The Bug’s Legal Bite
What figures to be the most costly aspect of the so-called year 2000 bug? Well, it could be an onslaught of Y2K-related lawsuits, many of which might use the Y2K hook to seek damages for frivolous or unrelated problems. That, should it come, could well surpass the costs of real Y2K problems. Clearly, temporary liability protections should be in place.
The computer glitch involves shortsighted programming in which two digits were used to denote a year. What will happen when the 99 that designates the current year rolls over to 00? If computers think it’s 1900, not 2000, serious problems could arise, and many of them would surely find their way into the courts.
Congress is awash in bills intended to protect businesses against Y2K-related lawsuits. This is serious stuff. A rash of suits by aggrieved customers and suppliers could damage the economy. The bills in Congress set forth a number of protections, from caps on punitive damage awards and required mediation to grace periods to allow defendants the time to fix the problem--anything from disrupted supply to computer crashes. The California Legislature too is looking for legal solutions.
Unfortunately, the strongest congressional bills, which were by no means perfect at the start, have been greatly watered down or will be. Generally, the legislation is opposed by public-interest groups and trial lawyers and others who fear it as a back-alley path to permanent limitations on the right to sue. They worry that legitimate lawsuits could be crippled.
The Times believes that protections against frivolous lawsuits are vital to dissemination of the honest information about Y2K readiness that the nation needs. President Clinton and Congress pushed through legislation designed to encourage large businesses to own up to their Y2K problems, but its success has been mixed at best. As of February, the Securities and Exchange Commission reported, companies had filed only limited information on their Y2K readiness.
Every business relies on others. True Y2K readiness extends to a company’s suppliers and vendors. Currently, when businesses ask associated companies whether they are prepared for the year 2000 glitch, they are too often greeted with foot-shuffling silence.
For obvious reasons, many companies are unwilling to talk. If a supplier is inclined to acknowledge that it is not or might not be ready, it is deterred because its vendors surely will look for another source. If a supplier claims it is Y2K-ready and turns out not to have been, the supplier figures it will be sued. Unless strong protections against frivolous lawsuits are in place, this stalemate will continue and companies will lack the confidence they need to work with those that are not fully prepared.
The Congress must set limits on damages, encourage or mandate mediation as an alternative and set grace periods giving companies time to fix Y2K problems. And there must be penalties in place for those who institute spurious lawsuits. The Congress has enough options before it to fashion comprehensive and fair legislation.
These bills should not represent a long-term abrogation of legal rights. Y2K liability protection is a necessary short-term fix for a once-in-a-modern-civilization problem, and new laws must have a strict time limit. Proper legislation can and should prevent billions of dollars in unnecessary lawsuits.
