The following is a list of the primary theories of recovery likely to be asserted in Y2K litigation. We will see additional theories as claims unfold and plaintiffs' counsel attempt to characterize disputes in ways that increase the likelihood of insurance coverage.
Claims Against Product Manufacturers:
( Strict product liability/negligence claim because product/system failed to achieve its intended purpose.
( Strict product liability/negligence personal injury claim where person is injured by malfunctioning product/system.
Claims Against Hardware and Software Vendors:
( Breach of warranty because product was not Y2K compliant or contained viruses.
( Misrepresentation/fraud that the subject product/service could be used beyond the year 2000.
( Breach of UCC warranties.
( Violation of a state trade practices law.
( Negligence claims for personal injury or property damage, based on negligent misrepresentation, fraud or strict product liability.
( Claim for injunctive relief to obtain vendors source code in order to make in-house changes to minimize Y2K impact.
( Negligence per se for violating criminal laws prohibiting the marketing of a destructive computer program.
( Breach of maintenance provisions in contract for failure or refusal to correct Y2K defect.
Claims Against Hardware/Software Consultants:
( Negligent failure to design Y2K-compliant system.
( Negligent misrepresentation for failing to warn of Y2K problem.
( Breach of covenant of good faith and fair dealing for failing to disclose Y2K problem.
( Negligent design of computer system damaged by Y2K problem.
Claims Against Employers Hiring Away Y2K Software Programmers:
( Misappropriation of trade secrets.
( Tortious interference with a competitor's contractual relationship with its employee.
Claims Against Banks, Stock Brokerage Firms and Similar Entities:
( Losses due to improper or failed financial transactions.
( Failed/incorrectly processed stock trades.
Claims Against Insurance Carriers for Denying Coverage:
( Claims that insurer wrongfully terminated or failed to renew insured's professional errors and omissions insurance, D & O insurance or business interruption insurance.
( Claims that insurer wrongfully denied business interruption coverage. Carriers may claim that foreseen consequences of the Y2K problem do not constitute a fortuitous, insurable event.
( Claims that insurer wrongfully failed to honor claims against a professional errors and omissions policy.
Potential Defenses to Claims:
( Assumption of a commonly-known risk.
( Comparative negligence.
( Waiver/Estoppel due to failure to timely raise complaints.
( Contractual indemnity based on contract with subcontractor.
( Common law indemnity against actual wrongdoer.
( Compliance with "state of the art" industry standards.
( Claim barred due to disclaimer of warranties.
( Reliance on force majeure provision in contract to excuse alleged breach.
( Governmental immunity.
( Expiration of applicable statute of limitations.