House Backs Bill Limiting Suits Sparked by Y2K Bug

WASHINGTON — In the first major piece of legislation aimed at the Year 2000 computer bug, the House voted Wednesday to curb lawsuits arising from the infamous high-tech glitch in hopes of stopping litigation that might cripple the nation’s economy.

The measure, backed by California’s Silicon Valley and most of the rest of American industry, was passed by a 236-190 vote, with 28 Democrats joining and nine Republicans defecting from the majority supporting the legislation.

Congressional action on the measure now moves to the Senate, where talks continue on a similar bill that was pulled from the floor two weeks ago amid objections by some Democrats and the White House. Congressional experts expect a Y2K bill will be passed by Congress, despite White House opposition.

Administration officials and consumer groups vowed to continue fighting the legislation. Top White House aides say that, while they support steps to stop frivolous Year 2000 lawsuits, they fear the House measure will abridge the rights of businesses and consumers with legitimate claims of damage caused by computers unable to distinguish between the years 2000 and 1900.

“The Clinton administration . . . has expressed grave misgivings about a number of the bills that are currently being considered by Congress,” presidential aides Bruce Lindsey and Gene Sperling wrote in a letter to House Speaker J. Dennis Hastert (R-Ill.). The two men said senior aides will recommend that the president veto any Year 2000 legislation unless it is modified to accommodate the White House’s concerns.

Many businesses, ranging from automobile suppliers to insurance carriers, have confessed that they have not fixed their computers to properly recognize dates after Dec. 31, 1999.

Many older computers were programmed to read only the last two digits in a year, rather than all four. Some experts have predicted that the oversight could trigger lawsuits amounting to as much as $1 trillion. Such a litigation explosion would exceed the more than $22 billion in legal claims arising in the 20 years since Congress passed the Superfund law to clean up the nation’s dump sites.

The House Y2K measure would make potential plaintiffs wait 90 days before filing suits. The measure also would give computer makers and software developers a grace period to fix problems, restrict plaintiffs’ ability to file class-action lawsuits in state courts and cap punitive damages at around $250,000.

Consumers, whose legal options already are restricted under increasingly broad software licensing agreements that come with their computer software, also would face new litigation restrictions under the House bill.

“That means if your house is burglarized due to a Y2K computer glitch with your alarm system, you may be out of luck,” said Sally Greenburg, senior product safety counsel in the Washington office of Consumers Union.

But, said Rep. David Dreier (R-San Dimas): “We should free business to try to find a solution to the Y2K problem, not [make them] threatened by frivolous lawsuits.”

“I think this legislation reduces enormously the uncertainty of the impact of Y2K and allows us to work toward getting the job done of preparing for next year while protecting those who have legitimate complaints against business,” added Jerry Jasinowski, president of the National Assn. of Manufacturers.

Although legal experts believe that property damage stemming from a Y2K computer bug likely will be compensated, congressional action notwithstanding, many say companies are expected to draw the line at covering ordinary business losses if malfunctioning computers cause a firm to shut its doors or scale back its operations.

Indeed, the few insurance companies offering Y2K coverage, albeit at stiff rates, are not finding many takers. Besides the high rates, some companies fear that seeking such insurance, and allowing carriers to collect evidence of a company’s Year 2000 readiness, could actually fuel lawsuits.