A Y2K Paradox for Business
A company that operates hospitals says it’s committed to solving any problems that Y2K glitches pose to patient safety. Officials say they have hired dozens of experts and budgeted more than $100 million in preparation. But here are the important questions:
Has the company met the legal standard of “due diligence”? Should it be sued if something goes awry? Does it deserve some protection to limit its losses to lawsuits?
These are the tough questions that the Congress has tackled in trying to fashion Y2K liability laws. The issues revolve around what might happen if electronic systems make the mistake of recognizing “00” in computer years as 1900, instead of 2000.
And now, unwarranted panic has begun to rival the actual Y2K event in terms of danger to the nation. The threat of an estimated $1 trillion or more in Y2K-related lawsuits surely rivals or surpasses any direct damage that Y2K might create.
At issue are some lawyers and shifty clients looking to cash in on frivolous damages.
This is not a simple matter, even though some in Congress think so. Say a supermarket chain’s cash registers crash en masse every time someone swipes a credit card with a “00” expiration date, which, in fact, has happened. The chain is entitled to seek big-time legal redress from the cash-register maker. ters. But where should lawmakers draw the line?
Sen. John McCain (R-Ariz.) and Rep. Thomas M. Davis (R-Va.) have offered two bills to deal with the issue. A third was written by Sens. Orrin G. Hatch (R-Utah) and Dianne Feinstein (D-Ca.) Their bills have received the most attention on Capitol Hill to date. The bills delve deeply into every aspect of a case, from pleading arguments to caps on attorneys’ fees.
Here’s what a final bill should do:
Leave aside any thought of a cap on personal injury actions. Eliminate vagaries certain to become legal loopholes, such as situations in which the party sued can avoid harm by claiming to have taken “reasonable” steps to find and correct problems. The same for trying to set some standard for what a defendant “could” have taken steps to avoid. Forcing the plaintiff to produce clear proof of “recklessness” is too high a standard.
The Justice Department, for example, is concerned that certain parts of the bills could “severely cripple” class-action suits on Y2K.
The business sector should realize the paradoxical position it is in here. Yes, it might get a bill protecting it from lawsuits, but the law would also limit the opportunities of business as well. Congress is on thin legal ground here, and had better proceed carefully.
