats. Their political action committee alone gave $2.8 million during the 1997-98 election cycle, with 87% going to Democrats. Donations from individual lawyers boosted that figure into the tens of millions, according to the Center for Responsive Politics.

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PROBLEMS AT PENTAGON: Defense Dept. lags in preparing for the millennium bug. A16

* MORE Y2K WORRIES: Gov. Davis’ efforts to avert Y2K glitches come under fire. A3