Y2K Legislative Update

1999 began with the introduction of several business-friendly Y2K federal and state legislative proposals, including the Year 2000 Consumer Protection Plan Act of 1999, S.96 Y2K Act, and S.B. 983 (Virginia).

The Year 2000 Consumer Protection Plan Act of 1999

On January 7, 1999 Congressmen Manzullo (R- Ill.), Dreir (R-Cal.) and DeLay (R-Tex.) introduced this "common sense legal approach" to the Y2K dilemma, leading the way in what is sure to be the first of many legislative proposals introduced this year which address the Y2K problem.

This proposed federal legislation is meant to fulfill two major purposes: (1) to encourage business owners to pinpoint and remedy their computer problems and (2) to mitigate the $1 trillion cost of expected lawsuits resulting from anticipated Y2K related problems. In particular, this legislation aims to cap available damages in Y2K cases, protect corporate directors and officers from certain Y2K related liabilities, establish mandatory arbitration, limit pain and suffering damages to medical and hospital expenses, and disallow Y2K action after January 1, 2002.

S.96, Y2K Act

Another pending federal bill, S.96 (Y2K Act), seeks to further limit Y2K liability for businesses. Under the Act's provisions, special masters would be appointed to hear Y2K cases in federal courts; damages would be limited to economic losses in cases where defendants acted in "good faith" in attempting to fix Y2K problems; joint liability among defendants would be barred; and special liability limits would be imposed upon retailers not engaged in the business of "information technology" who sold Y2K defective software.

S.B. 983

Finally, a bill limiting liability and damages for Y2K related problems was introduced into the Virginia legislature last month. S.B. 983, introduced by Sen. Warren Barry, provides protection from liability for the Y2K related actions of third parties; creates an affirmative protection for employees, officers and directors; and limits total damages to direct actual damages.