[Congressional Record Volume 145, Number 81 (Wednesday, June 9, 1999)]
[Senate]
[Pages S6733-S6781]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Y2K ACT
The PRESIDING OFFICER. Under the previous order, the Senate will now
resume consideration of S. 96, which the clerk will report.
The assistant legislative clerk read as follows:
A bill (S. 96) to regulate commerce between and among the
several States by providing for the orderly resolution of
disputes arising out of computer-based problems related to
processing data that includes a two-digit expression of that
year's date.
The PRESIDING OFFICER. The Senator from Arizona is recognized.
Amendment No. 608
(Purpose: To regulate interstate commerce by making provision for
dealing with losses arising from Year 2000 Problem-related failures
that may disrupt communications, intermodal transportation, and other
matters affecting interstate commerce)
Mr. McCAIN. Mr. President, I am pleased to start out by offering a
substitute amendment to S. 96, the Y2K Act. This substitute amendment
is truly a bipartisan effort. It represents spirited discussion, hard
fought compromise, and agreement with a number of my colleagues on both
sides of the aisle, led by Senators Dodd, Wyden, Hatch, Feinstein,
Bennett, Lieberman, Gorton, Lott, Abraham, Santorum, and Smith of
Oregon.
The substitute is at the desk, and I ask for its immediate
consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Arizona [Mr. McCain], for himself, Mr.
Dodd, Mr. Wyden, Mr. Hatch, Mrs. Feinstein, Mr. Gorton, Mr.
Bennett, Mr. Lott, Mr. Abraham, Mr. Frist, Mr. Burns, Mr.
Santorum, Mr. Smith of Oregon, and Mr. Lieberman, proposes an
amendment numbered 608.
Mr. McCAIN. I ask unanimous consent reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Mr. McCAIN. Mr. President, I thank Senator Wyden for being one of the
true leaders on this bill. Senator Wyden said at our committee markup
that he wanted to get to ``yes.'' He has worked tirelessly with me and
others to get there. Having not only the necessary majority vote but
the 60 votes necessary to move forward is directly related to his
efforts.
I also thank Senator Dodd of Connecticut. He has offered an important
perspective and has provided excellent suggestions and comments which I
think make this substitute we offer today a better piece of
legislation.
I am grateful to my colleagues, especially the senior Senator from
Connecticut, for their unflinching dedication to dialogue, to working
through our differences and remaining focused on the common goal of
enacting this critical piece of legislation. Without the leadership of
Senators Dodd and Wyden, this bipartisan effort would not have been
possible.
Before I talk about the legislation and the language of the
substitute itself, I would like to note that there was a unanimous
consent agreement that 12 amendments would be in order on both sides.
We are now in the process of working with the sponsors of those
amendments, some of which we can agree to, some of which may require
votes. But I hope my colleagues will also come over here ready to offer
those amendments so that in a very short period of time we can begin to
dispense with them.
We all know the very heavy schedule of legislation that lies before
us between now and the next recess on the Fourth of July. So I am
hopeful we can take up and dispense with these amendments in a timely
fashion.
The first effort, obviously, will be to get time agreements on those
amendments that we are unable to get agreement on, although I believe,
from a first look at many of these amendments, we will be able to work
out language so that we can accept a number of them. In fact, I think
some of them will improve the legislation.
I want to walk through the details of this substitute amendment and
the background and history of this bill.
First, let me summarize what this substitute contains.
Specifically, the substitute amendment:
Provides time for plaintiffs and defendants to resolve Y2K problems
without litigation.
It reiterates the plaintiff's duty to mitigate damages and highlights
the defendant's opportunity to assist plaintiffs in doing that by
providing information and resources.
It provides for proportional liability in most cases, with exceptions
for fraudulent or intentional conduct or where the plaintiff has
limited assets.
It protects governmental entities, including municipalities, school,
fire, water, and sanitation districts, from punitive damages.
It eliminates punitive damage limits for egregious conduct while
providing small businesses some protection against runaway punitive
damage awards.
[[Page S6734]]
And it provides protection for those not directly involved in a Y2K
failure.
The substitute, as the original bill, does not--I emphasize, does
not--cover personal injury and wrongful death cases.
The specific changes the substitute makes from the version of the
bill which Senator Wyden and I offered in April are those proposed by
Senator Dodd. It eliminates the director and officer liability caps, it
eliminates the punitive damages caps for businesses with more than 50
employees, it provides that State evidentiary standards will be used in
specific situations, and it preserves the protections provided in the
Year 2000 Information and Readiness Disclosure Act.
Let me be quite blunt. These revisions represent significant
compromise. They move this bill a considerable distance from the Y2K
bill passed by the House. Even with these compromises, I believe the
bill will accomplish the goals for the legislation--to encourage
remediation and prevention of Y2K problems and eliminate frivolous and
opportunistic litigation which can only serve to damage our economy.
However, I do not believe any additional compromises are necessary or
warranted.
I want to reemphasize that point. There have been additional efforts
made to have us accept or work on additional changes to the bill. We
run the risk right now of compromising to the degree where it makes
these protections, if not meaningless, so reduced that we are not able
to achieve the goal we seek. So I do not intend--nor do, I believe, the
majority of my colleagues, including those on the other side of the
aisle--to continue to work behind the scenes towards a compromise. If
there is a change that Members believe needs to be made to this
legislation, then let's go through the amending process, let's have a
time limit on debate, and vigorously debate and educate our colleagues,
and then have votes.
We have, thanks to Senator Wyden, moved a significant way, and also
thanks to Senator Dodd; we have done that. We cannot move from our
position further. Yet we do obviously have 12 amendments in order on
that side, 12 amendments on this side, which is ample opportunity for
debate and discussion about this issue and further amending, obviously,
with majority rule.
So I point out again, these are significant compromises that have
already been made, some of them to the dissatisfaction of some of our
constituents. It has not made everybody happy. But having been around
here now for some years, it is my firm belief that we have to make
compromises, because that is the essence of legislation. But we have
made enough compromises that we can no longer make any further changes
without compromising the fundamental principles behind this
legislation.
Let me make one other point. Time is of the essence here. We cannot
dally. We cannot wait until the end of the year when Y2K is upon us.
Already lawsuits have been filed, some of them pretty interesting,
and emphasize, at least to my mind, the necessity of this legislation.
But we need to move. I fully intend, once we pass this legislation,
to move to conference as quickly as possible. There are differences
between the House-passed legislation and this legislation. I am
absolutely convinced we will be able to reach agreement in conference
and come back here before the recess with a final conference report and
bill to be approved by both Houses.
I am committed to passing legislation which is effective. I am not
interested in passing a meaningless facade. We will do the public a
great disservice to claim victory in passing legislation which leaves
loopholes for spurious litigation. If we aren't going to legitimately
fix the problem, then we must be forthright with the public and tell
them it could not be done. I think that would be a disastrous result,
but it would be more honest than to pretend to provide a solution and
not.
This bill deserves the support of every Member of the Senate. It is
fair, practical, and legally justifiable. It is important not only to
the high-tech industry or only to big businesses but carries the strong
support of small businesses, retailers, and wholesalers.
The coalition of support for this bill is compelling. Yesterday a
press conference was held to reiterate the support of the overwhelming
majority of the Nation's gross national product: the U.S. Chamber of
Commerce; the National Association of Manufacturers; the National
Retail Federation; virtually every high-tech industrial association,
including the ITAA, the Business Software Alliance, and others who
participated, to emphasize the need for the bill and their support for
the compromises which have been made.
Many of those supporting this legislation will find themselves as
both plaintiffs and defendants. They have weighed the benefits and
drawbacks of the provisions of this legislation and have overwhelmingly
concluded that their chief priority is to prevent and fix Y2K problems
and make our technology work, not to divert their resources into time-
consuming and costly litigation.
The estimated cost of litigation associated with fixing the Y2K
problem is really quite enormous. In the view of some, it is as high as
$1 trillion. I do not know if it is that high, but already major
corporations in America have spent millions and millions, in some cases
tens of millions, of dollars in fixing existing problems. If we throw
into the mix the litigation we have already seen the beginnings of, it
could really have an effect, not only on the ability of our businesses
to do business, not only on the ability of our high-tech corporations
to continue investing in research and development and improvements in
technology, but it really would have a significant effect on our
overall economy. You take that much money out of our economy in the
form of litigation, you are going to feel the economic impacts of it.
Let me remind my colleagues how this legislation came to be, its
genesis and rationale. The origin, as we all know, of the Y2K problem
was in the 1950s and 1960s, when computer memory was oppressively
expensive. According to the February 24, 1999, report of the Senate
Special Committee on the Year 2000 Technology Problem, headed by
Senators Bennett and Dodd, in the IBM 7094 of the early 1960s, core
memory cost around $1 per byte. By comparison, today's semiconductor
memory costs around $1 per million bytes. Thus, there was a strong
incentive to minimize the storage required for a program and data.
A two-digit data code became the industry standard in order to
economize on storage space. It was presumed that sometime during the 40
or 50 years before the end of the millennium, the coding would be
changed as computer memory became more accessible. Unfortunately,
although memory costs fell dramatically, the interface requirements of
old software with new discouraged and slowed the changeover process.
The computer equipment and software that was expected to become
obsolete survived many layers and programming updates. The result is
that the two-digit programs are not designed to recognize dates beyond
1999 and may not be able to process data-related operations beyond
December 31 of this year.
Although some who oppose this litigation charge that the solutions
are simple and should have been completed long ago, the reality is not
that simple. First, there are over 500 programming languages in use
today. A universally compatible Y2K solution would have to be
compatible with most or many of these languages. Embedded processors in
embedded chips have to be found and replaced. There are also several
ways to reprogram causing additional interfacing issues.
Technical approaches to solving the problem include reprogramming all
two-digit date codes with a four-digit date code; windowing the date
codes to make programs think that the two-digit codes are applicable to
the year 2000 and beyond; and encapsulation which, like the windowing
method, tricks the computer program into thinking that the two-digit
date code is applicable beyond 1999. Unless the same approach is taken
in all computers, additional programming is required to allow interface
of four-digit codes with two-digit codes which have been windowed or
encapsulated.
Let me read from a recent publication of the National Legal Center
for the Public Interest, the Year 2000 Challenge, Legal Problems and
Solutions, which summarizes why the year 2000 problem is so difficult
to solve.
[[Page S6735]]
I quote from the article from the National Legal Center for the
Public Interest:
One of the most insidious characteristics of the Year 2000
problem is that the difficulty of solving it in any
particular organization often is so underestimated. Since
both the nature of the problem and the actions needed to fix
it are relatively easy to explain, people who are not
familiar with IT projects in general and the peculiar
difficulties of Year 2000 projects in particular tend to
think of Year 2000 projects as less difficult and risky than
they really are.
The unfortunate fact is that there is no ``silver bullet''
solution to the Year 2000 problem in any organization, and
the risks and difficulties in any Year 2000 project of even
moderate size and complexity can be enormous. None of the
remediation techniques described above is without
disadvantage, and for many IT users the time and resources
required to accomplish Year 2000 remediation far exceed what
is available. Most major remediation programs involve finding
and correcting date fields in millions of lines of poorly
documented or undocumented code. There is no single foolproof
method of finding date fields, no assurance that all date
fields will be found, corrected, or corrected accurately, and
no assurance that corrections will not produce unintended and
undesirable consequences elsewhere in the program. In many
cases it will be necessary to rely on information or
assurances from third-party vendors regarding the Year 2000
compliance of their products, even though experience teaches
that many such representations are inaccurate or misleading.
Comprehensive end-to-end system testing of remediated systems
in a simulated Year 2000 ``production'' environment is often
impractical or impossible, and less intensive testing may
fail to detect uncorrected problems. And even when an IT user
has succeeded in making its own system Year 2000 ready, Year
2000 date handling programs of external programs or systems
(such as the systems of customers or suppliers) can often
have a devastating effect on internal operations.
In addition to the technical problems with solving the problems, we
must consider the cost dimension of the Y2K problems. From the ITAA,
Information Technology Association of America, Year 2000 website, I
have the following information:
At $450 to $600 per affected computer program, the Gartner
Group has estimated that a medium-sized company will spend
between $3.6-$4.2 million to convert its software. The cost-
per-line-of-code has been estimated between $1.00-$1.50.
Viasoft estimates cost-per-impacted-programs between $572-
$1,204.
Estimates place correcting the problem for businesses and
the public sector in the United States alone between $100-
$200 billion. If you accept the premise that the total
information technology services marketplace in America
approaches $150 billion annually; that means Year 2000
Software Conversion could represent anywhere from 33%-50% of
dollars spent for information systems in one year. Some ITAA
Year 2000 Task Group members report estimates placing the
worldwide total to correct the problem between $300 to $600
billion.
In addition, the Senate Year 2000 Committee in its report cites
figures for several specific companies, as well as total costs which
include estimated litigation costs.
There is no generally agreed upon answer to this question.
The Gartner Group's estimate of $600 billion worldwide is a
frequently cited number. Another number from a reputable
source is that of Capers Jones, Software Productivity
Research, Inc. of Burlington, MA. Jones' worldwide estimate
is over $1.6 trillion.\5\ Part of the difference is that
Jones' estimate includes over $300 billion for litigation and
damages but Gartner's does not. A sense of the scale of the
cost can be gained from looking at the Y2K costs of six
multinational financial services institutions; Citicorp,
General Motors, Bank America, Credit Suisse Group, Chase
Manhattan and J.P. Morgan. These six institutions have
collectively estimated their Y2K costs to be over $2.4
billion.
Mr. President, the point here is that this is a complex technical
problem with no easy, cheap solution. Although the opponents of this
legislation would have us believe that Y2K failures can only result
from negligence or dereliction on the part of the technology industry,
and all those who use computer hardware and software, in truth, massive
efforts are underway, and have been for some time, to prevent the Y2K
problem from occurring. Even with the nearly incomprehensible amounts
of money being devoted to reprogramming date codes in virtually every
business and industry in our country, there are going to be failures.
Well-intentioned companies, acting in good faith, are nevertheless
going to encounter problems in their systems, or in the interface of
their systems with other systems, or as a result of some other
company's system.
But what experts are also concluding is that the real problems and
costs associated with Y2K may not be the January 1 failures, but the
lawsuits filed to create problems where none exist. An article in USA
Today on April 28 by Kevin Maney sums it up:
Experts have increasingly been saying that the Y2K problem
won't be so bad, at least relative to the catastrophe once
predicted. Companies and governments have worked hard to fix
the bug. Y2K-related breakdowns expected by now have been low
to nonexistent. For the lawyers, this could be like training
for the Olympics, then having the games called off.
The concern, though, is that this species of Y2K lawyer has
proliferated, and now it's got to eat something. If there
aren't enough legitimate cases to go around, they may dig
their teeth into anything. . . . In other words, lawyers
might make sure Y2K is really bad, even if it's not.
Mr. President, the sad truth in our country today is that litigation
has become an industry. While there are many fine, scrupulous attorneys
representing their clients in ethical fashion, there are also many
opportunistic lawyers looking for new ``inventories'' of cases. The Y2K
problems provide these attorneys with a lottery jackpot.
Let me read from an article published in March of this year, by the
Public Policy Institute of the Democratic Leadership Council, written
by Robert D. Atkinson and Joseph M. Ward:
As the millennium nears, the Year 2000 (Y2K) computer
problem poses a critical challenge to our economy. Tremendous
investments are being made of fix Y2K problems, with U.S.
companies expected to spend more than $50 billion. However,
these efforts could be hampered by a barrage of potential
litigation, as fear of liability may keep some businesses
from effectively engaging in Y2K remediation efforts. Trail
attorneys across the country are actually preparing for the
potential windfall. For those who doubt the emergences of
such a litigation leviathan, one only needs to listen to what
is coming out of certain quarters of the legal community. At
the American Bar Association annual convention in Toronto
last August, a panel of experts predicted that the legal
costs associated with Y2K will exceed that of asbestos,
breast implants, tobacco, and Superfund litigation
combined.\1\ That is more than three times the total annual
estimated cost of all civil litigation in the United
States.\2\ Seminars on how to try Y2K cases are well underway
and approximately 500 law firms across the country have put
together Y2K litigation teams to capitalize on the event.\3\
Also, several law suits have already been filed, making trail
attorneys confident that a large number of businesses, big
and small, will end up in court as both a plaintiff and
defendant. Such overwhelming litigation would reduce
investment and slow income growth for American workers.
Indeed, innovation and economic growth would be stifled by
the rapacity of strident litigators.
I want to point out that is from the Public Policy Institute of the
Democratic Leadership Council.
Mr. President, already at least 65 lawsuits--some report as many as
80--have been filed, and we are still 6 months away from January 1.
Most of these lawsuits involve potential problems that have not even
occurred yet. Our nation's legal system is not designed to handle the
tidal wave of litigation which will undoubtedly occur if we do not act
to prevent it. We must reserve the courts for the cases with real harm,
real factual support, and which cannot be otherwise resolved through
mediation and resolution.
Probably the classic example of opportunistic litigation is a class
action suit filed in California by Tom Johnson against six major
retailers. Tom Johnson, acting as a ``private attorney general'' under
California consumer protection laws, has brought an action against a
group of retailers, including Circuit City, Office Depot, Office Max,
CompUSA, Staples, Fryes, and the good guys, inc. for failing to warn
consumers about products that are not Y2K compliant.
He has not alleged any injury or economic damage to himself, but,
pursuant to state statute, has requested relief in the amount of all of
the defendants' profits from 1995 to date from selling these products,
and restitution to ``all members of the California general public.''
Although he claims that ``numerous'' products are involved, he has not
specified which products are covered by his allegations, but has
generally named products by Toshiba, IBM, Compaq, Intuit, Hewlett
Packard, and Microsoft.
It is crystal clear that the real reason for this lawsuit is not to
fix a problem that Mr. Johnson has with any of his computer hardware or
software, but to see whether he can convince the
[[Page S6736]]
companies involved that it's cheaper to buy him off in a settlement
than to litigate--even if the case is eventually dismissed or decided
in their favor.
And, even more interesting, is the history of how this case came to
be filed. The Wall Street Journal carried a story on Friday, May 14,
1999 in its Politics and Policy column by Robert S. Grernberger.
It says:
Michael Verna, a California lawyer, is warning a group of
technicians about the dangers ahead if they don't get the
gliches out of their companies' computers by the end of the
year.
Here in Seattle, Mr. Verna is explaining how writing
internal memos or careless e-mail could hurt a firm in a Y2K
lawsuit. Loretta Pirozzi of Data Dimensions Inc., a
consulting firm, complain that most bosses aren't budgeting
enough money to fix the problems. A knowing chuckle sweeps
the room. Mr. Verna warns that memos on such budget disputes
become smoking guns in court.
``What can we do?'' asks another woman.
``Have lawyers show you how to protect your documents, for
one thing,'' he says. ``By the way,'' he adds, ``that isn't a
sales pitch.''
But, of course, it is. Bowles & Verna, a 21-member firm in
Walnut Creek, Calif., has a Y2K game plan. It starts with
semimars that help develop new clients. The millennium itself
will usher in the ``failure litigation phase'' of court
fights. And in about five years, just when it seems like
everyone has sued everyone else, comes the ``insurance-
coverage phase,'' when companies go after their insurers to
pay some of their Y2K losses.
``You want to be on the leading edge of the tort of the
millennium,'' Mr. Verna says.
Bowles & Verna's journey to 2000 began almost by chance, in
1997, while Kenneth Jones, then a third-year law student, was
playing a computer football game. It is wife, Sandy, was
telling him that people were stocking up on canned goods and
bottled water for the expected chaos of Y2K. At that moment,
Mr. Jones recalls, he had an epiphany.
A new area of law, involving future failures due to Y2K
bugs, was being born, and Mr. Jones, a law student
comfortable with technology, was perfectly positioned for it.
He also was headed for a job at Bowles & Verna, where he had
been a summer law clerk. ``I decided the firm could be the
experts.
With Mr. Verna's strong encouragement, the 28-year-old Mr.
Jones proded his colleagues, giving some of the firm's
techno-challenged lawyers a book, ``Year 2000 Solutions for
Dummies.'' Gradually, the firm formed a Y2K team. All it
lacked was a client. Then, late last year. Mr. Jones's friend
Torn Johnson, a Walnut Creek swimming coach, went shopping
for a laptop computer--and Bowles & Verna found its first Y2K
lawsuit.
But with no apparent injury to Mr. Johnson, the firm needed
a legal theory. California's Unfair Business Practices Act
came to the rescue. The statute permits citizen lawsuits on
behalf of the people of the state to stop unfair or deceptive
business practices. And so Mr. Johnson is suing about half a
dozen retailers for injunctive relief to require disclosure
for Y2K compliance, but not for damages. And, under the state
law, Bowles & Verna would collect attorney's fees.
This is precisely the type of frivolous and opportunistic lawsuit
which would be avoided by S. 96. Rather than have all of these named
companies wasting their time and resources preparing a defense for this
case, S. 96 would direct the focus to fixing real problems. In this
instance, Mr. Johnson does not have an actual problem, but if he did,
he would need to articulate what is not working due to a Y2K failure.
The company or companies responsible would then have an opportunity to
address and fix the specific problem. If the problem isn't fixed, then
Mr. Johnson would be free to bring his suit.
This case is the tip of the iceberg--if thousands of similar suits
are brought after January 1, the judicial system will be overrun--and
the nation's economy will be thrown into turmoil. This is a senseless
and needless abuse that we can avoid by passing S. 96.
Mr. President, let me turn to the substance of the substitute
amendment offered today. Without going through every paragraph of the
bill, let me highlight the most important provisions.
Certainly the centerpiece of the bill are the provisions of Section 7
regarding notice. This section requires plaintiffs to give defendants
30 days notice before commencing a lawsuit. This provides an
opportunity for someone who has been harmed by a Y2K failure to make
the person responsible aware of the problem and to fix it. If the
defendant doesn't agree to fix the problem, then the plaintiff can sue
on the 31st day. If the defendant does agree to fix the problem, 60
days are permitted to accomplish the remediation before a lawsuit can
be filed. This offers a reasonable time and opportunity for people to
work out legitimate problems with sincere solutions, without cost of
litigation. It focuses on the fact that most people want things to
work--they don't want to sue.
A corresponding critical element of this legislation is the
requirement for specificity in pleadings found in Section 8. Not
written nor intended to cause loopholes for lawyers, the thrust of this
requirement is that there must be a real problem in order to sue. Our
judicial system should not be clogged with possible Y2K failures, nor
novel complaints to ensure the payment of lottery style settlements and
attorneys fees. We must reserve our judicial resources for real
problems which have caused real injury which can be redressed by the
court.
The Duty to Mitigate in Section 9 is also important. While it is in
some respects merely a statement of current law, it highlights the
emphasis to be placed on preventing problems and injury to the maximum
extent possible, and articulates the role that prevention information
made available by the affected industries can play in limiting injury
to product users.
The economic loss rule found in Section 12 is also a restatement of
law in the majority of states. It is critical, however, because it
confirms that damages not available under contract theories of law
cannot be obtained through tort theories. This is particularly
important here where personal injury claims have been excluded.
Punitive damages caps have been retained for small businesses,
defined as those with 50 fewer than 50 employees. Punitive damages are
permitted under some state laws in certain egregious situations
primarily as a deterrent from a repetition of the conduct.
Punitive damages are awarded primarily as punishment to a defendant.
They are intended to deter a repeat of the offensive conduct.
Punitive damages are not awarded to compensate losses/damage suffered
by a plaintiff.
The Y2K cases are unusual in that the conduct is not likely to occur
again, thus there is little deterrent value in awarding punitive
damages.
Without a deterrent effect, punitive damages serve only as a windfall
to plaintiffs and attorneys.
Additionally, since we have eliminated personal injuries from
coverage of the bill, the only harm caused by defendants will be
economic damage, which can be appropriately compensated without the
need for punitive awards.
Further, excessive punitive damage awards will simply compound the
economic impact of Y2K litigation and the costs will be passed along to
the public/consumers through higher prices.
In this situation, punitive damages truly become a ``lottery'' for
the plaintiff, thus they should be limited.
S. 96 provides an exception to the caps for intentional injury to the
plaintiff, which is most likely to be conduct worthy of additional
punishment.
S. 96 protects all governmental entities so that taxpayers are asked
to provide compensation for actual damages, but not provide windfalls
to plaintiffs. This is especially important to municipalities and
special districts (school, fire, water and sanitation). This is
strongly supported by National League of Cities.
Let me speak to some of the points raised by the proposal of Senators
Kerry, Robb, Daschle, Reid, Breaux, and Akaka. While it is encouraging
that they agree the Y2K problem is one which must be addressed, it is
unfortunate that they continue to reject some of the most important
goals of the legislation.
First, their proposal applies only to ``commercial losses.'' It
excludes consumer actions from the scope of the bill. I think this
exclusion is misguided and merely strengthens the hand of the
opportunistic lawyers.
It denies the consumer the protections afforded by S. 96, including
the ability to have problems fixed quickly and without the need for
expensive litigation. It places a burden on those least able to afford
legal counsel.
Notwithstanding the purported attempt to cover consumer claims
brought as class actions, in fact it provides a ``lawyers' loophole''
by permitting individual claims to be brought
[[Page S6737]]
and consolidated or aggregated to avoid the notice and pleading
requirements of the class action section.
There are no punitive damage limitations or protections, either for
business (large or small) or for governmental entities. Punitive
damages are intended to punish poor behavior and deter a repeat of it
in the future. Punitive damages do not have such an effect in Y2K
litigation because of the uniqueness of the problem. Thus, in Y2K
litigation, punitive damages become an incentive for ``jackpot
justice'' and abusive litigation.
The proportionate liability provisions are ineffective in preventing
``deep pocket'' companies from being targeted by mass litigation.
The approach of requiring a defendant to prove itself innocent in
order to be assured proportionate liability is misguided and ignores
the vast array of potential defendants and the myriad of factual
situations which may be encompassed in a Y2K action. In particular,
defendants who are in the middle of the supply chain may be sued for a
breach of a contract caused not by the failure of the defendant's
computers but by those elsewhere in the supply chain.
Requirements in the Kerry proposal would result in that defendant
being jointly and severally liable--an injustice. The result is, the
deep-pocketed defendants will face needless and abusive litigation and
will be subjected to either defending or settling such cases,
regardless of their share of responsibility for causing the plaintiff's
problems.
The Kerry proposal also fails to encourage settlement of cases before
trial. Defendants who do settle with the plaintiff should not be
subjected to continued liability or responsibility for other
defendants. This defeats the purpose of incentive for early settlement
in mediation.
The Kerry proposal rejects the protections for settling defendants
contained in S. 96. The fair rule in this situation is that each
defendant pays for the portion of the problem which that defendant
causes. S. 96 provides that clear rule, with exceptions patterned after
the Securities Act, as proposed by Senator Dodd.
There are important differences as well. The Kerry proposal does not
protect contracts as negotiated but permits them to be revised and
overturned by uncertain common law. This results in the parties being
uncertain of their duties and obligations under their contracts and
will increase the likelihood of litigation. The proposal also too
narrowly applies the economic loss rule, subjecting defendants to
broader damages available under current law in most States.
Taken as a whole, the Kerry proposal simply does not provide the
solutions which are needed to the Y2K problem. It is a meager attempt
to provide lip service to the business community while protecting the
trial lawyers' income stream. I urge my colleagues to carefully review
the details of the proposal and reject this form-over-substance
amendment.
I have taken a long time on this legislation. This is a very
important issue, to say the least. It has a profound impact on our
economy, on our country, and the lives of men and women who are engaged
in small, medium, and large business throughout America.
This substitute amendment is a good piece of legislation that
deserves the support of the Senate. It is not perfect. It certainly
does not provide a wish list of product liability or tort reform. The
business community certainly would like more than what is in this
compromise. The House passed a bill that contained many of the
provisions we have eliminated to reach this bipartisan compromise.
As in any negotiation process, there must be give and take. We have
given a great deal. I remain convinced that the Y2K problem is real and
must be addressed now. I believe that this substitute offered will
achieve a just and reasonable approach to Y2K: Fair prevention,
remediation, and litigation. This bill should not be further
emasculated. It has the support of the broadest possible cross section
of our Nation's economy. It is a bill which is good for our country. It
will ensure that our economy is not derailed with opportunistic
litigation.
It is critical that it pass without further delay. I ask each of my
colleagues for their support in bringing this bill to its final
successful conclusion and enacting it into law.
I thank the Senator from South Carolina, who I know has the very
strongest views on this issue. He is a fierce fighter for the
principles he believes in, which are obviously in opposition to this
legislation. However, the Senator from South Carolina has allowed this
bill to come to the floor. He could easily have blocked it further. I
appreciate his cooperation in doing so.
We have 12 amendments that are in order on each side. We would like
to see those amendments, and we would like to start work on them so we
can resolve those and perhaps get time agreements or accept those
amendments on both sides.
I thank my two dear friends who are on the floor today, Senator Wyden
and Senator Dodd, without whose cooperation and effort we would never
have reached this stage nor would we reach enactment of this
legislation. The essence of doing business in this body on these kinds
of issues is a bipartisan coalition. That is why we have a 60-vote
rule, which many times I decry when I am pushing issues which have no
more than 50 votes, such as campaign finance reform.
I think it also compels Members to work in a bipartisan fashion so we
can work together. I argue that at the end of the day the legislation
is probably much better for it.
If it is agreeable with the Senator from South Carolina, I will begin
with colleagues on our side and then the other side of the aisle to
begin addressing the amendments, so we can get agreement and time
agreements so we can dispatch this legislation as soon as possible,
although I know that the Senator from South Carolina will have a great
deal to say on this issue, as he has in the past.
I yield the floor.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, the distinguished chairman is correct,
the Senator has had sufficient time now during the negotiations over
the past 4 weeks to consider, after hearings before our committee, all
the different ramifications and contentions by the parties. It is the
intent of Members on this side of the aisle to expedite the vote on
this particular measure whereby we will have only amendments that are
germane to the particular issue, and that they be limited and there be
no delaying conduct and action.
I must address immediately some of the comments made by my
distinguished colleague from Arizona with respect to trial lawyers,
with respect to punitive damages, the lottery, and various other things
that go without contest up here in Washington because they look good on
a poll.
If we were to poll the States' attorneys general or the Governors,
they wouldn't be here at all. The State tort law has taken care of
product liability, according to the American Bar Association, in a very
efficient manner over the many years. In fact, we have the safest of
all societies in America as a result of product liability. That is the
subject at hand, of course--product liability--namely, the
computerization, the software, the glitch or the Y2K problem that could
occur January 1, 2000.
Everybody is on notice for January 1, 2000. All of these measures
before the Senate--the McCain-Wyden-Dodd amendment--say January 1, if
we have a glitch, we should first talk about it for 2 or 3 months. We
have 6 months right now. We have had 30 years.
The computer industry, the software industry, has appeared before the
committee. They have known about this problem for the past 30 years.
Ross Perot says it is easy to fix; just take the year 1972; everything
conforms in the year 2000 with the year 1972, and we have a fix.
There are other sinister drives, motives, and intents behind this
particular measure that must be surfaced at the very outset. This is
not a product liability problem for the computer industry. They know
and have warned everybody, and everybody is making tests. For example,
the best of the best, some 2,000 leading industries, are named in March
in Business Week. The market, of course, has taken care of the problem.
It is a nonproblem, as far as Y2K, as far as computerization, as far as
the product itself.
There is another problem with respect to the Chamber of Commerce, the
[[Page S6738]]
Business Roundtable, and that crowd coming in here and trying to
diminish the rights of consumers, the protection for consumers, of all
Americans.
March 1 in Business Week, an article tells a story about Lloyd Davis,
in his Golden Plains Agricultural Technologies, Colby, KS, business.
He needs $71,000 to get his particular system Y2K-compliant. He has a
problem. He can borrow up to $39,000, but he has not been able to
borrow the rest of it.
We are not talking about an injured party in an auto collision who
has a bad back and brings a frivolous suit--nobody can tell whether the
back is bad or not until after the verdict--and then walks away. That
has happened in America several times. But these are substantial small
businesses. I am quoting now from the article:
Multinationals such as General Motors, McDonald's, Nike,
and Deere, are making the first quarter--or the second at the
latest--the deadline for partners and vendors to prove
they're bug free. A recent survey says that 69 percent of the
2,000 largest companies will stop doing business with
companies that can't pass muster.
Mr. President, 2,000 companies of the blue chip corporations in
America here are coming forward and saying--already, 2 months ago, 3
months ago--if you are not compliant by the end of this month, June at
the latest, we are going to have to find another supplier. We cannot
play around. We have to do business. We are going to others:
Cutting thousands of companies out of the supply chain
might strain supply lines and could even crimp output. But
most CEOs figure it will be cheaper in the long run to avoid
bugs in the first place.
Some small outfits are already losing key customers. In the
past year, Prudential Insurance Co. has cut nine suppliers
from its ``critical'' list of more than 3,000 core vendors,
and it continues to look for weak links, says Irene Deck,
Vice President for Information Systems at the company. And
Citibank Vice President, Ray Apte, ``cuts have already
been made.''
Mr. President, you are talking about frivolous lawsuits. Not with all
this warning, with all the record made and public hearings here in the
Government itself and the Congress, with all the chances to cure all
the glitches. We have had chance upon chance upon chance and effort
upon effort. The most recent one here, of course, was just a couple of
weeks ago in the Washington Post:
Banking regulators worried about the year 2000 readiness of
a big ATM service company in the west have just ordered it to
get in shape by June 30 or face possible contract
cancellations by its 750 bank customers.
The point is, business is not telling business let's work it out in
90 days, like the law that they propose. Business is telling business:
Blam, you either get with it, business is business, or we are going to
cut you off.
As an old-time trial lawyer, the punitive damages they are talking
about is only for willful neglect. By January 1, 6 months from now, we
have this big debate, we have the best of minds, we have the best of
witnesses, we have the best of software experts coming, everything
else--we have the best of business leadership saying: Get with it or we
are going to cut you off. If they have not gotten with it by January 1,
that is willful neglect. All cases after January 1, under the record
being made here in 1999 in the National Government, ought to indicate
if there ever were an indication of willful neglect, willful
misconduct, it would be now on Y2K.
No, this is not really about business because business cannot wait
around. Incidentally, the claimants are not frivolous--which is a
remarkable thing, how they can tie people in. The National Federation
of Independent Business ought to be standing here with me in this well,
because the average computer for these small businesses, I would say,
is around $20,000. These are not people willy-nilly looking for a
lawsuit. They are not looking for a punitive damage lottery and all of
that kind of nonsense that they make fun of here and try to stir up the
emotions and say we have those old trial lawyers.
The truth of the matter is, these small business people have to get
on and do business. They have no time to get a lawyer and wait the 90
days and come back around after 90 days, then file a pleading, and then
on and on. Then under their particular bill, on joint and several--I
cannot tell where the parts are made, but I guarantee the majority of
the parts of the computers are made outside of the United States. If I
cannot get joint and several, where am I going? To India, where a lot
of the parts in computerization are made? Am I going to Malaysia to
bring my suit? I am a small businessman.
Oh, no, they have to get joint and several out of here. Why? On
account of product liability, the Chamber of Commerce on account of Tom
Donahue and Victor Schwartz. I have been here for 20 some years in the
Federal Government proudly standing on the side of the American Bar
Association, the Association of State Supreme Court Justices, the State
legislators. They met and they back us up every time, because this is a
problem at the local level that has long since been solved in tort law,
in verdicts made there. But otherwise, long since, here, there is
evidence upon evidence of businesses saying we cannot wait around for
lawsuits and lawyers and punitive damages and everything else of that
kind. We have to get on with it.
But Silicon Valley has the money. People are falling over pell-mell.
I wish we could have passed campaign financing reform because we are
going to talk money out here on the floor, which is when this
legislation really gets any kind of impetus or attention. Everybody
wants Silicon Valley contributions. I do, too. But I cannot see
changing 200 years of tort law in order to get it.
Most advisedly, if General Motors came up here to the National
Government and said: Look, we are going to put out a new model come the
first of the year, and it might have some glitches. So, if we find any
glitches in our 2000 year's model, what we need to do is get together
with anybody who has a glitch, and let's talk to them for 2 or 3
months. I don't know what they are supposed to do with the car during
that time because it will not work.
But that is the law they want to pass: let's talk about it for 90
days. How fanciful and nonsensical this whole move is. Thereafter,
bring your lawsuit. By the way, everybody has known about this
particular problem for years on end, every business magazine and
everything else. But let's not have any punitive damages or willful
misconduct. Let's not have any joint and several liability.
General Motors would say: Senator, how about changing 200 years of
the State tort law for me because I am going to put out a new model?
You would run General Motors out of town. You would not listen to
them at all. But General Motors is not up here making those kinds of
contributions. Silicon valley is. Oh, boy, we can bring the records
here and show just exactly what the issue is. Everybody wants to show I
am a friend of technology.
They do not have to talk to this Senator about technology. I authored
the Advanced Technology Program. I authored the Advanced Technology
Business Partnership Act. I have been working with the young
computerization people and technology people for 20-some years at
least. So don't tell me about technology and being a friend of
technology. What they are is a friend of campaign contributions.
So, you have the money marrying up with the manifest intent of the
Chamber of Commerce, the Business Roundtable, the Conference Board, the
National Association of Manufacturers and the National Federation of
Independent Business. The reason I can correlate them so easily is I
had to face them last year in the campaign. Of course the Chamber of
Commerce endorsed my opponent because I was such a sorry Senator. Then
in February they gave me the Enterprise Award for the year 1998, since
I had done such a good job. They do not have any shame. That is the
bunch with the most gall I ever met to come around, take the fellow
they opposed, and then give him an award for doing such an outstanding
job; the very reason, such a sorry job, why they opposed him. But that
is the kind of shenanigans we have going on and giving it an official
recognition here.
Do not let me leave out the insurance companies. The insurance
companies out there right now are at a hearing, Mr. President, before
your subcommittee and mine: ``No fault.'' But they have a different
name for it.
It has not worked. They have tried it in Connecticut, they have tried
it in Georgia, they have tried it in Nevada, but it has not worked, and
they canceled it out. We do not need a hearing.
[[Page S6739]]
We have the actual experience in the States. But the insurance
companies, at every turn, are in here driving to change the laws here,
there and yonder for money, to increase their profits.
I have been at the State level and have been a sort of States rights
Senator. I have been defending insurance at the State level, saying it
has been regulated.
They have come with Y2K; they have come with product liability; they
have come with auto choice. They call it no fault. They want a little
tidbit here and a little tidbit there. Let's federalize interstate
commerce--if any business is an interstate commerce--and let's
federalize the insurance industry in the United States and set the
rules for all 50 States, and then they will not have to qualify it.
I bring these things out because they are most important, for the
simple reason that the trial lawyers, for example, and punitive
damages--both--do a wonderful job for America.
Let's go back to the leading case: the Pinto case back in 1978. There
is an outstanding attorney in California named Mark Robinson. He got a
verdict for $3.5 million actual damages and $125 million punitive
damages. He never collected a red cent of the punitive damages.
When the Senator from Arizona gets up here and talks about the
punitive damages lottery, the American Bar Association said less than 4
percent of all tort cases result in a punitive damage verdict, and half
of those are reversed again on appeals. So we are talking about less
than 2 percent. He is up here describing it as ``just roll the dice and
we can get a lot of money and we have a lottery coming.''
What has that punitive damage verdict done? Go over, as I have done,
to the National Safety Transportation Board and you will find out that
in the last 4 years--Mr. President, I want you to listen to this
statistic--they have had 73,854,669 vehicle recalls. There were some
last week. Chrysler was recalling some cars. Another one had something
to do with the ignition; it was causing fires. Another one had
something else wrong with it. We are constantly getting the recalls.
Why? Not because they love safety, but because of the punitive damage
lottery and the trial lawyers; they are going to get them.
On a cost-benefit basis, in the Pinto case, they said do not worry
about it, we can kill a few, let the gas tank explode and let them die;
but the cost of those deaths is not near as much as the profit we make
on selling the car.
On cost-benefit, as a result of trial lawyers, we have had, just in
the last 4 years, 73 million recalls. That has promoted tremendous
safety in America, has saved thousands of lives, millions of injuries,
I can tell you that. If they want to give a good Government award to
anybody with respect to bringing about safety in America, find Mark
Robinson in San Diego and give him the award, because I am proud of him
and America is proud of him.
The trouble is, they are being derided and rebuked and defamed in the
National Congress because we have a bunch of Congressmen and Senators
who have never been in a courtroom, never tried a case, do not
understand that people do not have time for frivolous lawsuits. Trial
lawyers know they take on all the expenses, they take on all the time
and effort for the discovery, for the interrogatories, for all the
motions, all the appearances, thereupon the trial and thereupon--this
is what they call a lottery--get all 12 jurors by the greater weight of
the preponderance of evidence, take the case on appeal and get a
verdict from the Supreme Court, and then they get that fee they all
talk about now in the tobacco cases.
The trial lawyers have done more than Koop and Kessler. I have been
up here working with them on cancer. I have received national awards, I
can say immodestly. I helped and worked and got a center for this
particular disease, but I can tell you advisedly, after 32-some years,
these trial lawyers on smoking, on lung cancer, on heart attacks,
saving lives, preventing cancer deaths, have done way more than Koop
and Kessler, because we used to meet out here and nobody would pay
attention to Koop and nobody would pay attention to Kessler. When the
trial lawyers then started bringing the cases and getting these
settlements, it was not the fees that they got but, more or less, the
good that they brought to our society. Let's give them the good
Government award this morning.
I want to clear the air here because we have just run into all of
this lottery stuff and spurious suits and frivolous suits. This case
involves small business folks who have put $20,000 or more into a
computer, and they are trying, like the doctor who appeared before the
committee, their dead-level best to get some results because they are
not waiting, of course, until January 1, 2000.
We had the testimony of Dr. Robert Courtney on February 9, 1999,
before the Committee on Commerce, Science, and Transportation. The good
doctor was from Atlantic County, NJ. I had never met him before, but he
gave an outstanding recount.
I ask unanimous consent that his statement be printed in the Record.
There being no objection, the statement was ordered to be printed in
the Record, as follows:
Testimony of Dr. Robert Courtney at the Senate Committee on Commerce,
Science, and Transportation Hearing on S. 96, the Y2K Act, February 9,
1999
Good morning, my name is Bob Courtney, and I am a doctor
from Atlantic County, New Jersey. It is an honor for me to be
here this morning, and I thank you for inviting me to offer
testimony on the Y2K issue.
As a way of background, I am an ob/gyn and a solo
practitioner. I do not have an office manager. It's just my
Registered Nurse, Diane Hurff, and me, taking care of my 2000
patients.
These days, it is getting tougher and tougher for those of
us who provide traditional, personalized medical services.
The paperwork required by the government on one hand, and by
insurance companies on the other is forcing me to spend fewer
hours doing what I do best--taking care of patients and
delivering their babies.
But it was a Y2K problem which recently posed a serious
threat to my practice, and that is why I am here this
morning.
As a matter of clarification, although I am a doctor, I am
not here to speak on behalf of the American Medical
Association. Although I am also a small businessman, I am not
here to speak on behalf of the Chamber of Commerce. I cannot
tell you how these organizations feel about the legislation
before the Committee. But I can tell you how it would have
affected my practice and my business.
I am one of the lucky ones. While a potential Y2K failure
impacted my practice, the computer vendor that sold me the
software system and I were able to reach an out-of-court
settlement which was fair and expedient. From what my
attorney, Harris Pogust, who is here with me today tells me,
I doubt I would have been so lucky had this legislation
been in effect.
In 1987, I purchased a computer system from Medical
Manager, one of the leading medical systems providers in the
country. I used the Medical Manager system for tracking
surgery, scheduling due dates and billing. The system worked
well for me for ten years, until the computer finally crashed
from lack of sufficient memory.
In 1996, I replaced my old system with a new, state of the
art pentium system from Medical Manager for $13,000. This was
a huge investment for a practice of my size.
I remember joking with the computer salesman at the time
that this was a big purchase for me, and that I was counting
on this system to last as long as the last one did.
I remember the salesman telling me that he was sure that I
would get at least ten years out of it. He showed me a list
of how many of his local customers had used the Medical
Manager for longer than ten years.
And, the salesman pointed me to this advertising brochure
put out by Medical Manager. It states that their product
would provide doctors with ``the ability to manage [their]
future.''
In truth, I never asked the salesman about whether the new
system that I was buying was Y2K compliant. I honestly did
not know even to ask the question. After all, I deliver
babies. I don't program computers. Based on the salesman's
statements and the brochure, I assumed the system would work
long into the future. After all, he had promised me over ten
years' use, which would take me to 2006.
But just one year later, I received a form letter from
Medical Manager telling me that the system I had just
purchased had a Y2K problem. It was a problem that would make
it impossible for me to schedule due dates or handle my
administrative tasks--as early as 1999.
Medical Manager also offered to fix the problem that they
had created--but for $25,000.
I was outraged, as I suspect anyone sitting around this
table would be. The original system had cost me $15,000 when
I purchased it in 1986. The upgraded system cost me $13,000
in 1996. Now, a year later, they wanted another $25,000. They
knew when they sold me the $13,000 system that it would need
this upgrade--but of course, they didn't tell me.
I wrote back to the company that I fully expected them to
fix the problem for free, since I had just bought the system
from them and I had been promised that it would work long
into the future.
[[Page S6740]]
The company ignored my request, however, and several months
later, sent me an estimate for fixing the problem--again, for
over $25,000.
At this point, I was faced with a truly difficult dilemma.
My practice depends on the use of a computer system to track
my patients' due dates, surgeries and billings--but I did not
have $25,000 to pay for an upgrade. Additionally, I was
appalled at the thought of having to pay Medical Manager for
a problem that they had created and should have anticipated.
If I had to pay that $25,000, that would force me to drop
many of my indigent patients that I now treat for free. Since
Medical Manager insisted upon charging me for the new system,
and because my one year-old system was no longer dependable,
I retained an attorney and sued Medical Manager to fix or
replace my computer system at their cost.
Within two months of filing our action, Medical Manager
offered to settle by providing all customers who bought a
non-Y2K compliant system from them after 1990 with a free
upgrade that makes their systems Y2K compliant by utilizing a
software ``patch.''
This settlement gave me what I wanted from Medical
Manager--the ability to use my computer system as it was
meant to be used. To my great satisfaction, the legal system
worked for me and the thousands of other doctors who bought
Medical Manager's products since 1990. In fact, since I
brought my claim against Medical Manager, I have received
numerous telephone calls and letters from doctors across the
country who had similar experiences.
Additionally, even Medical Manager has stated that it was
pleased with the settlement. According to the Medical Manager
president who was quoted in the American Medical News,
``[f]or both our users and our shareholders, the best thing
was to provide a Y2K solution. This is a win for our users
and a win for us.'' [pick up article and display to Senators]
I simply do not see why the rights of doctors and other small
businesses to recover from a company such as Medical Manager
should be limited--which is what I understand this bill would
do. Indeed, my attorney tells me that if this legislation had
been in effect when I bought my system, Medical Manager would
not have settled. I would still be in litigation, and might
have lost my practice.
As an aside, at roughly the same time I bought the non-
compliant system from Medical Manager, I purchased a sonogram
machine from ADR. That equipment was Y2K compliant. The
Salesman never told me it was compliant. It was simply built
to last. Why should we be protecting the vendors or
manufacturers of defective products rather than rewarding the
responsible ones?
Also, as a doctor, I also hope the Committee will look into
the implications of this legislation for both patient health
and potential medical malpractice suits. This is an issue
that many doctors have asked me about, and that generates
considerable concern in the medical community.
In sum, I do appreciate this opportunity to share my
experiences with the Committee. I guess the main message I
would like to leave you with is that Y2K problems affect the
lives of everyday people like myself, but the current legal
system works. Changing the equation now could give companies
like Medical Manager an incentive to undertake prolonged
litigation strategies rather than agree to speedy and fair
out-of-court settlements.
I became a doctor, and a sole practitioner, because I love
delivering babies. I give each of my patients my home phone
number. I am part of their lives. This Y2K problem could have
forced me to give all that up. It is only because of my
lawyer, and the court system, that I can continue to be the
doctor that I have been. This bill, and others like it, would
take that away from me. Please don't do that. Leave the
system as it is. The court worked for me--and it will work
for others.
Thank you.
Mr. HOLLINGS. I thank the distinguished Chair.
I will run right down, trying to save time. It says:
But it was a Y2K problem which recently posed a serious
threat to my practice, and that is why I am here this
morning.
As a matter of clarification, although I am a doctor, I am
not here to speak on behalf of the American Medical
Association. Although I am also a small businessman, I am not
here to speak on behalf of the Chamber of Commerce. I cannot
tell you how these organizations feel about the legislation
before the committee. But I can tell you how it would have
affected my practice and my business.
I am one of the lucky ones. While a potential Y2K failure
impacted my practice, the computer vendor that sold me the
software system and I were able to reach an out-of-court
settlement which was fair and expedient. From what my
attorney, Harris Pogust, who is here with me today tells me,
I doubt I would have been so lucky had this legislation been
in effect.
In 1987, I purchased a computer system from Medical
Manager, one of the leading medical systems providers in the
country. I use a Medical Manager system for tracking surgery,
scheduling due dates and billing. The system worked well for
me for ten years until the computer finally crashed from lack
of sufficient memory.
In 1996, I replaced my old system with a new, state of the
art pentium system from Medical Manager for $13,000. This was
a huge investment for a practice of my size.
I remember joking with the computer salesman at the time
that this was a big purchase for me, and that I was counting
on this system to last as long as the last one did.
I remember the salesman telling me that he was sure that I
would get at least ten years out of it. He showed me a list
of how many of the local customers had used the Medical
Manager for longer than ten years.
The salesman pointed out the advertising brochure, and so forth.
But just one year later, I received a form letter from
Medical Manager telling me that the system I had just
purchased had a Y2K problem.
Here comes business. This is the practice of the business that is
going on here now in June of 1999, 6 months ahead of January 1, 2000.
The computer people are moving in and they are saying: Wait a minute,
you have got a Y2K problem.
I quote again:
It was a problem that would make it impossible for me to
schedule due dates or handle my administrative tasks--as
early as 1999.
Medical Manager also offered to fix the problem that they
had created--but for $25,000.
I was outraged, as I suspect anyone sitting around this
table would be. The original system had cost me $15,000 when
I purchased it in 1986. The upgraded system cost me $13,000
in 1996. Now, a year later, they wanted another $25,000. They
knew when they sold me the $13,000 system that it would need
this upgrade--but of course, they didn't tell me.
I wrote back to the company that I fully expected them to
fix the problem for free, since I had just bought the system
from them and I had been promised that it would work long
into the future.
The company ignored my request, however, and several months
later, sent me an estimate for fixing the problem--again,
for over $25,000.
At this point, I was faced with a truly difficult dilemma.
My practice depends on the use of a computer system to track
my patients' due dates, surgeries and billings--but I did not
have $25,000 to pay for an upgrade. Additionally, I was
appalled at the thought of having to pay Medical Manager for
a problem that they had created and should have anticipated.
If I had to pay that $25,000, that would force me to drop
many of my indigent patients that I now treat for free.
Since Medical Manager insisted upon charging me for the new
system, and because my one-year old system was no longer
dependable, I retained an attorney and sued Medical Manager
to fix or replace my computer system at their cost.
Within two months of filing our action, Medical Manager
offered to settle by providing all customers who bought a
non-Y2K compliant system from them after 1990 with a free
upgrade that makes their systems Y2K compliant by utilizing a
software ``patch.''
This witness appeared before the committee attesting to the fact that
what really happened is the attorney put it on the Internet. Whoopee
for the Internet. And once he got his case on the Internet, some 20,000
purchasers in a similar situation started calling on the phone and
filing in. Then on a cost/benefit--business is business--they knew what
the law was. They knew they intentionally misled. The salesman had
said: Man, this thing will last you more than 10 years, like your last
system. In a year it was already on the blink. They wanted to charge
$25,000--more than he paid for the first system and the upgrade
combined.
They got a free upgrade. They paid the lawyers, too. They were
tickled to death to get out of this one after it got on the Internet.
Let me quote:
This settlement gave me what I wanted from Medical
Manager--the ability to use my computer system as it was
meant to be used. To my great satisfaction, the legal system
worked for me and the thousands of other doctors who bought
Medical Manager's products since 1990. In fact, since I
brought my claim against Medical Manager, I have received
numerous telephone calls and letters from doctors across the
country who had similar experiences.
Reading on and skipping a good part, to conclude:
I became a doctor, and a sole practitioner, because I love
delivering babies. I give each of my patients my home phone
number. I am part of their lives. This Y2K problem could have
forced me to give all of that up. It is only because of my
lawyer, and the court system, that I can continue to be the
doctor that I have been. This bill, and others like it, would
take that away from me. Please don't do that. Leave the
system as it is. The court worked for me--and it will work
for others.
It is working all over the country, and, frankly, at a very minimal
cost. The consummate sum total of all products--this is product
liability matters--of all product liability verdicts does not exceed
the $12.1 billion that
[[Page S6741]]
Pennzoil received in a verdict against Texaco. When business sues
business, oh, boy, as Senator Dirksen stood here at this chair and
said: Then it gets into money. He said: A billion here and a billion
there, and before long it runs into money.
This is something to protect the consumers of America. It is very
much needed. They are working on it at the State level, and they have
plenty of notice. They do not need a bill to say, come January 1st,
give them another 90 days. We are going to give them 90 days beginning
right now with the debate. And we are going to give them another 60.
Happy day. We are giving them more days right now.
Just use the law, use your sense, do what business practices are
doing all over the country. But there is no question that this thing
here is just the footprint of a political exercise by those entities
downtown at the Chamber, which I am embarrassed for because I used to
be a champion of the Chamber of Commerce.
Talk about a businessman's politician, I challenge anybody to meet
the record we made bringing business, and continue to bring, to the
State of South Carolina. Incidentally, none of them have said anything
about Y2K; none of them have said anything about product liability.
I remember taking another prospect the other day to Bosch. They make
not only all the fuel injectors but all of the antilock brakes for
Toyota and Mercedes and a 10-year contract for General Motors. Just
going along down the line, I said: By the way, what do you have on
product liability?
The fellow got insulted. He said: Product liability? He ran over and
said: Look here. He showed me a serial number on every one of the
antilock brakes. He said: We would know immediately what went wrong.
You see, substantive basic tort law brings about due care, brings
about safety, brings about sound products. It is working in America.
And here comes a bunch of pollster politicians and a downtown group,
greedy as they are, trying to ruin small business, that is going to
have a problem.
Here is what the Washington Post, which is usually on the other side
of trial lawyers and everything else of that kind, said:
The Senate is considering a bill to limit litigation
stemming from the Year 2000 computer problem. The current
version, a compromise reached by Sens. John McCain and Ron
Wyden, would cap punitive damages for Y2K-related lawsuits
and require that they be preceded by a period during which
defendants could fix the problems that otherwise would give
rise to the litigation. Cutting down on frivolous lawsuits is
certainly a worthy goal, and we are sympathetic to litigation
reform proposals. But this bill, though better than earlier
versions, still has fundamental flaws. Specifically, it
removes a key incentive for companies to fix problems
before the turn of the year, and it also responds to a
problem whose scope is at this stage unknown. Nobody knows
just how bad the Y2K problem is going to be or how many
suits it will provide. Also unclear is to what extent
these suits will be merely high-tech ambulance chasing or,
conversely, how many will respond to serious failures by
businesses to ensure their own readiness.
In light of all this uncertainty, it seems premature to
give relief to potential defendants. The bill is partly
intended to prevent resources that should be used to cure Y2K
problems from being diverted to litigation, but giving
companies prospective relief could end up discouraging them
from fixing those same problems. The fear of significant
liability is a powerful incentive for companies to make sure
that their products are Y2K compliant and that they can meet
the terms of the contracts they have entered. To cap damages
in this one area would encourage risk taking rather than
costly remedial work by companies that might or might not be
vulnerable to suits. The better approach would be to wait
until the implications of the problem for the legal system
are better understood. Liability legislation for the Y2K
problem can await the Y2K.
That is the message of Business Week. It was very interesting that
they reached the same conclusion. I quote from that March 1 article:
Other industries are following suit.
It went on to talk about the 2000.
Through the Automotive Industry Action Group, General
Motors and other carmakers have set Mar. 31 deadlines for
vendors to become Y2K-compliant.
There is the Pinto case. They know what is coming down the road. They
run good business. If I was on the board of General Motors, I would say
right on. We are not waiting for political fixes of tort law by
politicians looking for silicon contributions.
In March, members of the Grocery Manufacturers of America
will meet with their counterparts from the Food Marketing
Institute to launch similar efforts. Other companies are
sending a warning to laggards and shifting business to the
tech-savvy. ``Y2K can be a great opportunity to clean up and
modernize the supply chain,'' says Roland S. Boreham, Jr.,
chairman of the board of Baldor Electric Co. in Fort Smith,
Arkansas.
There you go. They look upon it as a wonderful business opportunity,
the Y2K problem.
They, in essence, are saying, come on. Let's have the problem. Let's
find out who is efficient, who can really supply us. Let's find out who
can become compliant in time. You still have 6 more months. But
politicians are coming up here, we have to get there and identify. We
have to get those contributions. We have to get with the Chamber of
Commerce and Victor Swartz at the NAM and that crowd and show them that
we are good boys, and we are going to be on their voting charts that
they will publish when I run for reelection and everything else. They
have a political problem. It is not a Y2K problem. Business says, right
on with the Y2K problem. We can clean up the supply chain, find out who
is not really compliant and everything else early on here in 1999. We
are not waiting for January 1, 2000.
Right to the point, this particular legislation changes 200 years of
tried and true tort law, all for a special group that has the
unmitigated gall to come in and say all this about punitive damages,
lotteries, trial lawyers, frivolous lawsuits, and everything else.
Nothing is going to be frivolous after January. We have talked it to
death already this year. They have published the business articles
about it. Everybody has known about it. Every case, come January 1,
ought to be punitive, I can tell you that, because they ought to know
about it.
My particular power company group has already met and they have
tested to make sure it works. My State of South Carolina was just
cited, by July 1 the entire State system will be ready and going. So
everybody is doing it.
What we see and hear at the Washington level with the McCain-Wyden
amendment is, sit back, rest on your fanny, don't do anything. We are
going to take care of you, because on the one hand we are going to
provide a time that will put you out of business waiting the 90 days,
because you are a small businessman and you have to do business. And
then after the 90 days, we are going to say, by the way, the part was
made in Malaysia, so you have the wrong party.
Now, that is the game in this particular McCain-Wyden-Dodd amendment.
It should be defeated outright.
I yield the floor.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. WYDEN. I thank the Chair.
Mr. President, I am going to be brief this morning. I know my
colleague from Colorado has been waiting. The Democratic leader of the
Y2K effort, Senator Dodd, has also been waiting. I will be brief to
begin.
It is just a couple of hundred days to the new millennium. It seems
to this Member of the Senate that how this body handles this
legislation will say a great deal about our Nation's ability to keep
our strong technology-oriented economy prospering in the next century.
I believe that failure to pass this responsible legislation would be
like sticking a monkey wrench in the high-tech engine that is driving
our economic prosperity. There is no question that there are going to
be problems early next year stemming from the Y2K matter. What is going
to happen, however, is that the frivolous lawsuits will compound those
problems.
The sponsors of this legislation--the chairman of the committee, the
Democratic leader of the Y2K effort, Senator Dodd, and myself and
others who have been intensively involved--believe that with this bill
our Nation will be in a better position to be on line rather than
waiting in line for a courtroom date when the problems occur.
We have heard my chairman, Senator Hollings, and others talk about
the matter of changing jurisprudence in our country. Senator Hollings
specifically, who I respect so much, talked about how 200 years of case
law and jurisprudence is being changed.
This is a very narrow bill. Senator Dodd and I insisted that there be
a sunset date on this legislation. We believe,
[[Page S6742]]
and all the evidence points to the fact, that we are going to see the
problems stemming from Y2K trailing off 1 to 3 years into the new
century. We have put a tight 36-month sunset date on this legislation.
This is not changing Anglo-American jurisprudence for all time. This
is a narrow bill that will apply for 36 months so that we do not have
to have, for example, a special session of the Senate early next year
to deal with this problem.
Mr. KERRY. Will my colleague yield for a question?
Mr. WYDEN. I have been waiting about an hour. I will be happy to
yield to my friend, who I know has also been doing a lot of work.
Mr. KERRY. Mr. President, I ask my colleague if he might yield during
the course of his statement so that we may have a good dialogue with
respect to some of the issues he raises as he raises them.
The PRESIDING OFFICER. The Senator from Oregon has the floor.
Mr. WYDEN. Mr. President, I will be anxious to yield to my colleague
from Massachusetts after I have had a chance for just a few minutes of
discussion of this issue.
I will take a minute and outline an example of the kind of issue that
we are going to see early next century and how this legislation
specifically responds to it.
Let's say that Mabel's restaurant buys $10,000 worth of computers
from the Jones Company and they crash on January 3 of next year.
Mabel's restaurant loses a million dollars' worth of business as a
result. Mabel writes to Jones Computer Company telling them that the
crash was as a result of a Y2K failure; they want the computers fixed,
she wants compensation for the million dollars.
Here is what happens: The Jones Computer Company has to respond
within 30 days of hearing from Mabel's restaurant. They can say: Yes,
Y2K failure; we are going to fix the computer the way Mabel wants, and
we are going to pay the million dollars as well. Or they can say: We
will fix the Y2K problem, but we don't think we ought to be responsible
for the entire million dollars' loss. Mabel and Jones Computer agree
Jones ought to fix them, they negotiate and come up with what Jones is
liable for, and if Mabel doesn't think she is getting everything she
ought to, she can go out and sue Jones immediately. Or she can say the
situation isn't fixed the way she wants it and she can go out and again
file a lawsuit immediately.
Now, some have said, well, what happens if the Jones Computer Company
is bankrupt and insolvent? Well, Mabel can name in her lawsuit anybody
she thinks is a responsible party. The jury will then decide what
portion of the blame each potential defendant ought to bear. Virtually
all of these cases are going to be decided on the basis of existing
State contract and tort law. We lock into this legislation protection
for existing contracts, and in virtually all of the cases State
contract and tort law is going to be protected.
So what you are going to have is a situation where Mabel's
restaurant, if it isn't fixed to her satisfaction, can go to court
essentially immediately and recover all of her economic damages. She is
in a position, by the way, to recover up to a quarter of a million
dollars in punitive damages. I made my career with the Gray Panthers,
the senior citizens group, before I came to Congress and now for 18
years in Congress, around consumer advocacy. It seems to me that is a
pretty good deal, what I have outlined in this hypothetical case for
this restaurant, for just about any consumer in our country.
I want to talk specifically about whether Americans are losing any
legal rights in this particular legislation. I guess we could say they
are losing the right to sue for a few days. As I said, they can sue
immediately if they choose to. But the reason we are trying to have
that 30-day period for defendants is to make sure they fix people's
problems. It is better to be on line than waiting in line for that
court date.
Second, I guess you can say the cap on punitive damages as it relates
to small business means we are not going to stick it to small business.
Well, I happen to think those small businesses are making an
extraordinary contribution to our economy. So let's have a
philosophical debate. The Senator from Massachusetts, who has worked
hard on this issue, and I have a difference of opinion on that. We
don't disagree on a whole lot of issues. I think we do disagree on that
one. But I think we ought to protect the small businesses from these
unlimited punitive damages.
Third, I guess you can say our legislation does make some changes
with respect to joint and several liability. What we are saying,
however, is that anytime you have a corporate defendant who engages in
egregious conduct, rips off consumers, is guilty of fraud, joint and
several liability applies in those kinds of instances. It also applies
when we have individuals with a low net worth as well.
I would like the Senate to also reflect on the fact that essentially
what we are doing here is what we did in the Securities Litigation
Reform Act. It parallels most of the key issues in that area.
I want to wrap up by just mentioning briefly all of the major changes
that were made in this legislation after it left the Senate Commerce
Committee where Democrats, in a united fashion, opposed the bill.
I mentioned the 3-year sunset provision. I want it understood by all
Members of this body that I will be against any bill that comes out of
the conference committee that doesn't have a sufficient sunset
provision. This is not changing Anglo-American jurisprudence for all
time; this is a 3-year bill. We insisted on it after it came out of the
Commerce Committee.
Second, the business community originally talked about a vague
Federal defense that would essentially give them protection if they
engage in reasonable efforts. On the basis of what we heard from the
consumer groups, the Democratic leader of the Y2K effort, Senator Dodd,
and I thought that was too vague, to give corporate defendants that
kind of break. So we cut that out.
Third, we dropped the new preemptive Federal standard for
establishing punitive damages. The only people we are protecting are
the small business people. We may have a philosophical difference of
opinion on that. We think those folks deserve protection.
On the question of joint and several liability, when it came out of
committee, even if you engaged in fraud, even if you had a low-net-
worth defendant, there wasn't protection for the plaintiff. We insisted
on those kinds of changes. We said if a corporate defendant engages in
outrageous conduct, if they are trying to rip somebody off, you bet
joint and several applies. Senator Dodd and I insisted on that
provision as well.
Also, a provision which is certainly not popular in the business
community: There is liability for directors and officers if they make
misleading statements or they withhold information regarding any actual
or potential Y2K problems.
So at the end of the day, I believe we have a balanced bill. The
defendants have an obligation under this legislation to go out and cure
problems, to get their businesses online and make sure they are in a
position so that this technology-driven economy can continue to hum as
it has. The plaintiffs have equal obligations. They have a duty to
mitigate. So there are obligations on the part of the defendants and
obligations on the part of the plaintiffs.
But this is a narrow bill. It is going to discourage frivolous
claims, but it is also going to make sure that those who have a
legitimate, honest concern, as in that example of a small business I
outlined here this morning, that that small business is going to be
able to go after all of the parties, all of the parties responsible,
and hold them liable for the portion of the problem to which they
actually contribute. So I am very hopeful the Senate will pass this
legislation.
We heard mention of the trial lawyers on the floor of the Senate
earlier. Probably, prior to my involvement in this legislation, I was
considered one of the better friends of those folks. Mention was made
of the tobacco issue. I was the Member of Congress who got the tobacco
executives under oath to say nicotine was addictive, which I think has
had a little bit to do with helping to protect kids and consumers in
this country. So I don't take a back seat to anybody in terms of
standing up for consumer rights.
[[Page S6743]]
I say to the Senate today that as a result of months of difficult
negotiations, led by the chairman of the Commerce Committee, Senator
McCain, the Democratic leader of the Y2K effort, Senator Dodd, myself,
Senator Feinstein, and others, we have brought a balanced bill to the
floor of the Senate. It is going to ensure that we do not throw a
monkey wrench into this technology engine that is doing so much to
ensure our prosperity.
Mr. DODD. Will my colleague yield?
Mr. WYDEN. Yes.
Privilege Of The Floor
Mr. DODD. Mr. President, I ask unanimous consent that Tania Calhoun,
a fellow with the Select Committee on Y2K, be granted the privilege of
the floor during consideration of the bill.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DODD. Mr. President, I wish to again turn to the Y2K liability
bill and the very real importance of this issue. As you know, I have
served for the past year with Senator Bennett on the Senate Special
Committee on the Year 2000 Technology Problem. For over a year, we have
examined the coming millennium changeover and the possible problems
associated with it. We have held hearings to examine the effects of the
year 2000, including hearings on industry, finance, energy,
telecommunications, international trade, community safety, health, and
litigation. Throughout these hearings, the committee has become
increasingly alarmed at both the perception and the reality of a
gathering storm of potential liability and consequent litigation that
could swamp our court system and impact our Nation's businesses.
Mr. President, I would dare say that many Americans, have in one way
or another felt the direct effect of our Nation's burgeoning wave of
litigation that has been growing steadily over the past half century.
Whether it be the increasing cost of health care, insurance premiums or
consumer products, we have all experienced the results of litigation
costs. Americans have become accustomed to living in a litigious
society. Occasional abuses of the legal system generally arise from
problems that are generally limited in scope. An example of this can be
found within the securities industry where the legal system was no
longer an avenue for aggrieved investors but rather had become a
pathway for a few enterprising attorneys to manipulate legal procedures
for their own profit. So-called strike suits were generated whenever
stocks went down and sometimes when they went up. These costly suits
were frequently settled by companies seeking to avoid the expense of
protracted litigation. I authored litigation reform legislation, which
passed despite a veto by the White House. In other words, I have
strongly supported litigation reform efforts in the past. As with
securities litigation reform, the need for Y2K litigation reform arises
from a national problem yet it should be addressed with a narrowly
tailored solution.
Mr. President, only a narrowly tailored solution could effectively
manage the demands of such a pervasive problem. Potentially, any
business in the country might be swept into the Y2K problem, either
because it is itself not prepared or because a firm it depends upon is
not prepared. The Special Committee on Year 2000 has heard testimony
that as many as 15 percent of the businesses in this country will
suffer Y2K-related failures of some kind. Even now we read that small
and medium-sized businesses across the globe are not taking the
necessary steps to become Y2K-compliant, and many think they don't have
a Y2K problem. Since businesses are interconnected these days, just one
failure in one business may generate cascading failures that may then
generate numerous lawsuits.
The mere fact that this is such a pervasive problem is in itself the
primary reason why litigation on this matter could cost in the hundreds
of billions. It has been suggested that as a result of Y2K, the United
States could easily find itself witnessing not only a huge surge in
litigation, this potential litigious bloodletting could have long-term
consequences on the economic well-being of our country. By now we have
all heard that the cost of Y2K litigation could reach the astronomical
figures. Various experts, including the Gartner Group from my own state
of Connecticut, have estimated that the costs of litigation may rise to
$1 trillion. Such estimates, and I must stress that these are only
estimates, underscore the need for serious review and a bipartisan
approach to this issue. Massive amounts of litigation has the potential
to overwhelm the court system, disrupting already-crowded dockets for
years into the next millennium. We must be careful that an avalanche of
lawsuits does not smother American corporations and bury their
competitive edge. A maelstrom of class action lawsuits could have long-
term consequences on the American economy and the American people.
There are several things that should be absolutely understood about
this bill, first and foremost, the provisions in this bill will sunset
in 2003. Secondly, this bill will not affect the rights of plaintiffs
and defendants in personal injury actions in any way. Most importantly,
this bill seeks to encourage individuals and businesses to do all that
they can do to make themselves Y2K compliant and to encourage efforts
to mitigate Y2K related damages.
This is a complex bill with many complex legal issues. Some of my
colleagues are opposed to the section of the bill that provides for
proportionate liability, which generally means that a defendant can be
held liable only for the damages for which he is responsible. Some of
my colleagues argue that it is unfair for an innocent plaintiff to run
the risk that it might not recover 100 percent of its damages if it
can't hold the defendant liable for that amount, even if that defendant
was only responsible for 20 percent of those damages. I would respond
by saying that not only is it equally unfair to demand that businesses
with little complicity in a dispute be required to pay for most of the
damages just because it has deep pockets. Moreover without some form of
proportionate liability, plaintiffs' lawyers will always name a deep-
pocketed defendant in a suit because they know the deep-pocket will
have to pay for all the damages even if that defendant is only
marginally responsible. I would remind my colleagues that the bill
retains joint and several liability in cases where the defendant acted
with specific intent to injure the plaintiff or knowingly committed
fraud and does not affect personal injury cases. As a result, the
proportionate liability provision in this bill finds a reasoned balance
between the rights of plaintiffs and the rights of defendants.
As I have said on numerous occasions that a Y2K liability bill should
not be a vehicle for broad tort reform. And efforts to impose broad
caps on punitive damages are just that. The provisions that I propose
aren't tort reform, but merely protect small businesses and the mom and
pop enterprises by capping punitive damages only for small businesses
that have 50 or less employees and caps damages at $250,000 or three
times the compensatory damages, whichever is smaller. The White House
has expressed concern about the bill's provisions for capping punitive
damages, however as my esteemed colleague Senator Wyden pointed out the
last time the Senate considered this issue during last year's products
liability bill, it included a cap on punitive damages lower than this,
and the White House agreed to this proposal. It is unclear then why
they are opposing the cap in this bill which provides for more punitive
damages.
Other voices have suggested that this bill relieves businesses and
corporations from accountability or responsibility. The bill does not
do this, but does try to ensure that those who do sue will do so
responsibly and specifically and that there will be ample opportunity
for parties to solve the Y2K problem before litigating their Y2K
problems. To ensure responsibility on the plaintiff's side, for
example, the bill requires the plaintiff to provide specific details
about the injuries they've suffered when they file a complaint.
Plaintiffs who can articulate the nature of their injuries are less
likely to be filing frivolous complaints. To ensure accountability on
the defendants side, companies are given a narrow window of opportunity
to solve any Y2K problems they've created before a lawsuit is filed.
This window of opportunity gives them the chance to maintain a business
relationship by providing professional and responsible
[[Page S6744]]
service to their customers before the business relationship is soured
by a lawsuit.
There are those who say that state courts have been addressing issues
like the Y2K problem for years and can continue to do so. They also say
the state legislatures are fully capable of addressing the Y2K problem
and that there is no need for the Federal Government to become
involved. My colleagues should know, however, that nearly every state
to date has either passed Y2K liability legislation or is considering
such legislation, so Y2K actions in the future will probably not be set
on long-standing state precedents. Instead, they may be decided under
new untested and untried state laws. The bill provides in most cases,
for uniform provisions to be applied to Y2K cases, enabling both
plaintiffs and defendants to predict the law that applies to them.
Furthermore, since all of these laws are different, firms engaged in
interstate commerce--nearly every firm these days--will be at a
disadvantage. It is difficult to do business where potentially 50
different and changing sets of laws might apply. The bill's provision
of generally uniform guidance for Y2K cases levels the playing field
and reduces the cost of doing business for potential plaintiffs and
potential defendants. Multiple sets of laws also raise the problem of
forum shopping, which occurs when plaintiffs try to bring their
lawsuits in states where the laws are most advantageous to them. This
leads to imbalances in our state courts, and high costs for defendants.
Since the bill provides for generally uniform standards across the
country, forum shopping in Y2K cases will not be a problem. State
courts can maintain balanced caseloads: and the cost of defending Y2K
lawsuits will not be unreasonably high due to forum shopping.
Some are of the view that the Y2K problem has been around for 40
years and should already have been solved, and that the Senate has no
business stepping in to protect the high-technology industry. And we
should be clear, we are not trying to protect the high-technology
industry, but instead we are trying to manage a problem for all
business and individuals, the mom and pop grocery and the major
enterprise. We are all plugged in today, and the bill speaks to the
massive litigation boom that has the potential to bankrupt all kinds of
businesses, costing individual Americans their livelihoods.
While we are rushing to solve the Y2K problem and the policy issues
therein, we should above all strive to enter the next century with a
sense of vision, and this vision should include a prudent analysis of
the looming challenges of potential Y2K litigation. As I have said
before, no one wants to begin the next millennium by trading a vision
of the future for a subpoena.
I commend my colleagues from Arizona, Oregon and others who have
worked so hard on this. I thank my colleague from South Carolina, the
ranking Democrat of this committee. He feels very strongly about this
legislation. It could have--as Members have the right to do--delayed
action a long time on this. In fact, to be able to get to the
consideration of it today is something that I deeply appreciate. We
disagree on this matter. It is one of those rare occasions when we do.
But, when we do, that is a normal way of conducting business.
I happen to think this is a good bill. It is a practical bill. It is
a 36-month bill--3 years. That is it. It is narrow in scope and narrow
in time. It is a practical way to try to deal with a serious problem
that looms on the horizon.
We have to have balance. It incorporates the ideas that are fair to
the plaintiffs and that are fair to the defendants. It allows
resolution of these potential difficulties without having to get to
court. We are a very litigious society. Every person in the country
knows that. I think every effort that we can make to avoid going to
court instead of rushing to fix the problem we ought to do. This bill
tries to achieve that goal without denying people the right to get to
court.
I commend my colleagues in this effort. I hope that we can pass this
bill today or tomorrow after covering a variety of amendments, and go
to conference.
I thank my colleague for yielding.
Mr. WYDEN. Mr. President, I will yield the floor in just a moment.
First, I thank the Democratic leader for the Y2K effort, and Senator
Dodd for all of his counsel and help. He, of course, is the principal
author on securities litigation legislation which, to a great extent,
this bill is modeled after.
Just before I yield the floor, I, too, want to say to Senator
Hollings, the Democratic leader of the Commerce Committee, that I agree
with so much of what he has done--whether it is a matter of Social
Security surplus or campaign finance. I regret that on this one we have
a difference of opinion.
I think that we have brought a balanced bill to the floor of the
Senate. But I look forward to the many other issues on which Senator
Hollings and I are going to be in agreement.
I yield the floor.
The PRESIDING OFFICER. The Senator from Colorado is recognized.
Amendment No. 609 To Amendment No. 608
(Purpose: To provide that nothing in this Act shall be construed to
affect the applicability of any State law [in effect on the date of
enactment of this Act] that provides greater limits on damages and
liabilities than are provided in this Act)
Mr. ALLARD. Mr. President, I have an amendment at the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative assistant read as follows:
The Senator from Colorado [Mr. Allard] proposes an
amendment numbered 609 to amendment No. 608.
At the end of the amendment, add the following:
SEC. . APPLICABILITY OF STATE LAW.
Nothing in this Act shall be construed to affect the
applicability of any State law that provides greater limits
on damages and liabilities than are provided in this Act.
Mr. ALLARD. Mr. President, first of all, I want to say that I support
the piece of legislation that has been brought forward by Senator
McCain, working with the Senator from Oregon, and also the efforts of
the Senator from Connecticut in that regard.
I believe that we need to address a very important issue that is in
this amendment. I appreciate the work that Senator McCain and the
Commerce Committee have done to craft this important and vital piece of
legislation, especially in our high-technology society.
I support this effort to encourage prompt resolution of Y2K problems,
minimize business disruptions, and discourage unnecessary and costly
lawsuits. However, I am concerned about one aspect of this proposal:
State laws addressing year 2000 liability issues will be preempted by
Senate bill 96 unless we specifically provide for protection of
stronger State statutes. I am proposing an amendment to do just this.
The Colorado State Legislature passed a strong statute which
specifically addresses the Year 2000 liability issue.
Our Governor signed the legislation on April 5, 1999, and it will be
effective July 1, 1999.
Colorado's law provides certain protections from damages for
businesses that experience a year 2000 problem. While the intent of
this state law is similar to that of S. 96, the state's protections are
stronger than those proposed in S. 96.
Colorado's statute will be overridden by the Federal legislation we
are considering today.
My State is not the only one in this situation; Texas, North Dakota,
South Dakota, Virginia, Florida, and Arizona have also passed Year 2000
liability legislation that is stronger than this Federal law would be
in one way or another.
The State laws are consistent with the intent of S. 96 and were
supported by a broad cross-section of concerned groups.
In addition, 17 other States have pending Y2K legislation that is
near passage.
We should not be working to nullify the States' efforts. I am
offering this amendment in order to allow the greater State limits on
damages and liabilities to stand.
The intent of S. 96 as it relates to State law is confusing, and most
troublesome is the provision stating that the Federal law will
supersede State law to the extent that it is inconsistent with the
Federal law.
I am sure that several of my colleagues will be interested in
protecting their States' Year 2000 liability laws.
I encourage those Senators to support my amendment, and I encourage
[[Page S6745]]
others to consider the justification for preempting State laws
outright, especially those laws that establish stronger limits than
proposed at the Federal level.
I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
Mr. McCAIN. May I ask the Senator from Colorado to yield to me?
Mr. ALLARD. I am glad to yield to the Senator from Arizona.
Mr. McCAIN. I will tell my friend from Colorado that I believe we are
going to accept the amendment. So the yeas and nays will not be
necessary. So I request that he retract his request.
Mr. ALLARD. Mr. President, I withdraw the request.
Mr. HOLLINGS. Mr. President, let me commend the distinguished Senator
from Colorado. This was exactly the intent when we reported this bill
out by 11 to 9. Of the nine that was the main concern--that if there
were a problem, we have laws to take care of these problems. We have
had laws on the books for years. Business was moving.
What the Senator is saying here in this particular amendment is that
this shouldn't preempt any greater provisions of State law, that the
State law would apply.
I think it is an excellent amendment. I am glad to accept it.
Mr. ALLARD. Mr. President, I thank both the manager for the minority
and the manager for the majority for their favorable comments.
Mr. McCAIN. Mr. President, I don't believe there is any further
debate on the amendment.
The PRESIDING OFFICER. Without objection, the amendment is agreed to.
The amendment (No. 609) was agreed to.
Mr. HOLLINGS. Mr. President, I move to reconsider the vote.
Mr. McCAIN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. McCAIN. Mr. President, I thank the Senator from Colorado. I think
it is an important amendment. I appreciate not only his concern for the
entire bill but for the State of Colorado, since this obviously would
have an effect on the hard work of the State legislature and the
Governor.
I yield the floor.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
Mr. KERRY. Mr. President, at an appropriate time I may send an
amendment to the desk. But I want to begin at least talking about where
we are, where this bill currently puts us, and I have a number of
points I would like to make in the effort to do that.
I am struck by one thing that has just happened, which is why I am a
little less hesitant.
A few moments ago, the Senator from Colorado put in an amendment that
preserved the State law; but at the same time the Senator from Oregon
previously had made it very clear that their bill leaves in place the
existing State law protections for consumers in both tort law and
contract, but, in fact, what has happened is by virtue of the amendment
just passed by the Senator from Colorado, they have actually changed
that so that we have a different law for both contract and for tort.
It seems to me the bill has already, suddenly, by acceptance, moved
to a significantly different place from what they had intended. Maybe
this will be worked out later. I think it certainly makes this bill
more complicated in many regards and will probably give yet another
reason for the White House to veto this.
Let me state where I think we are with respect to this legislation. I
supported willfully, happily, and with a sense of pride the securities
reform legislation. Senator Dodd was a leader on that, and I voted for
it and voted to override the veto of the President because I thought it
was important to address what was an egregious overreach within the
legal community where we saw a pattern of abuse. We took action as a
result of that. I think it was the right action.
In addition, I also voted for tort reform with respect to the
aircraft industry, because Senator Kassebaum appropriately brought
legislation to the Senate that made it clear that liability issues with
respect to manufacturers--and she represented a State which is the home
base for Cessna, among other aircraft manufacturers--and we made an
appropriate change in liability law in the capacity of lawyers to bring
these so-called dreaded lawsuits that we hear a lot about on the Senate
floor. I voted for that and we changed it. It was for the better.
I say that because I want to make it as clear as I can in an
atmosphere where people are quick to try to paint Members into a corner
or sweep Members into one position of ideology or another. I am
approaching this from a perspective of what I hope is common sense and
fairness.
I heard the distinguished Senator from Arizona--who is a great
personal friend of mine and a man for whom I have enormous respect and
a great relationship--say a few minutes ago, and I will certainly pass
it off merely as rhetoric, that the amendment I will offer is ``form
over substance'' and it is designed to ``protect the income stream of
the trial lawyers.'' It is exactly that kind of polarization in the
rhetoric that is preventing Members from looking at what the Senate may
or may not do here, what the Congress may or may not do, and what may
happen to the American citizens that we represent.
I challenge my colleagues to show me one piece of language in the
amendment that I will submit that makes it easier for a lawyer to bring
a lawsuit. There is not one. In point of fact, every point raised by
the high-technology community that they wanted Members to address is
addressed in their favor--in favor of the high-tech community. They
wanted a period to cure; we provide a period to cure. They wanted
mitigation; we put a responsibility on plaintiffs to mitigate. They
wanted economic loss and contract preserved; we preserve contract law.
Finally, they wanted proportionality; all we require for them to
qualify for proportionality is that they act as a good citizen and do
two things: We ask they identify the potential in the product they make
for a Y2K failure, and having done so, we ask that they let their
purchasers, their clients, know of that potential.
That is all we ask. We don't ask that they fix it. They have a duty;
they have a period of cure within which they can fix it. If they fix it
within the duty, a period of cure, as the McCain bill, they would be
free from any lawsuit.
That doesn't help plaintiffs. That is not a plaintiff's bill. That is
not an effort to maintain the revenue stream for lawyers.
Let's talk about the reality of what is happening here. The reality
is that an industry is coming to the Congress for the first time in
American history and asking for prospective anticipatory relief from
liability for something they make--the first time ever.
What would happen if Ford Motor Company came in here and said: Gee,
we produced a car that instead of turning right while turning the wheel
right, turns left. Forgive us. We will fix it. Don't worry.
There are similar ways in which companies could come to a Senator and
say they don't want to be held liable because they ``kind of overlooked
something.''
As the Senator from South Carolina said a little while ago, 20 years
ago people knew about this. The founder and executive director of RX
2000 Solutions Institute said:
I am a former computer programmer who used two digits
instead of four to delineate the year. Granted, this was more
than 20 years ago, but even then I was aware of the anomaly
posed by the year 2000. When I expressed concern to my
supervisor, he laughed and told me not to worry.
The Y2K bug is not something that just fell out of the sky. The Y2K
bug is not a freak occurrence that happened as a God-given act. The Y2K
problem is a result of conscious choices that people made or didn't
make, deliberate decisions made to delay fixing a problem. They have
led us to where we are now.
I represent high-technology companies, and I am very proud of them. I
have had the support of high-technology CEOs, workers, and employees. I
truly have a respect for the entrepreneurial capacity and the
extraordinary path they are leading us on that is second to nobody in
the Senate, and I understand the nature and complexity of this Y2K
problem that suggests we don't want to have a wholesale slug of
lawsuits that clog the courts, that create the capacity for small
companies to tie up their capital, to diminish further entrepreneurial
effort, to reduce creativity.
[[Page S6746]]
I understand all of those arguments. Together with Senator Robb,
Senator Daschle, Senator Reid, Senator Mikulski, and Senator Akaka, I
am offering a compromise. It is not everything that the Chamber of
Commerce wants, and it sure isn't everything the lawyers want. However,
it is common sense, and it will be signed by the President of the
United States into law. The bill that is being offered by Senator
McCain and others will not in its current form be signed into law.
If Members are really concerned about the Y2K problem and want to do
something about it, we have an opportunity to legislate on the floor of
the Senate in a way that is fair, that makes sense, and that will help
the companies deal with Y2K, and at the same time, it doesn't turn
around and ignore common sense about how to leverage good behavior
within the community.
People ask, What are the real differences between this bill and
Senator McCain's bill? I will get to that. I will explain that. Two of
the most important are on the issue of proportionality. That takes a
little bit of explanation. Not everybody in the Senate is a lawyer.
There are 55 Members who are, but even among lawyers there has always
been a great tension on this issue of joint and several liability
versus proportional damages.
Under the bill that Senator McCain, Senator Dodd, and Senator Wyden
are offering the Senate, a company will automatically get proportional
liability. They don't have to be a good citizen. They don't have to go
out and remediate, even though they say that remediation is the purpose
of their legislation. There is no leverage in getting out of joint and
several liability that encourages them to remediate. They automatically
get proportional damages. The bill gives it to them right up front--
automatic. So they could display the most negligent, the most reckless
behavior, and still they get it. Is that possible? Some people will sit
here and say no, that is not going to happen.
Look at the instance the Senator from South Carolina talked about.
Ford Motor Company is historically recorded as having made a conscious
business decision to measure how much it cost them to move the gas
tanks and fix the gas tank problem versus the potential of damages.
They chose not to move it and ultimately it caught up to them in a
famous, famous case and they paid the price. That is why we have had
something called punitive damages.
Punitive damages are not, as the Senator from Arizona said, simply to
deter. Punitive damages are punitive. They are to punish in addition to
deter. The deterrence is not just as to the behavior of the entity that
is creating the problems. The deterrent is as to other potential
entities, in the future. The reason we have the potential of punitives
within the legal system is not just to deter behavior among a
particular set of actors engaged in a particular behavior at a
particular time. It is to say to other actors at a future time: If you
do not heed the warning that the products you make could subject you to
particular kinds of damages, then you, too, may be subject to them in
the future. That is why, today, young kids have pajamas that don't
catch on fire. That is why, today, people have all kinds of products in
their homes where people are sensitive to what the impact of that
product may be on a user.
My colleagues come in here and say we don't want punitives. These
outrageous lawyers are going to come in and maybe get a punitive damage
verdict. Let me tell you what my colleagues, either inadvertently or
willfully, are doing. They are protecting companies from a requirement
that the behavior they engage in has to be--let me make this very
clear. Punitive damages are only awarded if a plaintiff can show the
defendant acted in the worst activity possible, worse than mere
negligence. We are talking about a defendant who has to commit either
an intentional tort or otherwise here, because in their bill they have
a very narrow limitation as to who will qualify for joint and several,
very narrow. The fact is, they will exempt anybody who acts willfully,
wantonly, maliciously, recklessly or outrageously.
I ask a simple question: What is the public policy rationale for
coming in here and saying that a company that acted maliciously,
willfully, recklessly, outrageously should somehow be completely
exempted from the potential of joint and several liability and have a
blanket exemption even before the fact? I do not understand that. I do
not understand the public policy. Just because we do not like lawyers,
just because on a few occasions there have been a couple of bad jury
verdicts of punitive damages--which in every occasion, I say to my
friends, have been reduced by the court on appeal. Those never get
paid. They are great for headlines. They are wonderful for bad
reputations for lawyers. But they don't get paid because the courts
reduce them.
So I do not want to come here to the floor of the Senate and battle
phantoms. I don't want to battle dragons that do not exist. I want to
deal with the real problem of Y2K, and we deal with the real problem of
Y2K because we make it tougher for lawyers to bring cases. I agree with
what my colleague, the Senator from Connecticut, said a few minutes
ago. He said we, in a litigious society, do not want a lot of frivolous
lawsuits. We do not want to be caught up in court with a whole lot of
lawsuits that are inappropriate.
I agree with that. I was outraged when I heard about lawyers
automatically triggering lawsuits by computer when stocks changed and
so forth. That is an abuse of the system. We ought to do everything in
our power to require that the Federal courts, through the rules that
are available to them, hold lawyers accountable so that frivolous
lawsuits are denied and so forth. But we go farther than that. In my
amendment, on Y2K we in fact lay out a series of requirements that make
it much tougher for any lawyer to bring a case. Just like the
legislation of Senator McCain, ours is a 3-year bill. But ours is a 3-
year bill that does not harm consumers. Ours is a 3-year bill that has
a fair balance between this interest for remediation or mitigation and
what we are prepared to contribute to the well-being of the whole
industry, to blanket the whole industry.
Let me be specific about what I mean by that. The Y2K bill of Senator
McCain and company provides you automatically get proportionality,
proportional damages. Ours says you have to do two things. You have to
make the effort to identify the potential for a Y2K failure and then
put out the information to the people you have dealt with about that
potential.
The purpose of this legislation is to get companies to fix the
problem ahead of time. In order to get a company to fix the problem
ahead of time, you want to have the maximum incentive to the company.
So if you say to the company: Look, you can have the lower standard.
You can have what you want--which is you can get out from under joint
and several; you can have proportional liability--but we want you to do
something so you will encourage the very remediation and mitigation we
are looking for. We want you to look at your products and see what the
potential is for one of them to have a Y2K failure. When you find the
potential, we want you to be a good citizen and tell the people who
bought the things from you about it.
Why is that better than Senator McCain's bill? It is better because
of the Pinto principle. Some companies may look at the situation and
say: Hey, the Senate just gave us proportional liability and we don't
even have to worry about paying the full 80 percent if we think we have
only 20 percent liability because we don't have to do anything. They
gave it to us. It is cheaper for us not to fix it and wait and see if
anybody comes after us. And when they do come after us, all we are
going to have to do is do the 20 percent, not the 80 percent. I ask my
colleagues, how is that an incentive for the good fixing of the problem
beforehand that we are seeking?
The answer is, it is not. It will have exonerated people before the
fact from the very thing we are trying to encourage, which is the
incentive to fix it.
I find it very hard to believe that my colleagues in the Senate want
to vote against asking companies to be good citizens. I find it hard to
believe that my colleagues are unwilling to say a company ought to just
look for the potential of failure. We do not require that they
absolutely find it. We do not
[[Page S6747]]
require that they identify it. They have to make a good-faith effort to
look for it.
Every company with whom I have talked tells me they have already done
that. Most companies tell me they qualify today and they would accept
that standard. I am proud to say that a company--I have a letter
received today from Brian Keane who is co-president of the Keane
Company headquartered in Boston, MA. It is a $1.1 billion information
technology corporation and has over 12,000 employees located in 26
States. I quote from part of the letter, which I ask unanimous consent
be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Keane, Inc.,
Boston, MA, June 8, 1999.
Hon. Senator John Kerry,
U.S. Senate,
Washington, DC.
Dear Senator Kerry: Keane, Inc. is a publicly traded, $1.1
billion information technology corporation with over 12,000
employees located in 26 states. As you know, Keane is
headquartered in Boston, Massachusetts.
We are encouraged by your leadership role in the ongoing
debate over the Y2K liability legislation. Keane is concerned
that this important legislation is being used as a
``political football'' and would encourage all parties
engaged in the debate to work together to craft legislation
that will not only pass the Senate and the House, but also be
signed by the President. Y2K liability legislation is a
matter of great importance to Keane because, over the past
three years, Keane has worked with literally hundreds of
American companies to help them solve the Y2K problem.
Keane believes the most recent draft of the Kerry language
is a politically viable solution, because it serves the
purpose of protecting against frivolous Y2K litigation and
would be signed by the President.
Opponents of the Kerry bill argue that it does not
adequately address the distribution of damages to responsible
parties. However, Keane believes that the proportional
liability language in the Kerry bill addresses this issue.
Specifically, your staff has assured us that your language
would protect defendants who demonstrate that the plaintiff
restricted access to or failed to notify the defendant about
any function(s) that could corrupt other Y2K vulnerable
systems and defendant's who (1) performed a reasonable
assessment with a defined methodology for resolution of the
plaintiff's Y2K vulnerability prior to implementing a
solution; or (2) implemented the Y2K solution with
coordinated-comprehensive testing and quality assurance
processes; or (3) secured, after completion of the
remediation or testing, a formal acceptance agreement from
the plaintiff. With such protections, Keane can endorse the
Kerry language without reservation.
We appreciate your attention and leadership on this very
serious matter and look forward to working with your office
in the future.
Sincerely,
Brian Keane,
Co-President.
(Mr. BUNNING assumed the Chair.)
Mr. KERRY. It says:
Keane believes the most recent draft of the Kerry language
is a politically viable solution, because it serves the
purpose of protecting against frivolous Y2K litigation and
would be signed by the President.
Opponents of the Kerry bill argue that it does not
adequately address the distribution of damages to the
responsible parties. However, Keane believes that the
proportional liability language in the Kerry bill addresses
this issue. Specifically, your staff has assured us that your
language would protect defendants who demonstrate that the
plaintiff restricted access to or failed to notify the
defendant about any function that could corrupt other Y2K
vulnerable systems and defendants who (1) performed a
reasonable assessment with a defined methodology for
resolution of the plaintiff's Y2K vulnerability prior to
implementing the solution, or, (2) implemented the Y2K
solution with coordinated comprehensive testing and quality
assurance processes. . . . Keane can endorse the Kerry
language without reservation.
I believe that is reasonable, and I believe it is reasonable because
they have looked at the reality of the language we have put forward. I
want to go through a little bit of this now.
The McCain bill does not protect the individual consumer. They are
requiring the individual person to go through the same hoops and the
same requirements as a corporation. Again one has to ask: What is the
public policy rationale for asking one--let's say one of these people
sitting up in the gallery is assured, when they buy an alarm system for
their house, that the alarm system is Y2K compatible. But they leave to
go on vacation, the alarm system fails in the year 2000, their house is
robbed, and they want recoupment.
They have to go through every hoop of a large corporation. They
cannot go right in, file their suit, and get redress. They are going to
have to be treated like the other corporate entities, and they cannot
even get the discovery. They are left as powerless as, unfortunately,
the average consumer is in our society today.
Again, when one looks at public policy rationale, it is hard to
discern, and this is the main reason: Most of the Y2K problems that
people are envisioning are corporation to corporation. We are talking
about contract law. Most of this is contract law, and what we are
talking about are companies that are going to have an interest
conceivably in suing another company because the product they bought
from that company does not do what the company that sold it to them
said it would do.
Maybe under their warranties, just under the contract, it will be
taken care of. But what the McCain bill wants to do is say to every
American consumer: You are going to have to wait 3 months; you are
going to have to wait the 30 days for the filing; you are going to have
to refile if you were not filing with pleadings that were specific
enough, according to what the corporation had to go through.
It is a remarkable thing, in my judgment, to thrust that kind of
burden on a lot of situations that would be very difficult. Let me give
you an example. This is very specific, and I apologize, it will take a
minute, but I want to go through it.
Let's take a Mrs. Barnes who owns a home several streets away from
the Acme Chemical Company. There are 85 million Americans who live or
work within a 5-mile radius of one or more of the 66,000 facilities
that handle or store high-hazard chemicals. Let me repeat that: 85
million of our fellow citizens live in homes near a chemical company.
On January 1, 2000, let's assume Acme's safety system fails and
hazardous chemicals are released into the air and on to the land in the
neighborhood. It forces Mrs. Barnes and others to evacuate their homes.
People are allowed back into their homes after 2 days, but Mrs. Barnes'
property is contaminated, including her well. She retains an attorney
and she files a tort claim for recovery.
Acme Chemical claims that a Y2K computer failure was partially at
fault for the safety system malfunctioning. Mrs. Barnes did not know
that Y2K was a defense, of course, because most average citizens will
not know this.
Under the new law, the Acme Company will treat the complaint as the
notice. She has to wait 30 days for Acme to respond. In 30 days, they
respond by saying: We can't pay for the cleanup and lost value. But she
has to wait another 60 days to refile her lawsuit, notwithstanding that
they tell her that.
Now the average American consumer is out 90 days and does not know
where they are going, because we have protected the entity. All
discovery is stayed during this period. There is not anybody in our
system of justice who does not know what happens when you stay
discovery for 90 days.
In 2 months, Mrs. Barnes refiles her suit. She refiles it against the
company that installed the safety system. Under the McCain bill, she
has to plead her case with a particularity in the complaint. She can
state her damages as required, but she is going to have a lot of
trouble specifying the materiality effect because she will not know
what that is because there has been no discovery. The case is dismissed
because the complaint failed to meet the pleadings requirements.
Assume somehow she can meet the pleadings requirement. She comes
back, she finds other information to survive another motion to dismiss,
and finally gets her day in court.
After hearing the case, the jury finds both defendants acted
recklessly and outrageously for not identifying and fixing the problem,
and it awards her $300,000 compensation for the property and the need
to replace her water supply. They may find that Acme is 70 percent
responsible and the safety system 30 percent liable under the
proportionality. The total amount of her award might be $1.3 million,
with the compensatory and punitive adjusted and reduced by the number
of people according to the cap, because they only have 40 people who
work for them. Under the cap in S. 96, that would be an adjusted award
of $550,000.
[[Page S6748]]
We find that Acme cannot pay for all of the damage and files for
bankruptcy. The safety system pays Mrs. Barnes $90,000 under their
percentage, but that is not enough to clean up her property. She cannot
get a new water supply, especially after she pays the legal bills. She
tries to collect from Acme but without success. In the end, under the
State law she would have received her $1.3 million, but because we are
going to take that away, at the end, because of the Senate bill that is
contemplated being passed here that does not protect this individual
consumer, she will be left with only $135,000--not nearly enough to
compensate for her loss, pay her legal fees, replenish her well and
make her whole.
What is the public policy here? That is literally how this bill would
work. That is taking us step by step through the requirements that are
being put on the average American here, even though what we are really
talking about doing here is protecting companies from lawsuits by
companies.
To the degree that my colleagues say: Wait a minute, Senator. We know
about those naughty things called class actions, and we don't want to
have a class action brought against us, I say to my colleagues, I
agree. We want to have a tough standard for the potential of any class
action.
So we have put in our bill something lawyers do not like; we have put
in our bill a materiality requirement that means they have to show that
very specificity of defect, and it has to be specifically material to
the impact on that particular damage that took place for that person.
The majority of the people who make up the class have to have the same
linkage to the materiality. That makes it very hard to go out and just
construct a class. So I think class actions would, in fact, be
seriously reduced and impacted in an appropriate way, I might add. So
we are raising the bar. We are raising the standard.
Our bill, therefore, in my judgment, protects consumers. The McCain
bill would apply all of its procedural burdens and damage limitations
to individual consumers. I know that this is one of the things that the
White House, the President, is particularly concerned about. We need to
try to find some kind of reasonable compromise. We have not. And that
begs a veto.
In addition, I have talked about the proportionality issue. It is
hard to believe that colleagues would not be willing to vote that a
company ought to engage in good citizen behavior of a two-step effort
to identify mere potential--I underscore that mere potential; the
company does not have to find the problem; the company does not have to
cure the problem--they have to find the mere potential that something
that they have created may have done it; and, two, let people know that
they have done that. It is hard to believe that we would not vote to do
that.
In addition to that, we impose an additional duty on the plaintiff.
My colleague from Arizona said this is to keep the revenue stream
going. We impose an additional duty on the plaintiff because existing
State law generally requires plaintiffs to mitigate their losses in the
case of a breach of contract. S. 96 puts on the plaintiff an additional
burden to mitigate that isn't part of additional contract law, which
allows a defendant to argue that the plaintiff should have avoided the
damages based on information that was in the public domain.
So what we have done, to encourage information sharing and in order
to encourage the remediation that we want, we leave the existing State
law duties in place, supplementing them with an additional mitigation
requirement if the defendant itself made the information available.
Why is that good policy? Because, again, it encourages the good
behavior that our colleagues are saying everybody is going to engage in
but for which there is no certainty and there is no leverage.
Here you have an additional burden on the plaintiff if the company
undertook to share the information. What does that do? That means that
the company is going to say: Oh, boy, if we go out and get the
information and we put it out to the people we have sold it to, they
are going to have the burden of showing that we somehow did not do what
we were supposed to. We have shifted the burden to the people who then
would be the plaintiffs. It makes it harder to bring a case. It also
does more to encourage the mitigation that we want to get in this
particular effort.
I want to make it very clear, I think it was back in April the
Senator from Arizona, the chairman, put a letter in the Record from
Andy Grove of Intel. The letter that was part of Mr. Grove's
communication to the chairman. I will read the relevant portion of it:
Dear Senator McCain . . . The consensus text that has
evolved from continuing bipartisan discussions would
substantially encourage [bipartisan] action and discourage
frivolous lawsuits.
He cited several key measures that are essential to ensure fair
treatment of all parties under the law.
One was procedural incentives, the requirement of notice and an
opportunity to cure defects before a suit is filed.
Senator McCain has that in his bill. We have that in our bill: The
same procedural requirement to cure, the same procedural effort to have
alternative dispute resolution. We both encourage alternative dispute
resolution and mitigation.
Second point: A requirement that courts respect the agreements of the
parties on such matters as warranty obligations and definition of
recoverable damages.
Senator McCain does that; we do that. We provide the exact provision
of contract protection except where there is an intentional--
intentional--injury to a party. I ask my colleagues, what is the public
policy rationale for exempting a company from an intentional wrongdoing
to an individual that is not a specific intent to that individual but
nevertheless fits under the concept of a reckless, willful, or wanton
act?
Third, Mr. Grove said he wanted threshold pleading provisions
requiring particularity as to the nature, amount, and factual basis for
damages and materiality of defects. We do the same thing. Senator
McCain does that; we do that.
Finally, appointment of liability according to fault, on principles
approved by the Senate in two previous measures. That is the securities
reform bill. I have already spoken to that.
Senator McCain gives it to them no matter what, forget it. You just
get it because you are who you are. We give it to them if they take two
steps: Identify the potential for a Y2K problem, which is what this
bill is all about, and let the people they have dealt with know about
that potential.
Again, we do not require that they fix it. We do not require with a
certainty that they find it. We require that they just say there is a
potential. That is what they have to go out and fix.
The fact is that is a minimalist standard that most companies ought
to be prepared to live by. Every company I have talked to tells me they
are doing that. Of course, they are going to do that. They would have
no reason to be concerned about that.
So the real fight here, I suppose, is over punitive damages and over
the breadth of reach that some people are making with respect to some
other efforts which I can go into later as they arise in the course of
the debate.
We have a consumer carveout. We have a duty to mitigate. We have
proportionate liability.
The McCain bill also creates jurisdiction for almost all Y2K class
actions in Federal court. We do not do that. First of all, the Federal
bar has told us they cannot handle it. They do not have room for
whatever that might mean. Secondly, I cannot think of anything less
respectful of States rights, of the States' abilities to manage their
own affairs with respect to how they want to proceed. There is no
showing that that is, in fact, necessary. So the reach of the bill, in
fact, goes further than that which is necessary to fix Y2K.
I want to emphasize that I still hope maybe we can find some medium
where people will come together. It may be that the Senate isn't in the
mood to do that right now, so it will just go ahead and pass S. 96--it
will go to conference, come back, and then go to the President, and he
will veto it, and we will come back. Or maybe when the President gets
into the negotiations in the conference committee, the very things I am
talking about will be resolved, and it will come back to us in a way
that people of good conscience can say: This is good public policy
because it protects consumers even as it creates a
[[Page S6749]]
fair process for the avoidance of frivolous suits and the avoidance of
the burdening of an industry that we all respect and care about.
I think our bill does that. I think our bill justifiably protects the
capacity of companies to be free from frivolous lawsuits. It increases
the pleading requirements. It provides a cure period. It provides a
duty to mitigate. It shifts a greater duty to the plaintiffs, and it
does so, I think, in a reasonable and fair-minded way.
I regret that, unfortunately, this debate has been so caught up in a
larger agenda of entities that are very forceful outside of the Senate.
I yield the floor.
The PRESIDING OFFICER (Mr. Voinovich). The Senator from Arizona.
Mr. McCAIN. Mr. President, I continue to respect the views of the
Senator from Massachusetts. He makes some very persuasive arguments.
I strongly recommend to the Senator from Massachusetts that he put
his objections in the form of an amendment or amendments and we vote.
We have been through, I think the Senator from Massachusetts would
agree, literally weeks, if not months, of negotiations with the Senator
from Massachusetts. At no time have we been able to agree. I strongly
recommend that he just propose an amendment, and we have a vote on it.
The Senate will be on record. We will be then able to move forward, as
is the legislative process.
I will make a parliamentary point. I have asked the Democratic side
to try to get an agreement within about an hour or so on remaining
amendments that will be proposed of the 12. We now have about 6 or 7. I
think the same is true on the other side. We want to give everybody
ample opportunity to propose their amendments. Then I will also ask
that we get those amendments in so we can start negotiating time
agreements. I see no reason why we can't finish this bill by tomorrow
evening.
I urge my colleagues, again, if you have an amendment on either side
of the aisle, tell Senator Hollings or me so we can get those 12 nailed
down on either side so we can start negotiating.
I think it is very important to recognize that there has been amazing
solidarity shown on the part of big, medium, and small business on this
legislation, including the parts of it that were just addressed by the
Senator from Massachusetts. They do not accept his remedy. I strongly
admire the knowledge, the information, and the incredible tenacity
that Senator Kerry has shown on this issue.
The reality is--and every once in awhile we have to face reality, I
say to my friend from Massachusetts--we are going no further. However,
if we are going no further in the process of negotiation, that does not
change in the slightest the fact that the Senator from Massachusetts
can propose 1 of these 12 amendments, or 2 or 3 or 4 of them, I think
there is room, and we can debate and vote on them.
I yield for the Senator from Oregon.
Mr. WYDEN. I appreciate the chairman yielding. I will be brief.
I think what the chairman of the Commerce Committee is suggesting is
a practical way to get at it. This Member of the Senate believes, with
all due respect to my friend from Massachusetts, that the Kerry
amendment would be a lightning rod for additional frivolous lawsuits
with respect to Y2K. I think, for example, some of the language is so
vague--this question of identifying the potential for Y2K failure.
Mr. KERRY. Will the Senator yield for a question?
Mr. WYDEN. As soon as I have made this point, because it is the
chairman's time.
I think that is so vague that it is going to ignite a litigation
derby. That is No. 1.
No. 2, we have had a kind of mixing of the concept of punitive
damages and proportionality by the Senator from Massachusetts that I
think is just not borne out by the bipartisan bill. Our punitive damage
limitation applies only to small business. It has nothing to do with
reckless behavior or careless behavior.
On proportionality, we are saying that you can hold everybody liable
for exactly what they contribute, whether they are a small business or
anything else.
Finally, on the example of the person, I believe it was Mrs. Barnes,
and the chemical plant, she has all her existing remedies with respect
to personal injury and wrongful conduct under negligence law. That is
all outlined on page 10.
I appreciate the chairman of the Commerce Committee yielding me the
time to briefly make a response to the Kerry amendment. As I say, I am
a Senator who agrees with the Senator from Massachusetts on so many
things. I do share his view that I hope by the time we are done with
this legislation, we can have something that gets upwards of 70 votes.
But suffice it to say, this Senator believes, with all due respect, the
proposal of the Senator from Massachusetts will be a lightning rod for
a variety of frivolous lawsuits.
I thank the chairman of the committee for yielding.
Mr. KERRY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, I intend to send my amendment to the desk.
It is more inadvertence than anything else, and enthusiasm. I am not
going to delay it whatsoever. I agree with him. We want to get on with
this and make an effort.
Let me just make a couple of comments and address this. First of all,
with respect to what the Senator from Oregon just said, the woman in
the hypothetical I used would be precluded from the very kind of
damages, because your bill limits it to physical injury. She is not
physically injured. The fact is, the property damage and other damage
would, in fact, not be subject to it.
Secondly, under the economic losses in the bill from the Senator from
Arizona--and I think this is important for the Senator from Arizona to
understand--data processing would not be included in the definition
that you have with respect to economic loss. You speak to the question
of property and you allow certain kinds of property, but you don't
include in the definition of ``property'' intellectual property.
What happens if a company has a loss as a consequence of an entire
software system that went down and their data being lost and,
therefore, they do not provide a service to somebody? You could have a
huge economic interruption as a result of that, and you don't include
that as an economic loss. I will give you the precise language. There
are serious, real consequences here.
Secondly, the Senator from Oregon just said that we are just
precluding small businesses from punitive damages. Again, I just spoke
at a graduation of a law school. I hate to say it, I had to stand up
and say in front of the graduates of the law school, welcome to the
most hated profession in America. They understood what I was saying.
You can't come to the floor of the Senate and quote me defending
lawyers. That is not what I am doing. I am defending a principle. I am
defending a cherished notion within America about how we redress
problems.
I know people do not like being hauled into court. I almost laughed
when I heard the Senator from Arizona say that all the big businesses
and all the business community are united behind this bill. Of course,
they are. Big surprise. They are about to get out from under an
accountability system that suggests to them that they ought to behave
some way.
The Senator from Oregon has just said to me, small businesses will
only be held accountable for the proportion that they are liable. OK.
What happens in this example? The small businesses in Oregon and the
people served are in Oregon, but they are only 20 percent of the
problem. The people who sold them the hardware and the rest of the
equipment are in Japan. You cannot reach them, because you are a small
lawyer and you don't have the long reach. You don't have jurisdiction,
and you cannot get them conceivably. There are a lot of companies out
there right now operating like that. So all you have is 20 percent of
the person being made whole.
The theory of law for years, under joint and several, has been that
in America we care first about the victim, and we are going to make the
victim whole. Then the companies that have the power and the clout will
sort out between each other who gets what. That has been a very
efficient and effective distribution system. It is efficient.
What we are now saying is, sorry, average American, sorry, we are
going to
[[Page S6750]]
give the power back to the corporate entities and you, the little
average person, you are going to have to go to Japan and chase them, or
you are going to have to just stomach your loss.
Small businesses are most of the business in the country. I am also
pretty sensitive to that, because I am the ranking member of the Small
Business Committee. I take great pride in the things that I have done
to try to further small business efforts. I believe in it. I am the
only Senator I know who has a zero capital gains tax bill here for
targeted investments in the high, critical technologies. I would love
to empower small business to do better. But all that punitives apply to
are willful, wanton, reckless, destructive, irresponsible, unacceptable
behavior. And what my colleagues are doing is coming to the floor, as a
matter of public policy, and saying the Senate ought to go on record
saying that we don't care how you behave. We are going to take away the
capacity to make the average citizen whole, and we are going to give it
to the corporate entity.
Now, I love these corporations. Look, I represent them and I respect
the leaders of them. They are doing great work for America. We have
created 18 million jobs in the last 10 years or so because of their
virtues and capacities. I will come back here and labor on their behalf
on encryption and a host of other things. But, fair is fair. Fair is
fair. Are you telling me we should not have these companies do two
simple things?
My colleague said the language is too vague on those two simple
things. Well, let's talk about that for a minute. The bill says
``identify the potential.'' What does that mean, ``identify the
potential''? Does anybody have trouble with that? It means to identify
whether the product the defendant made or sold had the potential for
Y2K failure. How would you know that? You know you have an embedded
chip in it. You know whether or not in the digitalization process you
use two or four digits. I am not technically competent enough to tell
you all of them, but there are people who are; they are running around
the country fixing these things.
The IRS has invested $1.3 billion and several years of effort in
order to be Y2K compliant, and they are today. How did they get there?
They got there because they asked this very question. Do we have the
potential for failure? And if we do, what are we going to do to fix it?
My colleagues come to the floor and they are trying to tell us that
this bill is to encourage people to fix it. But what do they do? They
let them right out from underneath it, give them an upfront, blanket
exemption saying: We are not going to require that you be subject to
joint and several; you don't have to do anything; you just walk. And
that is wrong as a matter of policy.
All we ought to ask them to do is the very thing this bill's purpose
is about: Look and see if you have the potential for failure and tell
the people you sold it to. If we can't ask them to do that, then we are
not standing up for the average citizen in this country. It is that
simple.
Amendment No. 610 to Amendment No. 608
(Purpose: To regulate interstate commerce by making provision for
dealing with losses arising from Year 2000 Problem-related failures
that may disrupt communications, intermodal transportation, and other
matters affecting interstate commerce)
Mr. KERRY. Mr. President, I send an amendment to the desk and ask for
its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Massachusetts [Mr. Kerry], for himself,
Mr. Robb, Mr. Daschle, Mr. Reid, Mr. Breaux, Mr. Akaka, and
Ms. Mikulski, proposes an amendment numbered 610 to Amendment
No. 608.
Mr. KERRY. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Mr. McCAIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Arizona is recognized.
Mr. McCAIN. Mr. President, again, I find the logic of my friend from
Massachusetts somewhat tortured. He maintains that these ``two simple
things'' will meet the approval of the high-tech community. Yet, it
doesn't. So in his mind, of course, clearly it should. But the fact is,
it doesn't.
So we are in a very interesting kind of hyperbole here that the
Senator from Massachusetts keeps saying the high-tech community
supports this and this is perfectly acceptable to them. Yet, they don't
support it or agree with it--and for good reason--because these ``two
simple things'' are directed at the high-tech defendants, not the rest
of the business community that will be defendants. When a wholesaler
fixes their systems within their company, yet it leases a trucking
group to deliver whatever that product is, and then they are subject to
joint and several liability, then, of course, it opens the floodgates.
The Senator from Massachusetts seems surprised that, or somehow casts
doubt about the motivation of business in supporting this legislation.
Of course they are supporting it, because they don't want to be subject
to a flood of litigation. That is the whole purpose of the legislation.
The whole purpose, I tell my friend from Massachusetts, is to stop a
flood of litigation.
Mr. KERRY. Will my colleague yield for a question?
Mr. McCAIN. In a second. The Progressive Policy Institute of the
Democratic Leadership Counsel says:
Despite the number of lawsuits avoided during a 90-day cure
period, or the number of disputes settled through ADR, the
cost of Y2K litigation will remain exorbitantly high as long
as opportunities remain for people to abuse our legal system.
However, there are a number of Y2K-specific reforms that can
be enacted to curb that abuse and the subsequent costs. To
begin with, responsibly strengthening pleading standards
would keep many baseless suits out of the systems. Plaintiffs
seeking money awards for damages should be required to state
the particular nature and effects of material Y2K defects and
how they figured into calculating those damages. In addition,
to insure fairness, rejected plaintiffs should be allowed to
refile their suits with the required specifics in order to
protect legitimate claims that are not initially apparent.
Furthermore, legislation should deny awards for damages that
could reasonably have been avoided.
Class action suits are normally the most expensive and
wasteful of product liability lawsuits and often contain
enormous numbers of groundless complaints. Legislation should
insure that the majority of members in class action suits
have truly experienced Y2K-related failures and deserve
redress. By reducing the number of invalid claims, waste and
fraud could be significantly eliminated from the adjudication
of class action suits.
The effects of abusive litigation could be further curbed
by restricting the award of punitive damages.
That is what this legislation does. That is where the Senator's
amendment will open a loophole wide enough to drive a truck through.
Punitive damages are meant to punish poor behavior and discourage it
in the future. However, because this is a one-time event, the only
thing deterred by excessive punitive damages in Y2K cases would be
remediation efforts by businesses.
I say again to the Senator from Massachusetts--and we have had this
dialog for hours on the floor, and for hours in the committee, and I
will continue because of the enormous affection I have for the Senator
from Massachusetts. We will continue this dialog. We are in fundamental
disagreement on the interpretation of the Senator's proposed amendment.
It is as simple as that. So I would be----
Mr. WYDEN. Will the chairman yield briefly?
Mr. McCAIN. The Senator from Massachusetts has asked me to yield
first.
Mr. KERRY. I am happy to let my colleague go first, and I will come
back.
Mr. McCAIN. I yield to the Senator from Oregon for a question.
Mr. WYDEN. I thank the chairman.
It seems to me that on the basis of everything we have gone through
in terms of the committee, there is a reason that the high-tech
community is overwhelmingly opposed to the Kerry amendment. As far as I
can tell, there is this company the Senator from Massachusetts has
talked about, and I will acknowledge that. But the high-tech community,
as far as I can tell, is overwhelmingly opposed to this Kerry
amendment. As far as I can tell, the reason they are is that the Kerry
amendment introduces vague, ill-defined terms that are going to trigger
[[Page S6751]]
more litigation. On the basis of everything we went through in the
committee, is it the chairman's judgment that that is the reason the
high-tech community is overwhelmingly opposed to the Kerry proposal now
before the Senate?
Mr. McCAIN. That is my understanding.
Obviously, I would like to include the Senator from Massachusetts in
this dialog. Under his amendment--and I will be glad to respond to his
question--isn't it true that defendants who are in the middle of the
supply chain may be sued for a breach of contract caused not by the
failure of the defendant's computers but by those elsewhere in the
supply chain? That is the fundamental problem we have with Senator
Kerry's amendment.
I yield to the Senator from Massachusetts.
Mr. KERRY. Mr. President, let me respond to that because it is very
important. May I also respond by saying this, and, again, I say this
with great respect and affection for both of my colleagues. But to be
on the floor of the Senate using as a justification the passage of
something that does somebody a lot of good, the fact that they like
that it does them a lot of good, is kind of a strange argument. If the
fox is there to guard the chicken coop and you are going to put a big
fence around the chickens, and you ask the fox, ``Do you like it?'' and
he says, ``No,'' that is no surprise. It is the same thing here. Who is
going to be surprised that the companies are going to say: Of course,
we support your bill, because it gives us more than we really properly
ought to get.
Having said that, let me say to my friend that our bill does
everything the Senator from Arizona just said.
We could do all of the things the Senator listed. The only difference
is, we asked them to identify the potential for the failure and provide
information that is calculated to reach the people. We don't even
require that it reach the people.
My colleague just said this is going to open up a whole lot of
litigation.
I ask my colleague, has he asked companies? Does he know of a company
that isn't trying to identify their Y2K failure? Does he know of a
company that, having done that, would not tell the people to whom they
sold it?
Mr. McCAIN. First of all, my response to the Senator from
Massachusetts is that these companies and corporations that are in
favor of this legislation--did the Senator from Massachusetts forget
that half of them could be plaintiffs? Why is it that so many of them
who could be plaintiffs are in support of this legislation? They are
not just the defendants, they are the plaintiffs.
The fact is that we are helping business all over America. I have to
tell my friend from Massachusetts that I came here to help business all
over America. I came here to help entrepreneurs. I came here to stop
the flood of litigation that has so distorted the business system in
America. I came here with a clear campaign to say, look, we have too
many frivolous lawsuits in America; we have too many class action
suits; we have too many lawyers and not enough business people.
I am unashamed and unembarrassed to tell the Senator from
Massachusetts that I am here in behalf of defendants who, if I took a
poll tomorrow, would number 90 percent. I don't know the percentage
that are lawyers, but I know it grows bigger by the day. But all of
those who are lawyers would say: Yes, please, Senator McCain, help
business get off this terrible burden where we are paying so much,
where we have become a litigious society in America and so many
terrible things have happened as a result.
As I pointed out, Mr. Tom Johnson--a man who is becoming famous here
on the floor of the Senate, I might add--is bringing these lawsuits
against honest, hard-working people, especially small and medium-sized
businesses.
If the Senator from Massachusetts is astonished--and I include the
Senator from Oregon in the category--at trying to help businesses,
small, medium, and large, from the incredible burden of litigation
which has flooded the United States of America--guilty as charged.
Guilty as charged.
The second aspect of this issue is clearly what I, as a business
owner, would tell people. It is that I, as a business owner who
distributes my product, would not be able to vouch for other people and
other businesses that are also part of this distribution chain of my
product.
That is again where I get back to the point that I do not know of any
business in America that doesn't want to fix the Y2K problem. I know
lots of business people who don't know, because of the distribution
system--both through distributors and retailers--that they can vouch
for those persons' willingness or ability to fix the Y2K problem, which
then opens up that flood.
I hope I answered the Senator's question.
Mr. KERRY. Mr. President, I hate to say this. I say it again with
affection and respect. But the Senator didn't actually completely
answer the question, because he didn't tell me of any company in the
country that wouldn't do what I have said or that hasn't done what I
have said.
Mr. McCAIN. My answer is, I know of no company or corporation in
America that would not want to have the problem fixed.
Mr. KERRY. That is precisely the point. The Senator has just
acknowledged precisely the point I am making. I come back to it.
I am not serving on the Banking Committee and the Commerce Committee
and the Small Business Committee because I don't care about business. I
have the same desires as the Senator from Arizona to see business
succeed. He came here for the same purpose--to create jobs and to make
the country better for all of our citizens.
But this bill is not going to make lives better for all of our
citizens in its current structure. Yes, it is wonderful for those
corporate entities to be singled out to get the benefits of it. I agree
with the Senator. Everything in the amendment I have offered does the
exact same thing--to protect those companies, as his does, with one
exception. We are fighting here over one big exception right now. This
is the exception. The very thing the Senator from Arizona just
acknowledged--he said yes, every company ought to want to find that,
and I don't know of any company that isn't trying to.
That is the precise standard that we are trying to be sure companies
embrace--to have a guarantee that we are doing the most to encourage
mitigation, to fix the problem, inadvertently or otherwise.
The Senator's bill gives them automatic entry into the
proportionality of damages, without the guarantee that they tried to
make that effort. Why is that important? It goes to the Senator's
question to me. It is important because some companies may conceivably
choose the cheaper road, which is to not necessarily pay for the fix up
front but wait and see what the damage might be and not engage in the
very mitigation we have encouraged.
If that company is the midline company that the Senator just referred
to, under his proposal they would automatically be subject to get the
proportional level of their damage. But they could have weighed on an
economic basis whether the bottom line of that proportional damage was
such that they would rather wait and see, or weigh that rather than fix
the problem and avoid whatever the consequences may be to consumers
generally.
I don't think that is good public policy. Maybe we differ on that. I
think there is a fair way to provide all of these companies with the
protection that we want them to have, and we want them to have an
appropriate level of protection.
But, again, my colleagues can't show me why it is unreasonable to
suggest that a company can't identify the potential for a Y2K failure.
How can you not do that? All you have to do is sit down with your
design people, have a meeting, document the meeting, and ask a couple
of questions: Do we have a Y2K problem? Do we have any invented
processors? What products do we have them in? Whom did we sell them to?
Whoops. Let's send a letter to those people and tell them.
Is that asking too much?
The purpose of this bill is to encourage people to fix the problem.
If you do not ask people to do that, how can you say you are really
exhausting all of the possibilities of how you are going to fix the
problem? I don't understand that. I
[[Page S6752]]
say to my colleagues that that is one thing we are fighting about.
The other thing is the question of dealing with damages. I know I
have said it before. Some people do not like dealing with damages. But
the standard you have to get over to have punitive damages apply--I
don't know of anyone in the high-tech industry, I can't imagine a
company in the high-tech industry, that would be subject to that. Any
CEO I have met has as much public conscience as anybody in the Senate
and is engaged in a bona fide effort to make their company work. I
don't know anybody who is not.
But if there is some junk artist out there who is just hungry for the
bottom line, trying to gamble on all of the Internet success and
everything that has happened with high-tech stocks, who started out
fly-by-night, who wanted to go out there and make a quick hit, if that
person did it, and willfully, wantonly, recklessly, outrageously
impacted the life of an American citizen, I want that American citizen
to be able to have redress for that. I don't think it is right to deny
them that.
Mr. WYDEN. Will the chairman yield?
Mr. McCAIN. If I could respond very quickly about one aspect of this,
I have confessed with great pride and sometimes with pleasure that I am
not a member of the legal profession. But I am afraid the Senator from
Massachusetts does not quite comprehend what we are dealing with here.
This is a book, ``Year 2000 Challenge, Legal Problems and
Solutions,'' from the National Legal Center for the Public Interest.
Let me quote for the Senator what we are facing so we can really put
this in the proper perspective.
The unfortunate fact is there is no ``silver bullet''
solution to the year 2000 problem in any organization, and
the risks and difficulties in any Year 2000 project of even
moderate size and complexity can be enormous. None of the
remediation techniques described above is without
disadvantages, and for many IT users the time and resources
required to accomplish Year 2000 remediation far exceed what
is available. Most major remediation programs involve finding
and correcting date fields in millions of lines of poorly
documented or undocumented code. There is no single foolproof
method of finding date fields, no assurance that all date
fields will be found, corrected, or corrected accurately, and
no assurance that corrections will not produce unintended and
undesirable consequences elsewhere in the program. In many
cases it will be necessary to rely on information or
assurances from third party vendors regarding the Year 2000
compliance of their products, even though experience teaches
that many such representations are inaccurate or
misleading. Comprehensive end-to-end system testing of
remediated systems in a simulated Year 2000 ``production''
environment is often impractical or impossible, and less
intensive testing may fail to detect uncorrected problems.
And even where an IT user succeeded in making its own
systems Year 2000 ready. Year 2000 date handling problems
in external systems (such as the systems of customers or
suppliers) can have a devastating effect on internal
operations.
With all due respect to my friend from Massachusetts, this is what we
are trying to get in our legislation and this is what the Senator's
amendment basically prevents us from doing.
Here is the problem. I don't claim to have the expertise that the
Senator does on punitive damage or on joint and several liability. I
know the problem pretty well. We have had extensive hearings in the
Commerce Committee, and we have talked to all the experts. This is
really what we are trying to take care of--not as the Senator from
Massachusetts asked me, in good faith, do I believe there is any
company or corporation that is not trying to fix a problem. I don't
know of any.
I think what I read to the Senator from Massachusetts explains how
difficult and enormously complex solving this problem is. This is why,
although I respect and admire the Director of the FAA who will fly all
day long on January 1, the year 2000, I intend to remain at home that
day. However, I encourage others, as the Senator from Massachusetts, to
fly around the country.
I say seriously to my friend from Massachusetts, I hope this explains
to him the complexity of the problem. We not only can take care of the
individual manufacturer, but all the systems and subsystems that are
connected with it are not addressed, in my view, adequately, in the
Senator's amendment.
Before I yield to both Senators, could we agree to some time on this
amendment?
Mr. KERRY. Mr. President, I want to cooperate. I cannot agree at this
particular instant, because I need to canvas the cosponsors to figure
out who desires to speak. We have no intention of prolonging this.
Mr. McCAIN. If the Senator from Massachusetts and his staff will work
on that, I appreciate that.
I yield the floor.
Mr. KERRY. Mr. President, let me come back to the remarks of the
Senator from Arizona, because I appreciate everything he just read. I
would like to be associated with putting it into the Record. However, I
don't associate myself with the notion that the consequences of what he
just read ought to be automatically given a bye, a pass, if you will,
without some duty to make the determination of what he just read.
Any company that is going to be subject to what the Senator from
Arizona just read would answer the standard I have put forth about a
potential for failure in the affirmative in 10 seconds. The Senator
from Arizona has acknowledged that. We are almost fighting about a
difference that is not a huge distinction here, but it is significant
enough because of what we want to do to achieve the mitigation we want
to get out of this bill.
There isn't a company in good standing in this country that cannot
answer affirmatively the two-step qualification for proportional
damages. To suggest that we will give every company an automatic bye
without requiring them to do that is to actually adopt a bill that
doesn't go as far as it can to achieve the purpose that the Senator
from Arizona states we are trying to achieve.
That is why there is a fundamental difference here.
The PRESIDING OFFICER (Mr. Brownback). The Senator from Oregon.
Mr. WYDEN. Mr. President, I will be very brief. I want to respond to
the point the Senator from Massachusetts made with respect to the
standard that he would apply in identifying the potential for Y2K
failure.
I believe that using language that vague virtually ensures that a
significant number of frivolous cases are going to end up going to
juries--exactly what we fear. What will happen, companies will attempt
to defend themselves, the judge will be offered a motion to dismiss,
and the company will say: It is frivolous; we move to dismiss the case.
The judge will look, and if this were the standard that were actually
adopted, he would say: I don't know whether they identified the
potential for Y2K failure. And we would, in fact, be igniting an
additional round of frivolous lawsuits.
A motion to dismiss under this standard will get by because it is so
vague.
With respect to the economic losses the Senator from Massachusetts
has talked about and believes are inadequately addressed under our
bipartisan legislation, in this bill we keep State contract and tort
law in effect. We keep State contract and tort law in effect. The
problem is that there are some who disagree, some who would essentially
like to create torts out of these contractual rights where no torts
exist.
Finally, with respect to punitive damages, the Senator from
Massachusetts said again that our bipartisan bill would hollow out, for
example, protections that are needed for consumers. We ensure our
standard of evidence with respect to this is in line with State
requirements. Again, we are trying to take a balanced approach.
I hope my colleagues will oppose the Kerry amendment. I think it
ensures we will see a significant number of frivolous suits not being
dismissed where they ought to be but essentially ending up going to
juries and causing great economic duress early in the next century.
I yield the floor.
Mr. McCAIN. Mr. President, for the purpose of proposing some
amendments, I ask that the pending Kerry amendment be set aside for
that purpose, with the proviso of returning immediately to the Kerry
amendment.
I send to the desk two amendments by Senator Murkowski, an amendment
by Senator Gregg, an amendment by Senator Inhofe, and two amendments by
Senator Sessions, and I ask for them to be numbered.
[[Page S6753]]
The PRESIDING OFFICER. Without objection, the amendments will be
numbered and laid aside.
Mr. McCAIN. Mr. President I ask unanimous consent we return to the
pending Kerry amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. McCAIN. One of the irate staff just came over here. I saw no harm
associated with that process. If there were an objection, I would be
glad to remove those amendments. They were simply amendments to be
numbered in case when we get an agreement on both sides of the aisle.
I ask unanimous consent to withdraw those amendments, and we will
leave everything as it was before.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. McCAIN. Regarding the Kerry amendment, I want to mention that a
company that has made no effort to prevent failure or fix its systems
will undoubtedly be found more responsible for a plaintiff's injuries
under the terms of S. 96 in liability already proposed, without the
hazard of making a company that can't control the entire chain of
distribution liable for the entire damage awarded the plaintiff. Our
opposition to the pending Kerry amendment is almost that simple.
I note that the Senator from California is waiting to speak. I hope
by the time the Senator is finished, perhaps we could have some
agreement for a vote on this amendment so we could move forward, as
well as agreement on the other side for resolving the remaining 12
amendments on both sides.
I yield the floor.
The PRESIDING OFFICER. The Senator from the great State of
California.
Mrs. FEINSTEIN. Mr. President, I rise to support the underlying
McCain-Dodd-Wyden-Lieberman-Feinstein bill, because I believe this bill
is a once in a millennium, 3-year law. Without it, I believe we could
see the destruction or dismemberment of America's cutting-edge lead in
technology. We all know that the year 2000 is rapidly approaching and
with it there comes a wide variety of possible disruptions relating to
the so-called Y2K problem.
It is true, though, that no one really knows how big the problem will
be or how small it will be, so government organizations, businesses
large and small, and private individuals are all scrutinizing the area
from their own particular perspective. The area that has received the
most attention is concern over a possible flood of lawsuits that could
clog courts and distract businesses from solving these problems early
in the next millennium. Several well-known consultants and firms,
including the Gartner Group, have established that Y2K litigation could
quickly reach as high as $1 trillion. So concerned Members of Congress,
including Senators McCain, Hatch, Dodd, and others, have been working
for many months in an attempt to craft a solution to what has recently
been described as this trillion-dollar headache.
The genesis of the bill now pending on the floor was a request by
literally dozens of companies and more than 80 industry groups--
including the Semiconductor Industry Association, the National
Association of Manufacturers, the Chamber of Commerce, the Information
Technology Association--to develop legislation to prevent frivolous and
baseless lawsuits that could jeopardize companies moving to quickly
solve Y2K problems. The trick was not at the same time to prevent the
suit with merit.
I began working on a similar bill with Senator Hatch almost 6 months
ago, because I became convinced that the Congress did need to intervene
in order to ensure that Y2K problems are quickly and efficiently
solved. Now, after several months of negotiating and a combined effort
among a number of different Senators, I believe we have reached a fair
compromise. This bill is especially important to California where over
20 percent of the Nation's high-tech jobs are located. The problem
actually extends even beyond high-tech companies to the lives of
employees, stockholders, and customers in a wide range of American
businesses.
One of the first indications I had of the depth of the concern was
when groups of consultants began to come to us saying they refused to
become involved in helping companies solve Y2K problems for fear that
they would open themselves up to being sued later on. Instead, they
would rather just not get involved. One such group was the American
Association of Computer Consulting Businesses that represent 400
companies and more than 15,000 consultants. They told me personally
that they were going to refuse to enter into any Y2K consulting
contract until they had some kind of additional protection. So it
became very clear to me that, indeed, we do have a real problem. I
believe the underlying bill crafts a real solution.
I think it is important to say, and say again and again, that nothing
in this bill is permanent. It is simply a 3-year bill, limited to
specific cases. The bill applies only to Y2K failures and only to those
failures that occur before January 1, 2003. Let me quickly go over the
provisions as I see them.
The 90-day cooling off period during which time no suit may be filed
enables businesses to concentrate on solving Y2K problems rather than
on fending off lawsuits.
The bill provides for proportionate liability in many cases, so that
defendants are punished according to their fault and not according to
their deep pockets. I am not an attorney and I have always felt this
was the most fair way to go, except in certain situations, and the bill
does provide for those certain situations. I would like to go into this
in greater detail.
The bill also encourages parties to request and use alternative
dispute resolution at any time during this 90-day cooling off period.
For Y2K class actions, the bill requires, in order to qualify, that a
majority of plaintiffs must have suffered some minimal injury. That
would avoid cases in which thousands of unknowing plaintiffs are lumped
together in an attempt to force a quick settlement.
For small businesses, the bill limits punitive damages to $250,000,
or three times compensatory damages, so as to deter frivolous suits. It
prevents the ``tortification'' of contracts with several provisions
that require businesses to live up to their agreements rather than
turning to the courts in the hopes of avoiding their responsibilities.
These are not the only provisions in the legislation, but these
provisions represent the basic premise of a bill that does not seek to
prevent the truly injured from recovering damages, but will hopefully
prevent the frivolous lawsuit and keep companies from solving problems
without delay.
There is much that is not in this bill, and there have been many
changes made in the bill, certainly since I became involved in it. I
would like to just indicate a few of them.
All caps on attorney's fees have been removed. Punitive damage caps
for large businesses have been eliminated. Punitive damage caps for
small businesses have been increased from three times actual damages to
three times compensatory damages. All government regulatory or
enforcement actions have been exempted from the bill, and three
exceptions to the elimination of joint and several liability are
provided in order to protect smaller plaintiffs and those who cannot
recover from every defendant. The caps on liability for officers and
directors have been removed, and the bill has been changed to provide
that per suit there is only one 90-day cooling off period.
I think the cooling off period is probably very well known and
probably very well accepted, so let me dispense with any further
explanation on that point. But let's go to one of the more
controversial parts, proportionate liability.
One of the reasons this bill is important to the affected companies
is that it prevents plaintiffs from forcing quick settlements from
innocent defendants who should be trying to solve Y2K problems.
Additionally, under the system of joint and several liability, a
defendant found to be only 20, 10, or even 1 percent at fault can
nonetheless be forced to pay 100 percent of the damages. This system,
as we all know, encourages plaintiffs to go after deep-pocket
defendants first in order to force that quick settlement. It is my
basic belief that this is fundamentally unfair, and the bill eliminates
joint and several liability in some Y2K cases.
Under the new system, for this brief 3-year period, defendants will
be responsible only for that portion of damage that can be attributed
to them. The bill does have, as I have said, three specific exceptions
to the elimination of joint and several liability, and those
[[Page S6754]]
were taken from the Private Securities Litigation Reform Act recently
passed overwhelmingly by the Congress and signed into the law by the
President.
First, any plaintiff worth less than $200,000 and suffering harm of
more than 10 percent of that net worth may recover against all
defendants jointly and severally. This exception in the bill protects
those plaintiffs with a low net worth but will not unduly injure
defendants, because the damages recovered will not be that great.
Second, any defendant who acts with an intent to injure or defraud a
plaintiff loses the protections under this bill and is again subject to
joint and several liability. The bill does not protect those acting
with an intent to harm.
Finally, the bill provides a compromise for those cases in which
defendants are judgment-proof. In cases where a plaintiff cannot
recover from certain defendants, the other defendants in the case are
each liable for an additional portion of the damages. However, in no
case can a defendant be forced to pay more than 150 percent of its
level of fault.
These proportionate liability provisions offer a more fair and, I
truly believe, rational approach to the system of damages in Y2K cases.
Without this more balanced system, a few large companies will soon be
forced to bear the entire brunt of Y2K litigation regardless of fault,
and that is the problem. That is what will destroy the cutting edge of
American prominence in this area, and that will result in jobs being
lost.
Under the system of proportionate liability, this bill holds
defendants responsible for the extent of their fault and no more, with
the exceptions I have just mentioned.
Another area that I think deserves a little bit of clarification is
the class action area. Under the class action section of this bill, a
year 2000 class action suit cannot proceed unless the defect upon which
the action is based is material to a majority of class members. This
section is very important. Essentially, this clause prevents the type
of ``strike suits'' we saw in the securities litigation area.
In the Y2K context, this provision will stop overly aggressive
plaintiffs from searching out small defects in computer programs,
gathering together thousands of software users who do not even know
they have been injured, and trying to force a quick settlement out of
the software manufacturer.
Once this bill passes, if a class action suit alleges that software
does not function properly, the action can proceed only if the alleged
defect affects a majority of the class members in some significant way.
Trivial defects that would not even be noticed by most class members
would not be cause for a class action. Again, plaintiffs with good
cause may still proceed, but frivolous suits would be stopped. That is
the purpose of the provision and the purpose of the bill.
There has been a lot of discussion in this Chamber about punitive
damage caps. The Dodd-McCain compromise caps punitive damages, for
small businesses only, at the lesser of $250,000 or three times
compensatory damages.
The idea of capping punitive damages is one of the most controversial
issues in this or any other bill dealing with changes to our system of
civil justice. In this case, I believe reasonable and carefully drafted
caps on punitive damages can deter frivolous suits. Additionally,
capping punitive damages reduces the incentive to settle meritless
suits because companies will not be at risk for huge, unwarranted
verdicts.
I recognize that this is a controversial issue and that intelligent,
well-meaning people may disagree over whether this is the time or the
place to address punitive damages. But I have continually emphasized
that this bill is not about punitive damages, and the compromise
dramatically limits the punitive damage caps compared to earlier
versions.
In summary, this $1 trillion litigation headache is approaching. This
Congress can provide thoughtful, preventive medicine and some
anticipatory pain relief in the form of reasoned, fair, and thoughtful
compromise. I think the bill sets forward clear rules to be followed in
all Y2K cases. I believe it levels the playing field for all parties
who will be involved in these suits. Companies and individuals alike
will know the rules and will know what they have to do. Most important,
there is an element of stability that can come from this bill which
will allow companies to prevent Y2K problems when possible, fix Y2K
defects when necessary, and proceed to remediate damages in an orderly
and fair manner.
It is true that some plaintiffs may have to wait a little bit longer
to file a suit for damages, but their rights will not be curtailed and
recovery will not be prevented. In fact, the waiting period in the bill
will make it far more likely that problems will be solved quickly,
allowing potential plaintiffs to get on with the activities that were
disrupted by the Y2K problem at issue.
This bill has been through a tortuous legislative drafting process
with criticisms, suggestions, and changes made from every side and by
every sector of our society. I hope we can pass this bill and send it
to the President, and let us show the Nation that the Y2K crisis will
not cripple our courts, will not disrupt our economy, and will not slow
our progress toward a 21st century world.
I thank the Chair, and I yield the floor.
Mr. HOLLINGS. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative assistant proceeded to call the roll.
Mr. DODD. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 610
Mr. DODD. Mr. President, I am grateful to Senator Kerry of
Massachusetts for offering his amendment, which allows us now to have a
full debate on what is a comprehensive amendment. It covers a whole
series of provisions which are included in the pending bill before the
Senate.
Let me try, if I can, to take each of the critical provisions in the
amendment, address them, and explain why I believe, despite the good
intentions of its author, it would do significant damage to the
underlying purpose of the bill that Senator McCain and Senator Wyden
and myself and others have offered to the Senate for its consideration.
I said at the outset of my remarks earlier today that this bill is
very narrow in scope, very narrow in duration, and limited to a fact
situation which most Americans, I think, have a growing awareness of
today.
In 204 days the millennium clock will turn, and there is a very
serious set of issues that could affect many Americans and many people
outside of our shores: that is the so-called Y2K glitch or bug in
computers based on information that is included in embedded chips and
other items within these computers which would read the date of the
year 2000 incorrectly.
I am, of course, simplifying the situation. I think the Senate is
well are aware of the danger inherent in the Y2K problem. That problem
could, of course, create serious disruptions in a variety of mission-
critical functions in telecommunications, transportation, medical care,
Federal services, and the like.
Over the last year and a half the Senator from Utah and I, as
chairman and vice chairman of the Y2K Special Committee, have conducted
some 21 hearings to examine where we were with the Y2K problem, what
the Federal Government was doing, what State governments were doing,
what local municipal governments were doing, and what the private
sector and nonprofits were doing in order to remediate the problem; to
fix the problem as soon as possible; and, where that may not be
possible, to have contingency planning to avoid the kind of potential
disruptions that those who are most knowledgeable about this issue
suggest could occur.
Over that period of time we have seen significant improvement in the
remediation done by the private and public sector, State and local
governments, all across this country. In fact, we are at the point
where we believe, as of this date, in June, with some 204 days to go,
the country is by and large in good shape. We should not anticipate or
be worried about any major disruptions here in the United States. There
could be exceptions to that but, by and large, we think that is the
situation today.
[[Page S6755]]
One of the things we are trying to do is see to it that when January
1 arrives, the best effort of a business--small, medium, or large--does
not go for naught as a result of its inability to detect problems with
embedded chips that ultimately result in Y2K-related failures.
Last year we passed a bill on disclosure to encourage the various
sectors of our society to share as much information as possible with
each other so that we could contribute to the remediation effort and
avoid the kinds of problems some are anticipating will occur after
January 1. That bill created a safe harbor provision, which allowed for
the sharing of information--not sharing of lies and knowingly false
information, but sharing as much knowledgeable information that
businesses had--without worrying that someone would come around later
and say, ``what you said in June of the year 1999 was not exactly
right,'' and, therefore, you would be subject to litigation.
That bill was passed overwhelmingly by this body and the other body
and signed into law. It is making, we think, a significant contribution
to avoiding the kinds of problems that we could have had after January
1 of the year 2000. But it does not eliminate all the problems. In
fact, no one can pass a piece of legislation that will eliminate all
the difficulties.
We realize with those problems that may emerge that you could have
disruptions as a result of the failure to detect such things as faulty
embedded chips. So this legislation before us is designed to be a
complementary piece of legislation to the disclosure act of last year,
a complementary piece of legislation to the efforts of Senator Bennett,
myself, and others who have worked on that committee, who strived to
encourage, jawbone, do whatever we could, to minimize the kind of
difficulties Americans could face.
We do not claim we have achieved all of that yet. But with the
adoption of this bill, a 3-year bill, a 36-month bill, we say to
potential plaintiffs and defendants: If, in fact, a problem arises that
under any other circumstances might give rise to a lawsuit, we want you
to try to avoid that lawsuit, if you can. We want you to try to work
out the problem. We want you to spend your time, your money, and your
efforts to fix the Y2K problem, not to run to the nearest courthouse
and then spend weeks and months, potentially years, at the cost of
millions of dollars, litigating an issue and not solving the underlying
problem which is causing the kind of disruptions this issue can
potentially cause.
That is the purpose of this bill. That is the rationale behind it: to
try to avoid rushing to the courthouse.
We are a litigious society. We love lawsuits. Most Americans are
painfully aware of this. There is nothing wrong with going to court to
try to solve your problems. But I think most would agree that if you
can avoid going to the courtroom to solve your problems, you can get
better results in many instances.
So this legislation is designed specifically to avoid rushing to the
courthouse for 36 months--not for a lifetime, not for eternity, but for
36 months--during the critical period where this issue is upon us, to
see if we can't work out these difficulties. We only do that for 36
months with issues directly related to the Y2K issue, not any matter
that comes up, but specifically the Y2K issue. We do so in a very
limited way.
Specifically, we do not prohibit lawsuits. We merely are trying to
see if we cannot come up with an alternative vehicle to solve the
problems.
Mr. President, what Senator Kerry of Massachusetts has done is
offered a series of ideas that he and those who have joined him believe
will enhance the underlying legislation. They state --and I believe
them--that they are desirous of making this a better bill, of making it
less likely that we are going to have a race to the courthouse.
As you analyze what they have proposed, despite their good intentions
it would appear they are doing just the opposite of their intentions. I
can accept, although I do not entirely understand, those who are just
fundamentally opposed to what we are trying to do, and then offering a
series of provisions which would gut our very underlying intent. I do
not support it. I vehemently oppose it. But I can't understand how a
rationale could be made for you to oppose the idea of trying to avoid
litigation for 36 months, if you can, on this Y2K issue.
Let me take, if I can, some of the provisions included specifically
in the Kerry proposal and explain why I think those provisions directly
undercut the underlying intent of the McCain-Wyden-Dodd proposal.
One deals with the bill's proportionate liability provisions. As I
read the legislation, the Kerry bill, on page 13 of this proposal,
states that notwithstanding the proportionate liability sections, the
liability of a defendant in a Y2K action is joint and several if the
defendant fails to demonstrate by a preponderance of the evidence that
prior to December 31, 1999, the defendant identified the potential for
Y2K failure, and then, in paragraph two, provided information
calculated to reach persons likely to experience Y2K failures. Consider
what those two provisions would do. Those are findings of fact, not
findings of law. So even if a defendant has made some effort to
identify potential Y2K failures, and made efforts to provide
information calculated to reach the likely persons, you know very well
that those are questions of fact, not of law. I would be hard pressed
to identify a judge that was not going to say that questions of fact go
to a jury.
As a result, there will be litigation on the very issue upon which my
colleague from Massachusetts is trying to avoid litigation. Again, I
can understand why some may disagree with the proportional liability
provisions of the bill. They do not like the idea of having
proportional liability. But I think it is only fair and just, under
these fact situations. Otherwise what you get, very clearly, is
attorneys who will go shop around for some company that is
infinitesimally involved but simultaneously has deep pockets, and that
becomes your defendant. They will then try to get that fractionally
involved defendant as becoming totally responsible and culpable for the
Y2K failure.
That is directly contrary to what we are trying to do here in this
bill, directly contrary to what we are trying to do with the 90-day
cooling off period, directly contrary to our saying that you have to go
after the people responsible for the injury. By suggesting here that if
they would just identify the potential Y2K problems and provide
information to reach the persons likely to experience these failures,
it seems to me that you have undercut entirely the desired goal in the
underlying bill by avoiding the proportional liability provisions of
the legislation. It is these provisions that we think will do a great
deal to minimize the rush to the courthouse.
These matters just do not end up in court miraculously. It takes an
energetic and aggressive bar that wants to pursue them. That would be
the case, in my view, if this amendment were adopted.
Again, these are findings of fact, not of law. No judge that I know
of would dismiss a case where there are findings of fact to be
determined. Those should go to a jury. Therefore, your motion to
dismiss fails. Therefore, you are in court. Therefore, you have
destroyed what we are trying to accomplish with this 36-month bill,
just to deal with a Y2K issue, where the issue ought to be to try to
resolve the problems the American public faces.
As a practical matter, we have 204 days left before the millennium
clock turns. If you adopt these provisions here over the next 204 days,
instead of remediating the problem, setting up your contingency
planning, which is what you ought to be doing at this point, we will
have people running around here trying to figure out ways to meet some
standard here so they can avoid the joint and several liability
provisions.
I can see them suggesting that we ought to be spending resources here
to identify potential Y2K failures and provide information to persons
likely to be subjected to those failures. With 204 days to go--if my
colleague from Utah were here, I think he would echo these comments--we
need everyone in this country involved in this issue spending every
available moment of time and every bit of resources fixing these
problems instead of trying to avoid the kind of legal hurdles placed in
the way that the Kerry amendment would require, if his amendment were
to be adopted.
[[Page S6756]]
An excellent point that should be made is that this proportional
liability section would also encourage results where U.S. companies
could end up paying for the wrongs of foreign companies, non-U.S.
companies. It has been stated over and over again, and I can tell you
that it is true based on our information, that Y2K remediation efforts
abroad are lagging. If a U.S. plaintiff can't recover against a non-
U.S. company, he is going to try to recover against the closest deep
pocket in this country. So you end up having U.S. companies that have
made a significant remediation effort having to bear all the burden
because a foreign manufacturer has not done the job as well. The
plaintiff has a hard time reaching that potential defendant, so he
races to the most fractionally involved U.S. company in order to get
their full compensation. That is just not fair.
The amendment's contracts preservation section does not preserve
contracts. Although it is essential that Y2K contract rights be fully
enforceable, the bill's formulation allows contractual provisions to be
set aside, even by vague State common law rules. This approach would
give State court judges the power to throw out contract provisions they
don't like.
One thing that has been sacrosanct is, when there is a contractual
relationship, that is what prevails. If the parties enter into a
contract, then the contract rules. If you are going to allow, as you
would if the Kerry amendment is adopted, State court judges to undo
contracts, because you don't like contract law but you want tort law,
then you are expanding an area of the law that we have never done.
Where there is a contract in place, the contract rules. If you are
going to allow State courts to undo that and then allow attorneys to
shop around the country until they find a State jurisdiction where they
have avoided these contracts, you have just gutted this bill.
If you want to gut the bill, gut the bill. If you want to destroy
this effort, destroy the effort. But do not stand up simultaneously and
tell me you are trying to enhance what we are trying to do and then
allow State courts to gut contract law in this country.
The Kerry amendment also makes liability for economic losses more
expansive than current law. Under current law in most jurisdictions,
plaintiffs who are in a contractual relationship with the defendant
cannot circumvent the contract by trying out the tort idea.
I understand lawyers want to do this. We don't like the contract my
client entered into, so let's try going to the tort idea here. Not
terribly clever, not terribly unique, pretty commonplace. But we are
not going to all of a sudden say that contracts are no longer valid
here.
In essence, if you adopt this amendment, at least this part of it,
that is what you are doing. If there is a good contract, then the
contract rules. The idea you can circumvent that contract by seeking to
bring a tort suit to recover your economic losses permits all
intentional torts to go forward, whether or not the parties have a
preexisting relationship. Whatever else you may like about this
amendment, that provision alone ought to cause it to be overwhelmingly
defeated.
The amendment's carveout for noncommercial suits, in my view, will
permit a huge range of abusive actions. The Kerry proposal carves out
suits by individuals from most of the provisions of this bill. I
believe that abusive class actions on behalf of consumers are one of
the greatest dangers in the Y2K area, because such suits are easily
created and controlled by plaintiffs' lawyers. That also was the case
in the securities area prior to the enactment of the securities
legislation, a bill that we adopted several years ago.
Again, in this area, the McCain-Wyden-Dodd bill does protect class
action lawsuits. They are not done away with here. We simply try to
tighten up the rules under which class actions can be brought, and I
think wisely so. We don't want to be going back and saying basically
that in these areas you can file vague complaints where no one can
determine what the charges are against you. Remember, in this area of
Y2K--unlike securities litigation where clearly the defendants are
going to be securities firms and the like--a small business can be a
plaintiff and a defendant very quickly. It is not going to be as clear
as to who the consumers are here.
Is one going to suggest to me that a small business where there is a
computer glitch that all of a sudden gets sued is a nonconsumer, in a
sense? I think we are trying to draw lines here that don't apply in the
area of law that we have crafted with the McCain-Wyden-Dodd bill.
So by suggesting that all the other provisions of law are OK here is
to basically just say this bill has been defeated. If that amendment is
offered as a single freestanding amendment, we may as well not take the
time of the Senate to go further. I will recommend that you pull the
bill down because, frankly, then you have said this proposal here has
no merit.
So I am not suggesting these are all the provisions of the Kerry
amendment, but they are the ones I think are most egregious and which I
think would do the most damage to the underlying effort that the
Senators from Oregon and Arizona, and others, have tried to craft here.
Again, this is a bill for 36 months, that is it. We have 204 days
left to do something to minimize a serious problem. I hope we have no
problems come January 1 and February, and that all of the talk about a
serious Y2K problem turns out to be wrong. Then we can look back and
say maybe we didn't need this bill. But I would rather be standing here
and have that happen than to be sitting around in January and all of a
sudden watch serious problems occur, people racing to courtrooms all
over the country because this body didn't think 36 months set aside in
this area was a worthy exercise to defend against a potential problem
that could cause Americans a lot of difficulty.
For once, this body, the Congress, is taking action in anticipation
of a problem. What we normally do is wait for the problems to happen
and then scurry around trying to fix them. Here in June we are trying
to do something to avoid potential catastrophes in January. I commend
my colleagues again--those who have been involved in this--for having
the wisdom to step up and try to take meaningful action here.
Do we have a perfect bill? No, I can't tell you that. We realize we
are sailing in uncharted waters here. But we think we are on the right
side of this and our footing is strong--36 months, narrow in scope and
time--to try to avoid the millions, if not billions, of dollars that
ultimately taxpayers and consumers may end up paying for a lot of
worthless lawsuits to satisfy the appetites of a few narrow members of
the bar. I think it is a risk worth taking. I think in the long run the
American public will support our efforts. With all due respect to my
colleague from Massachusetts, for whom I have a great deal of
admiration, we fundamentally disagree. Were his proposal to be adopted,
I believe it would do significant, if not irreparable, damage to the
McCain-Wyden-Dodd approach we have drafted and submitted for our
colleagues' consideration.
I yield the floor.
Unanimous Consent Agreement
Mr. McCAIN. Mr. President, I ask unanimous consent that the following
amendments on this side be in order and these amendments only:
Senator Murkowski, two amendments; Senator Inhofe, one amendment;
Senator Gregg, one amendment; Senator Lott, one amendment; Senator
Sessions, two amendments.
Although it may be redundant, I add to that the amendments that were
already agreed to in yesterday's Congressional Record: Senator
Hollings, three amendments; Senator Kerry, one amendment; Senator
Boxer, one amendment; Senator Feinstein, one amendment; Senator
Feingold, one amendment; Senator Graham of Florida, one amendment;
Senator Leahy, one amendment; Senator Dodd, one amendment; Senator
Edwards, two amendments; Senator Daschle, one amendment.
Would it be agreeable to Senator Hollings if that is included in the
unanimous consent agreement?
Mr. HOLLINGS. Yes. I thank the distinguished Senator. The Feinstein
and Dodd amendments are now cared for. As listed in the calendar for
today, it is correct. We agree.
Mr. McCAIN. I ask unanimous consent that those amendments be the
[[Page S6757]]
only ones in order in consideration of the bill.
Mr. HOLLINGS. The Senator from Florida, Mr. Graham, has switched with
the Senator from New Jersey, Mr. Torricelli.
Mr. McCAIN. The amendment under Senator Graham will now be listed
under Senator Torricelli.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. McCAIN. Mr. President, I also want to mention that I think the
Senator from Massachusetts wants to discuss this amendment again. We
are prepared to enter into a time agreement with the Senator from
Massachusetts when he returns to the floor for his further discussion
of the amendment. Perhaps we can enter into an agreement at that time.
I will also be contacting Members whose amendments are still listed as
relevant to reach time agreements with them so that perhaps by the
close of business this evening we could have time agreements allocated,
if possible. If not, we will just proceed with the amending process
tomorrow.
I yield the floor.
The PRESIDING OFFICER. The Senator from Kansas.
Mr. BROWNBACK. Mr. President, I rise to speak in support of the Y2K
Act. I commend Senator McCain for the leadership he has provided the
Senate on an issue that is of critical importance to small businesses
across this country. I do not know if we have highlighted enough the
cost of the Y2K problem on small business. That is what I would like to
briefly address. I also thank the Chamber of Commerce for the effort
they have made to bring this problem to the attention of the Congress
and to the public.
I support protecting businesses from unnecessary and frivolous
litigation that will arise from the Y2K problem. While businesses are
hard at work trying to fix potential problems arising from the Year
2000, others are trying to exploit it through excessive and expensive
litigation. It has been reported in that the cost of litigation in the
U.S. arising from this problem will range from $200 billion to $1
trillion. It is just incredible. The Senate Commerce Committee has
reported that up to 48 lawsuits relating to the Y2K problem have
already been filed. What has been described as a ``tremendous new
business opportunity'' for lawyers is done at the expense of the
private business sector, in particularly small businesses. Small
businesses are most at risk from Y2K failures because many have not
begun to realize the potential problem and they do not have the capital
to remedy any Y2K difficulties.
This bill goes a long way toward preventing litigation from the Y2K
problem by establishing punitive damage caps, alternative dispute
resolution, and proportional liability. While this bill will limit the
amount of frivolous litigation, it will not prevent those who are
blatantly negligible in becoming Y2K compliant or have caused personal
injuries as a result of their noncompliance from escaping their
responsibilities. They will still be held responsible.
Although I believe S. 96 will prevent and limit any litigation
arising from the Y2K problem, I am still concerned that the greatest
beneficiaries of the Year 2000 computer problem will be the trial
lawyers. I am disheartened that there is no provision in this bill that
places a reasonable cap on attorneys' fees. An attorney fees' cap will
help prevent excessive litigation against small businesses by creating
a financial disincentive for trial lawyers. Unlike the big corporations
who have millions to spend on solving the Y2K problem and defending
themselves in any Y2K civil action, the small businesses do not have
the financial resources and are therefore the primary targets of any
potential Y2K litigation. A reasonable and fair attorney fees' cap will
decrease the amount of excessive and frivolous litigation arising from
the Y2K problem. But without a reasonable cap, I am concerned that the
Y2K problem could become a boondoggle for the trial lawyers at the
expense of small businesses. However, in the interest of passing this
legislation, I will not be offering an attorney's fee amendment at this
time. I do hope that the Senate will be able to consider and debate
this issue in the future.
That having been said, I ask that the Senate move quickly to pass
this legislation and protect small businesses from potential Y2K
litigation.
Thank you very much, Mr. President.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Mr. President, as one of the original cosponsors of both
S. 96 and the bipartisan amendment that now constitutes the base bill
before the Senate, I am, of course, strongly in support of that
proposal and opposed to the Kerry amendment, even including all of the
changes, almost all of which are constructive, that have been added to
it during the course of its development.
But in reflecting on both my support of the base bill and my
opposition to the Kerry amendment, I wish to reflect on the fact that
most, though not all, of the major actors in this bill have been
Members of the Senate for a decade or so. Each of them can remember
that it is a decade or less ago that one of the constant refrains on
the floor of the Senate--and for that matter, throughout our society--
was our deep concern about American competitiveness.
Volumes of the Congressional Record are filled with speeches about
the fact we were losing ground to many of our competitors, most
particularly the Japanese, because of their work ethic, because of
their educational system, or for a half dozen other reasons. Probably
the last such speech was made on the floor of this Senate more than
half a decade ago.
It is obvious that the United States, whatever its problems then, has
had a magnificent recovery and dominates the economic and technical
world by as great a margin as it ever has had during the course of the
20th century.
While all kinds of American geniuses are responsible for this change,
I think it is safe to say that the extraordinary, imaginative,
entrepreneurial work of the men and women whose companies make up the
Year 2000 Coalition supporting this legislation have the greatest
responsibility and deserve the greatest amount of credit for changes in
the nature of our economy and of our society and the way in which we
live, the way in which we communicate with one another and the way in
which we preserve and enhance knowledge. These factors have changed as
much in this last decade as in the previous century.
It is, therefore, the very people and the very companies that have
done more to enhance the quality of life in the United States and the
quality of life around the world who have done more to break down
barriers between people and regions and nations. It is these people who
seek the modest relief proposed in this bill, these people who are so
responsible for our economic success.
I have been handed a letter to the distinguished junior Senator from
Massachusetts from the Year 2000 Coalition. I ask unanimous consent
that letter be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Year 2000 Coalition,
June 8, 1999.
Hon. John F. Kerry,
U.S. Senate, Russell Senate Office Building, Washington, DC.
Dear Senator Kerry: The Year 2000 Coalition, a broad-based
multi-industry business group, is committed to working with
the Senate to enact meaningful Y2K liability legislation. We
fully support S. 96 sponsored by Senators McCain and Wyden,
with amendments to be offered by Senator Dodd. This is also
supported by Senators Hatch, Bennett, Gorton, Feinstein and
others. S. 96 is the most reasonable approach to curtail
unwarranted and frivolous litigation that might occur as a
result of the century date change.
While we appreciate any effort that further demonstrates
the bipartisan recognition of the need for legislation, the
Coalition does not support the amendment to S. 96 that is
being circulated in your name. We urge you to support S. 96
and to not introduce an amendment to it. Your vote in favor
of cloture is important to bring the bill to the floor and
allow the Senate to address the challenge of Y2K confronting
all Americans. A vote in favor of S. 96 is a vote in favor of
Y2K remediation, instead of litigation.
This letter was also sent to the following Senators: Robb,
Daschle, Reid, Breaux, and Akaka.
Sincerely,
Aerospace Industries Association, Airconditioning &
Refrigeration Institute, Alaska High-Tech Business
Council, Alliance of American Insurers, American
Bankers Association, American Bearing Manufacturers
Association, American Boiler Manufacturers
[[Page S6758]]
Association, American Council of Life Insurance,
American Electronics Association, American
Entrepreneurs for Economic Growth, American Gas
Association, American Institute of Certified Public
Accountants, American Insurance Association, American
Iron & Steel Institute, American Paper Machinery
Association, American Society of Employers, American
Textile Machinery Association, American Tort Reform
Association, America's Community Bankers, Arizona
Association of Industries, Arizona Software
Association, Associated Employers, Associated
Industries of Missouri, Associated Oregon Industries,
Inc.
Association of Manufacturing Technology, Association of
Management Consulting Firms, BIFMA International,
Business and Industry Trade Association, Business
Council of Alabama, Business Software Alliance,
Chemical Manufacturers Association, Chemical
Specialties Manufacturers Association, Colorado
Association of Commerce and Industry, Colorado Software
Association, Compressed Gas Association, Computing
Technology Industry Association, Connecticut Business &
Industry Association, Inc., Connecticut Technology
Association, Construction Industry Manufacturers
Association, Conveyor Equipment Manufacturers
Association, Copper & Brass Fabricators Council, Copper
Development Association, Inc., Council of Industrial
Boiler Owners, Edison Electric Institute, Employers
Group, Farm Equipment Manufacturers Association,
Flexible Packaging Association.
Food Distributors International, Grocery Manufacturers of
America, Gypsum Association, Health Industry
Manufacturers Association, Independent Community
Bankers Association, Indiana Information Technology
Association, Indiana Manufacturers Association, Inc.,
Industrial Management Council, Information Technology
Association of America, Information Technology Industry
Council, International Mass Retail Council,
International Sleep Products Association, Interstate
Natural Gas Association of America, Investment Company
Institute, Iowa Association of Business & Industry,
Manufacturers Association of Mid-Eastern PA,
Manufacturer's Association of Northwest Pennsylvania,
Manufacturing Alliance of Connecticut, Inc., Metal
Treating Institute, Mississippi Manufacturers
Association, Motor & Equipment Manufacturers
Association, National Association of Computer
Consultant Business.
National Association of Convenience Stores, National
Association of Hosiery Manufacturers, National
Association of Independent Insurers, National
Association of Manufacturers, National Association of
Mutual Insurance Companies, National Association of
Wholesaler-Distributors, National Electrical
Manufacturers Association, National Federation of
Independent Business, National Food Processors
Association, National Housewares Manufacturers
Association, National Marine Manufacturers Association,
National Retail Federation, National Venture Capital
Association, North Carolina Electronic and Information
Technology Association, Technology New Jersey, NPES,
The Association of Suppliers of Printing, Publishing,
and Converting Technologies, Optical Industry
Association, Printing Industry of Illinois-Indiana
Association, Power Transmission Distributors
Association, Process Equipment Manufacturers
Association, Recreation Vehicle Industry Association.
Reinsurance Association of America, Securities Industry
Association, Semiconductor Equipment and Materials
International, Semiconductor Industry Association,
Small Motors and Motion Association, Software
Association of Oregon, Software & Information Industry
Association, South Carolina Chamber of Commerce, Steel
Manufacturers Association, Telecommunications Industry
Association, The Chlorine Institute, Inc., The
Financial Services Roundtable, The ServiceMaster
Company, Toy Manufacturers of America, Inc., United
States Chamber of Commerce, Upstate New York Roundtable
on Manufacturing, Utah Information Technology
Association, Valve Manufacturers Association,
Washington Software Association, West Virginia
Manufacturers Association, Wisconsin Manufacturers &
Commerce.
Mr. GORTON. This letter was signed by companies or groups too
numerous for me either to name or to count. They explicitly state
support of the Year 2000 Coalition for S. 96 in the form in which it
finds itself now, explicitly opposing the Kerry amendment to that bill.
Personally, I think that letter deserves great weight and our most
solemn consideration without regard to any of the details of the debate
on the differences between S. 96 with its bipartisan amendment and the
Kerry amendment. When one goes into the details of those differences,
the justification for this letter becomes even more apparent.
My long-time friend and distinguished rival in this matter, the
Senator from South Carolina, and I have differed on a substantial
number of legal concepts that go far beyond Y2K legislation. He knows,
as does the distinguished occupant of the Chair, that my own personal
preference--and I suspect the preference of the Year 2000 Coalition--
would be to abolish the concept of joint liability in its entirety. The
concept of joint liability is one pursuant to which a person, a group,
a defendant, only partially or even marginally responsible for a given
legal wrong, nonetheless can be held responsible for all of the damages
caused by all of the defendants against whom a judgment is entered.
On its surface and beneath its surface, such a concept is
extraordinarily difficult to justify.
In the case of potential Y2K litigation, it is even more difficult to
justify, as in any typical Y2K lawsuit there may well be dozens of
defendants--the manufacturers of all of the elements of what can be an
extremely complicated software and hardware production, its
distributors, both wholesale and retail, and perhaps many others. The
risks to companies, whether sophisticated or unsophisticated in the
nuances of the law, the panic created in them, the disruption of their
priorities, both in the development of new technology and dealing with
potential Y2K litigation, is impossible to overestimate.
At first, this bill, or any bill that has seriously been considered
here on subjects like this, abolishes in its entirety the concept of
joint liability. Even though I prefer the original S. 96 to this
proposal, it is a matter that has been worked out very carefully by a
group of Republicans and Democrats--one of the most important of whom
is the Senator from Connecticut who is present on the floor--to be a
result that has broad support not only in this Chamber but around the
country as a whole.
Just as the Senator from Connecticut and many of his colleagues have
compromised on some elements they wish like to have in the bill, so
have we on our side, and we have with respect to joint liability. There
are some very real limits on it and S. 96, as it appears before the
Senate now, and there are a few in the Kerry substitute, but they are
largely illusionary.
A second field in which there are differences in this bill has to do
with punitive damages. How anyone even in this isolated Chamber could
come up with a proposition that software companies, members of this
Year 2000 Coalition, are so indifferent to the problems of Y2K that
somehow or another they deserve to be punished--not in a criminal court
but by the potential loss of unlimited punitive damages--is difficult
for me to imagine. It is clear by the vehement opposition to limits on
punitive damages that there are those in the legal profession who at
least hope for the bonanza of huge punitive damage awards, however
difficult it is to imagine the justification for such awards as we
debate this matter. Or perhaps it would be more accurate to say they
hope they can force settlements, even on the part of companies they
believe have not been negligent at all, because of the threat, the mere
possibility of a very large punitive damage award.
I represent one of the handful of States in the United States of
America that does not permit punitive damages in civil litigation, that
believes that punishment should be a part of the criminal law and not
the civil law. I have not noticed, in a long career, that justice is
unavailable to plaintiffs in the courts of the State of Washington on
that account. I believe we would have a more responsible legal system,
a more fair and more just legal system, if the concept of punitive
damages in civil litigation was abolished across the country. It is not
going to be. It was not even in the product liability legislation of
which I have been a sponsor in the past. It was not in the original
form of this bill, and it is not in the form that appears before us
now.
But there are some distinct limitations on punitive damages for
relatively small companies, companies that could obviously be
bankrupted by punitive damage awards--a bankruptcy that, I submit, in
almost every case
[[Page S6759]]
would not benefit the economy or the people of the United States. Yet,
for all practical purposes, even those minor limitations are removed
from this bill in the Kerry amendment.
Finally, the Kerry amendment allows for the single form of litigation
that may most disturb the members of the Year 2000 Coalition, class
actions on the part of consumers, actions in which almost invariably
the plaintiffs are nominal plaintiffs, actions in which many of the
plaintiffs often do not even know they are plaintiffs, actions that
very frequently have been far more on behalf of the lawyers who bring
them than on the nominal class of plaintiffs themselves. To allow such
actions seems to me to be a serious mistake and seriously to undermine
the entire goal of Y2K relief.
In summary, I do not think S. 896, as modified, is a terribly strong
bill. I think it provides a degree of appropriate relief to a
fundamentally vital element of the American economy and the advancement
of our own standard of living in a fashion which is important to that
industry and in a fashion that is beneficial to that industry. But I do
not think it goes far enough. Others think it goes too far. I do
believe, however, we have now reached a conclusion that will be
supported by a significant majority of the Members of the Senate,
members of both parties.
I can no longer say, with the changes that have been made in it, that
the Kerry amendment is useless, that it provides no relief at all. It
does include in it some constructive elements, some which may be
appropriate for consideration during a conference subcommittee meeting
between the House and the Senate as we put this bill in final form. But
in comparison with the base bill before us, it does not provide
appropriate relief. It does not meet the minimum needs of the year 2000
Coalition. It does not meet the minimum needs of a standard of
reasonable justice with respect to a single problem that will go away
shortly after the beginning of the new millennium in a piece of
legislation that will not become a part of the permanent law of the
United States, because it will not be needed.
So, I return to the remarks with which I began. The members of this
coalition, the signatories to this letter, have done an extraordinary
service, not only to themselves, not only to the American people and
the American economy, but to the entire world and to the task of
building bridges among people in the entire world. They have asked for
help for a single specific problem that faces them and that faces us
and will for a few short months and for a relatively short period of
time thereafter. They deserve that relief. They deserve it as promptly
as we can possibly pass it. And they deserve it with our enthusiastic
support.
The PRESIDING OFFICER. The Senator from Virginia.
Mr. ROBB. Mr. President, as a Senator from Virginia, with one of the
most vibrant high-tech communities anywhere in the country, I am
acutely aware of the problems the Y2K bug presents. And I want a bill.
I have worked with the high-tech community in Virginia, particularly
Northern Virginia, but throughout the State since my days as Lieutenant
Governor and as Governor.
During the time I was Governor, I created a task force on high
technology and they came up with 44 recommendations, the most prominent
of which was to create a Center for Innovative Technology, which, for
the benefit of our colleagues, is housed in that funny-shaped building
very close to Dulles International Airport. Colocated with it was the
Software Productivity Consortium, because we wanted to be able to
provide a central point for consideration of all the issues and
concerns of the technology industry and a way to broker the release of
the scientific work on technology-related projects.
So, I come with a lengthy background of working with the high-
technology community and a specific interest in getting legislation
that will address the Y2K problem.
The potential wave of litigation which could accompany the turn of
the century could, in fact, be crushing, and many businesses have
indicated that the threat of litigation could keep them from devoting
the necessary resources to addressing their own Y2K problems. A
reasonable bill, which would weed out frivolous lawsuits and encourage
parties to remediate their Y2K disputes outside the courtroom, would be
to everyone's benefit. But while there is general agreement that some
sort of bill should pass, regrettably, we do not yet have consensus on
exactly what language should be in this bill.
Passage of almost any legislation requires some elements of
compromise. We have seen that process ongoing. Indeed, I entered this
debate several weeks ago--actually, now months ago--to help find the
necessary consensus on this issue. Given the rapidly approaching new
year, as well as the dwindling number of legislative days left in the
Senate, it is important for us to act on this legislation now. Further
delay will only make it more difficult to reach the consensus most of
us are looking for.
With the tight timeline we are facing, I am concerned with the
direction the debate still seems to be taking. Notwithstanding my own
misgivings about certain provisions in S. 96, the administration
strongly objects to the bill in its current form, and the President has
promised that if Congress sends S. 96 to the White House without
significant modifications, he will veto it. Thus, we are presented with
a dilemma. If we want a bill that will solve a legitimate problem, we
need a bill that the President will sign or at the very least will not
veto, or we need 67 hard votes in order to override a veto. Otherwise,
we are just playing with politics. I regret to say I am afraid that is
where we are now. We do not at this point, on this language, have the
necessary 67 hard votes.
The President has promised to veto this bill if it comes to him in
its current form. So we are going through an exercise to polarize and
politicize an issue instead of providing a solution to an issue.
I appreciate the very hard work that my distinguished colleague from
Massachusetts has put in trying to find the necessary language that
would provide the relief that is legitimate and on which virtually
everyone in the Chamber can agree and still get the President to sign.
If we continue to approach this legislation with a vehicle we know
the President has already promised to veto, we are not giving the
industry the relief they so critically need. All we are doing is
scoring political and debating points, but we are not coming up with a
solution. We have that dilemma.
I am, therefore, a cosponsor of the legislation offered by my
distinguished friend, the Senator from Massachusetts, because the White
House has indicated they will sign that particular legislation if these
changes are made. It has line-by-line changes to certain provisions,
and they are relatively limited at this point.
I applaud the good will that has prevailed on both sides to this
point in reaching this particular position, but we are still not there.
For this reason, I hope that our colleagues will support the amendment
that has been drafted and negotiated by my distinguished partner from
Massachusetts because, at that point, we will have a bill. It will not
be a perfect bill, but it also will not be a vetoed bill.
It is inconceivable to me, given the many demands that have come to
this Chamber from all of the interests that are involved, that we could
ever come up with a perfect bill, but at least we will have protection
from the kinds of lawsuits that the industry is most concerned about,
and we will have it in time to make decisions to remediate some of the
problems they could otherwise deal with if they were free from the
threat of litigation in this particular area.
I thank my colleague from Massachusetts for his patience in working
out the amendment which is now before us, and I urge my colleagues to
pass this particular amendment.
I yield the floor.
The PRESIDING OFFICER. Who seeks time?
Mr. DODD. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. KERRY. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
[[Page S6760]]
Amendment No. 610
Mr. KERRY. Mr. President, I know my colleagues on the other side are
anxious to know how we will proceed. Senator Daschle intends to speak,
and I suspect that may be it on our side. I am sure our colleagues on
the other side will be thrilled to hear that, and we can move forward.
I want to say a couple of things about what has been said in the last
hour of debate. Some of my colleagues have mentioned the ``vagueness''
of the standard that is being applied to ask whether or not a company
ought to determine if they have a potential for Y2K liability. First of
all, there is no vagueness whatsoever in any company's capacity to
determine on its own, through its technological knowledge, whether or
not it has a potential of liability, and that is because of the nature
of the problem.
We are talking about inventing chips with time-sensitive
digitalization on ``00'' and its capacity for interpretation. People
can run through their programs and run through the demand list, so to
speak, on that program and pretty thoroughly test it to make the kind
of determination about potentiality. Anybody who has sufficiently done
that is going to qualify automatically for proportionality.
To the degree that my colleagues complain and say, well, gee, they
are coming in here with this standard that might have to go to jury--
the Senator from Connecticut is worried about a standard that goes to
the jury--turn to their bill, page 28, Section 9: Duty to Mitigate.
Damages awarded in any Y2K action shall exclude
compensation for damages the plaintiff could reasonably have
avoided in light of any disclosure or other information of
which the plaintiff was, or reasonably should have been,
aware, including information made available by the defendant
to purchasers. . . .
So there is an issue for the jury. There is an issue. They have no
problem putting the responsibility on the plaintiff. They have no
problem at all finding a vague standard, so to speak, using their
terminology. I do not believe our standard is vague, but they have no
problem at all requiring the jury to determine the reasonableness of
what the defendants have done. And the plaintiff is going to have to
prove it.
So that is part of the imbalance of this bill. Every step of the way,
there is a shifting, a change in tort law, a requirement for a higher
standard that goes beyond the original purpose.
I have heard my colleagues say the purpose of this bill is to help
technology companies that are an important part of the American
mainstream, economic bloodline, if you will, for all of our country. I
agree with that. I absolutely agree with that. I do not want frivolous
lawsuits. I do not want lawyers lining up for some kind of constructed
settlement process that is based on a fiction.
But our bill does not provide for that. Our bill is very clear in the
way in which it requires a period of cure, just as S. 96 does, a period
of mitigation, just as S. 96 does. It requires the same underlying
relationship with contract law, with one exception--where you have an
intentional, willful, reckless action by a company. No one for the
other side has been able to answer the public policy question of why
any entity that acts recklessly, with wanton, willful purpose, ought to
be exonerated from a standard that holds them accountable. I do not
think any American, average citizen, who is subjected to the
consequences of those kinds of actions would believe that is true.
Finally, on proportionality, the argument was just made by the
Senator from Washington that you ought to have this proportionality
available to a company. I agree with him. But it ought to be available
to a company that has at least made a de minimis effort, a de minimis
effort to determine whether its own product might have the potential to
have a Y2K problem.
I think our colleagues are going to have a hard time explaining why a
company should not have to at least show that it inventoried its own
products to determine that. It would be irresponsible, in the context
of a bill that is supposed to encourage mitigation and encourage remedy
and cure, to suggest that companies should not be encouraged to go out
and determine what they may have done wrong. It is just inconsistent.
So I believe our effort is a bona fide effort to do precisely what
the sponsors of S. 96 want to do. I believe it achieves it in a more
fair and evenhanded way. I believe that, as a consequence of the White
House agreement with our position, ultimately we are going to have to
adjust.
I say to my friends in the high-technology industry, I hope they will
carefully read the language in our proposed amendment. If one of them
wants to come to me and suggest language that is clearer, to suggest
how they could conform in a reasonable way that they are not afraid of,
I will adopt that language.
If any one of them wants to show me a reasonable way to have a
standard here that makes them a good citizen or qualifies them as such,
I am all for it. I have not yet found a CEO of a company who has been
able to suggest to me anything except wanting to not be sued as a
rationale for why, from a public policy perspective, we should change
the law of this country prospectively in an anticipatory fashion to
change a longstanding relationship. And I do not think that case will
be made.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who seeks time?
Mr. HOLLINGS. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. WYDEN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. WYDEN. Thank you, Mr. President.
I would like to take just a few minutes, as we wait for the minority
leader to address some of the concerns that have been raised by the
Senator from Massachusetts, to describe why I and the Democratic leader
of the Y2K efforts, Senator Dodd, believe that the Kerry amendment,
though certainly sincere, is really a glidepath, an invitation, to
frivolous lawsuits with respect to this Y2K matter.
I come today to say we know we are going to have problems early in
the next century. That has been documented on a bipartisan basis by the
Y2K committee. What we are concerned about is not compounding the
problem with frivolous lawsuits. Regrettably, the Kerry proposal is
going to do just that.
What the Senator from Connecticut and I have tried to do is to talk
first about the vagueness of the language in the Kerry proposal. This
notion that you would simply have to identify ``potential'' with
respect to the Y2K issue and Y2K problems is just going to be a
lawyers' full employment program. What is going to happen is, you are
going to have frivolous cases brought; you will very quickly have
companies, particularly small business defendants, move to dismiss
those cases because they are patently frivolous.
Because the Kerry standard is so vague, a judge is going to have
really no alternative other than to send that to a jury. So I think
that provision, identifying ``potential,'' is a real lightning rod for
frivolous lawsuits. That would be our first concern.
The second, it seems to me, is that the Senator from Massachusetts
has, to a great extent, mixed together, commingled, the principles of
punitive damages and proportionality. I would like to try to step back
for a minute and see if I can clarify that.
The Senator from Massachusetts has spoken repeatedly, he has come to
the floor repeatedly, and said that under the bipartisan legislation,
if defendants are engaged in reckless, irresponsible, wanton conduct,
there is going to be no remedy for the plaintiff in those situations.
The fact of the matter is, under proportionality--clearly laid out in
our legislation--you are liable to the extent that you contributed to
the problem. That is true if you are a small business, if you are one
of the Fortune 500 businesses--it is true no matter who you are. Under
our language, with respect to proportionality, you are liable for what
you contribute. It is just that simple.
With respect to punitive damages, besides keeping in place the State
evidentiary standards on punitive damages, what we in fact say is the
only
[[Page S6761]]
people we are really going to try to protect are those who are such a
key part of the technology engine for our country, and that is the
Nation's small businesses.
Finally, colleagues, I think there is some confusion with respect to
this issue of economic losses as well. The Senator from Massachusetts
has said that in some way the bipartisan proposal we bring has narrowed
the availability of coverage for economic losses. We very specifically,
in our legislation, make clear that existing State contract and tort
law is kept in place.
What the dispute is all about is that the Senator from Massachusetts,
and perhaps others, is in effect trying to tortify existing contract
law. They would like to try to create some torts for 36 months in the
Y2K area where those torts do not exist today in existing law.
My reputation, my background is as a consumer advocate. That is what
I was doing with the Gray Panthers for 7 years before I was elected to
the Congress, what I have tried to do for 18 years in both the House
and the Senate. I feel very strongly about protecting consumers, and
there are areas where it is appropriate to create new torts. Certainly,
I have created a few causes of action during my years of service in the
Congress.
If I can just finish, then I will be glad to yield to the Senator
from Massachusetts. I think it would be a mistake, given the
extraordinary potential for economic calamity in the next century, to
change the law with respect to economic loss. We are neither broadening
it nor narrowing it. We are keeping it in place. I know that those
State laws with respect to economic loss do not do a lot of the things
that the Senator from Massachusetts thinks are important, but that is,
in fact, what we do in our legislation.
I want to be clear, our legislation does nothing, absolutely nothing,
to limit remedies that are available to plaintiffs when, in fact, they
are victims of a personal injury or wrongful death. So if an
individual, early in January of the next century, is in an elevator,
for example, and the computer in the elevator breaks, and the
individual tragically falls to his or her death or suffers a grievous
bodily injury, all existing tort law remedies apply in that kind of
instance.
The bill that is before the Senate now is a very different one than
the one that was voted on on a partisan basis by the Senate Commerce
Committee. In fact, in the Senate Commerce Committee, I joined the
Senator from Massachusetts in saying that it was wholly inadequate in
terms of protecting the rights of consumers. I happen to think the bill
the House of Representatives passed is wholly inadequate.
The legislation that we have now is a balanced bill. The defendants
have strong obligations to cure defects. The plaintiffs have an
obligation to mitigate damages. I think our failure to pass this bill,
which has now included 10 major changes to favor consumers and
plaintiffs since the time it left the Commerce Committee, our failure
to pass this bill, I think, is a failure to meet our responsibilities
as it relates to this technology engine that is driving so much of our
Nation's prosperity.
I think when we look at the potential for calamity early in the next
century, I don't think there is any dispute that we are going to have a
significant number of problems. The question is, does the Senate want
to compound those problems by triggering a round of unnecessary and
frivolous litigation?
I hope we won't do that. I urge my colleagues to oppose the Kerry
amendment.
I yield the floor.
Mr. KERRY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, the comments of the Senator from Oregon now
have highlighted the sort of difference between what they say they do
and the reality of what is done here.
I am not going to ask the reporter to read back the comments, but let
me just quote the Senator. He can tell me if I have said differently.
The Senator just said on the floor of the Senate that the Kerry bill
seeks to create new torts. Am I correct? Am I stating what the Senator
said?
Mr. WYDEN. Mr. President, if the Senator will yield, I am happy to
engage him.
I am saying that our proposal protects State contract law with
respect to economic losses. It seems to me that the gentleman's
proposal, in wanting to change existing State contract law, is clearly
moving us in a different area which legal experts have come to
describe, pretty arcanely, as the notion of tortifying contract law
doctrine, yes.
Mr. KERRY. Let me say to my colleague, he has just confirmed what I
said. He is insinuating that we are creating a new tort.
I want to make it very clear, what the Senator and Senator McCain and
others are doing is taking away the right of State law, with respect to
existing contract law, to be applied. They are saying that if a State
allows a particular tort with respect to economic loss, they can't do
it.
I will be very specific about it. My provision with respect to
economic loss does exactly what the provision of the Senator from
Oregon and the Senator from Arizona does. We are both trying to hold on
to contracts, to avoid contract limitations on liability, and not to
have people move into tort. Neither of us want contract law to become
tort. So we both prevent that.
Here is the distinguishing feature. What we do that Senator McCain
and company do not do is, we say the following: If the defendant
committed an intentional tort, you are not going to void the contract
law, except--and this is the only exception--where the tort involves
misrepresentation or fraud regarding the attributes or capabilities of
the product that is the basis of the underlying claim.
Mr. WYDEN. Will the Senator yield on one point?
Mr. KERRY. In a moment I will yield.
Mr. WYDEN. Is that available under current law?
Mr. KERRY. I want to make this clear, Mr. President. Under the McCain
bill, if a party is induced by fraud to enter into a contract, they
can't recover damages for that. So what if in a conversation they say
to the salesperson of the company: Is your product Y2K compliant? And
the person says: Oh, absolutely, our product has been Y2K compliant. We
are terrific, blah, blah, blah.
If they intentionally were to induce them into the contract on
misrepresentation and they lose business as a result of that, they are
being denied the ability to sue for that by S. 96.
I think that is wrong. I don't know, again, what public policy
interest is served by suggesting that fraud and misrepresentation ought
to be protected. Why should they be protected?
Mr. WYDEN. Will the Senator yield?
Mr. KERRY. I will yield for an answer to the question. Why should
fraud or misrepresentation be protected?
Mr. WYDEN. We apply State contract law to these economic losses. What
we say is, you get your economic loss under current law if your State
law lets you. The Senator from Massachusetts is absolutely right. There
is a sincere difference of opinion here. We are saying economic losses
should be governed by State contract law. The Senator from
Massachusetts says that he would like to go with a different concept.
That is the difference of opinion here.
Mr. KERRY. Let my say to my colleague, with all due respect, that he
is dead wrong. He is even more so dead wrong, because moments ago they
adopted an amendment by the Senator from Colorado, the Allard
amendment, which makes it very clear that State law is superseded. That
is the amendment they adopted. So State law takes precedence, period,
end of issue. You cannot protect people from misrepresentation or
fraud, and there is no public policy rationale for that.
I yield the floor.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Mr. President, with consent across the aisle, I believe,
I ask unanimous consent that there be 1 hour equally divided on the
Kerry amendment No. 610, followed by a vote on or in relation to the
amendment, with no amendments to the amendment being in order prior to
the vote, but that the vote will take place at a time to be determined
by the managers.
The PRESIDING OFFICER. Is there objection?
[[Page S6762]]
Mr. REID. Reserving the right to object, I wonder if my friend from
Washington could hold that unanimous consent request for a few minutes.
We have to make a couple calls.
Mr. GORTON. I will withdraw the request for the moment.
The PRESIDING OFFICER. Who seeks time? The Senator from Nevada.
Mr. REID. Mr. President, I am here to speak as one of those who is a
cosponsor of the amendment now pending, the Kerry amendment. People
have spent a tremendous amount of time coming up with the various
proposals that are now before the Senate. I commend and applaud those
who have worked so hard on this issue. I see on the floor my friend
from Oregon. He has spent not hours and days, but weeks on this
legislation. I commend him for the efforts he has made.
I do, however, say that in addition to the work he has done as a
principal author of the bill, the junior Senator from Massachusetts has
also spent a tremendous amount of time on this issue--as much if not
more than my friend from the State of Oregon. The problem we have with
this legislation--and we all recognize that it is extremely important--
is that we have 204 days left until Y2K. We don't have time to play
partisan politics and wait until the next session to produce a bill.
With 204 days left, we have to get to some serious legislation here
and get something that is not perfect, but doable. I suggest that the
amendment I am cosponsoring, which the chief author, the Senator from
Massachusetts, has spoken at some length on, is legislation that the
President will sign. We have to take that into consideration.
In the last several months I have traveled around the country meeting
with high-tech companies, small businessmen and women, and individuals
who have done so much to help this robust economy in which we are now
involved. These individuals who run these companies want a bill. They
don't want or expect a perfect bill, but they want a bill. They want a
bill that would become legislation. They want a bill that would meet
the demands they have. These small business men and women are
successful enough, and certainly smart enough, to realize that with 204
days left there is a lot that has to be done. They would much rather
have something signed into law than nothing at all.
We have to make sure that whatever we do is reasonable. The Kerry
amendment is reasonable. The amendment now pending before this body is
reasonable. We reward people for making an effort to address the Y2K
problem. We also discourage frivolous lawsuits. I hope this amendment
will receive a resounding vote.
I submit to this body that what we are doing is offering an amendment
to the underlying bill that would make the legislation something the
President would sign. We hope that when this bill, with this amendment,
gets out of here, it will go to conference, and at the conference the
differences will be worked out.
As it now stands, the underlying bill simply will not be signed by
the President. I submit to my friend from the State of Oregon, who has
worked so hard on this, that his legislation will not be signed. They
have amended the McCain legislation, but the President of the United
States will not sign this legislation. He has said this orally and he
has said it in writing.
So I think, we have to push something through, in good faith, to help
this problem that we have, something that would be signed by the
President. I hope that people of good will on both sides of the aisle
will join together and offer support for the underlying amendment.
Mr. GORTON. Mr. President, I ask unanimous consent that there be 1
hour equally divided on the Kerry amendment No. 610, followed by a vote
on or in relation to the amendment, with no amendments in order prior
to the vote, with the vote to take place at a time to be determined by
the managers.
The PRESIDING OFFICER. Is there objection?
Mr. KERRY. Reserving the right to object. I actually didn't hear it.
Mr. GORTON. It provides for 1 hour equally divided, with no more
amendments while that hour is going on, and that the time for the vote
will be determined by the managers of the bill.
Mr. KERRY. The managers, plural?
Mr. GORTON. Yes.
Mr. KERRY. I have no objection.
The PRESIDING OFFICER. Without objection, it is so ordered.
The PRESIDING OFFICER (Mr. Sessions). Who yields time?
Mr. LAUTENBERG. Mr. President, I ask unanimous consent that I be
permitted to talk as in morning business for up to 10 minutes, and that
it not be charged to either side.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The remarks of Mr. Lautenberg pertaining to the introduction of S.
1193 are located in today's Record under ``Statements on Introduced
Bills and Joint Resolutions.'')
Amendment No. 610
The PRESIDING OFFICER. The Senator from Connecticut.
Mr. DODD. Mr. President, I thought our colleagues might find it
worthwhile to know that there are literally dozens of organizations,
representing a significant percentage of the gross domestic product of
this country, that endorse the McCain-Wyden-Dodd legislation, the Y2K
bill. Beginning with the aerospace industry organizations, running
through to the Wisconsin Manufacturers and Commerce Association, the
West Virginia Manufacturers Association, Valve Manufacturers, Service
Masters--all of the high-tech organizations, many of the State
organizations--the North Carolina Electronic and Information Technology
Association, Technology of New Jersey--it just goes on down this long
list. My colleagues may want to have some idea and sense of the people
we have worked with mostly now for many months to try to craft this
legislation in a timely fashion.
This list represents almost 70 percent of the gross domestic product
of the United States and thousands and thousands of working men and
women in this country who would like to see Congress come up with some
answer of how to solve the Y2K problem and yet not create a cost and an
action that doesn't solve the problem but ends up with more costs and
without resolving the very serious issue that Y2K poses. I ask
unanimous consent that list be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Year 2000 Coalition,
June 8, 1999.
Dear Senator: The Year 2000 Coalition hand-delivered the
attached letter to Senators Kerry, Robb, Daschle, Reid,
Breaux, and Akaka, who have prepared a staff working draft of
a proposed amendment to S. 96, The Y2K Act. The Coalition
supports passage of S. 96 with incorporated amendments to be
offered by Senator Dodd. We have urged the Senators that are
working on the staff draft to support S. 96.
Sincerely,
Aerospace Industries Association; Airconditioning &
Refrigeration Institute; Alaska High-Tech Business Council;
Alliance of American Insurers; American Bankers Association;
American Bearing Manufacturers Association; American Boiler
Manufacturers Association; American Council of Life
Insurance; American Electronics Association; American
Entrepreneurs for Economic Growth; American Gas Association;
American Institute of Certified Public Accountants; American
Insurance Association; American Iron & Steel Institute;
American Paper Machinery Association; American Society of
Employers; American Textile Machinery Association; American
Tort Reform Association; America's Community Bankers; Arizona
Association of Industries; Arizona Software Association;
Associated Employers; Associated Industries of Missouri;
Associated Oregon Industries, Inc.; Association of
Manufacturing Technology; Association of Management
Consulting Firms; BIFMA International Business and Industry
Trade Association; Business Council of Alabama; Business
Software Alliance; Chemical Manufacturers Association;
Chemical Specialties Manufacturers Association; Colorado
Association of Commerce and Industry; Colorado Software
Association; Compressed Gas Association; Computing Technology
Industry Association; Connecticut Business & Industry
Association, Inc.; Connecticut Technology Association;
Construction Industry Manufacturers Association; Conveyor
Equipment Manufacturers Association; Copper & Brass
Fabricators Council; Copper Development Association, Inc.;
Council of Industrial Boiler Owners; Edison Electric
Institute; Employers Group; Farm Equipment Manufacturers
Association; Flexible Packaging Association; Food
Distributors International; Grocery Manufacturers of America;
Gypsum Association; Health Industry Manufacturers
Association; Independent Community Bankers Association;
Indiana Information Technology Association; Indiana
Manufacturers Association, Inc.; Industrial Management
[[Page S6763]]
Council; Information Technology Association of America;
Information Technology Industry Council; International Mass
Retail Council; International Sleep Products Association;
Interstate Natural Gas Association of America; Investment
Company Institute; Iowa Association of Business & Industry;
Manufacturers Association of Mid-Eastern PA; Manufacturer's
Association of Northwest Pennsylvania; Manufacturing Alliance
of Connecticut, Inc.; Metal Treating Institute; Mississippi
Manufacturers Association; Motor & Equipment Manufacturers
Association; National Association of Computer Consultant
Business; National Association of Convenience Stores;
National Association of Hosiery Manufacturers; National
Association of Independent Insurers; National Association of
Manufacturers; National Association of Mutual Insurance
Companies; National Association of Wholesaler-Distributors;
National Electrical Manufacturers Association; National
Federation of Independent Business; National Food Processors
Association; National Housewares Manufacturers Association;
National Marine Manufacturers Association; National Retail
Federation; National Venture Capital Association; North
Carolina Electronic and Information Technology Association;
Technology New Jersey; NPES, The Association of Suppliers of
Printing, Publishing, and Converting Technologies; Optical
Industry Association; Printing Industry of Illinois-Indiana
Association; Power Transmission Distribution Association;
Process Equipment Manufacturers Association; Recreation
Vehicle Industry Association; Reinsurance Association of
America; Securities Industry Association; Semiconductor
Equipment and Materials International; Semiconductor Industry
Association; Small Motors and Motion Association; Software
Association of Oregon; Software & Information Industry
Association; South Carolina Chamber of Commerce; Steel
Manufacturers Association; Telecommunications Industry
Association; The Chlorine Institute, Inc.; The Financial
Services Roundtable; The ServiceMaster Company; Toy
Manufacturers of America, Inc.; United States Chamber of
Commerce; Upstate New York Roundtable on Manufacturing; Utah
Information Technology Association; Valve Manufacturers
Association; Washington Software Association; West Virginia
Manufacturers Association; Wisconsin Manufacturers &
Commerce.
Mr. DODD. Mr. President, again, I listened to the debate on the Kerry
amendment. Again, as I stated earlier, I went down the various points
of the proposal. The amendment basically is designed to open up the
McCain legislation to the kinds of unbridled litigation that can occur
in this area.
As I said earlier, we have not argued that we have crafted a perfect
bill. It is our fervent hope that this legislation will become
unnecessary, because the problems that many anticipate we hope will not
occur. But if they do occur, if, as some claim, we are going to face
serious problems in this country, then we think it is the wiser course
of action for Congress to enact legislation that would encourage the
resolution of the Y2K problem.
That is what we have attempted to do with this bill. We have had to
compromise it, because it asks for compromise. Senator Wyden, our
distinguished colleague from Oregon, is responsible for at least 11 or
12 changes, that I know of, in this bill from its original crafting. I
worked on three or four of the ones dealing with the punitive damages
and directors' and officers' liability in the States in this bill. We
have compromised slightly. But every day you have to move the goal post
to serve yet another constituency.
We would like to have a bill that everyone would support. It would be
wonderful to have a piece of legislation that 100 Senators would get
behind. But candidly, you have a handful--really just a handful--of law
firms that are opposed to this, it is a total misstatement to suggest
that the trial bar in general is opposed to this bill. It is a couple
of law firms in this country that are opposed to this bill. That is the
fact of the matter. Because of a couple of law firms, we have an
amendment that I am confident these law firms are very attracted to,
like, and support for the obvious reasons. It basically makes this bill
meaningless or worse; it actually expands an area of the law that
didn't exist prior to the consideration of this bill. It is one thing
if you want to change the bill. It is another matter to take existing
law and create yet new opportunities. That is what the Kerry amendment
does. When you allow State law to obviate contract law, you are not
only disagreeing with our bill but you are disagreeing with existing
law.
For Members to come in and support this amendment, understand that if
it carries and ends up being adopted, it will encourage the adoption of
it. Then we are not only not dealing with the Y2K problem, we are
expanding areas of litigation that do not presently exist. Whatever
disagreements you have with the underlying bill, if you want to vote
against that bill, fine; but don't expand areas of litigation.
With all due respect to my colleague from Massachusetts, clearly his
amendment does that. I think it would be a tragedy, as we are trying to
shut down and reduce the proliferation of litigation, that we find we
are expanding those opportunities.
Again, a lot of compromise has been involved in this and a lot of
time and a lot of effort to bring it to this point.
Again, I have a great deal of respect for those who disagree with
this work product. They have a different point of view--one that I
disagree with, but I respect. To come in and to somehow suggest that we
are improving this legislation and that we are in fact minimizing the
possibility of further litigation with the adoption of the Kerry
amendment is just not the case. You are expanding the opportunities for
litigation.
For those reasons, the high-tech communities of this country feel
strongly about this amendment, and for good reason.
When the amendment comes up for a final vote, I urge my colleagues to
reject it and to let us move along and try to pass this legislation,
and send a message that we care about this issue and want to minimize
the problems the Y2K issue can present.
I do not know if there is any more time. I know there is some talk
about other Members who wish to come over. I urge them to do this. This
has been going on for 6 hours now. We have 21 other amendments to
consider. My hope is that we can get this completed fairly quickly and
at least have one or two votes today before we adjourn.
I yield the floor.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, we are now under controlled time, are we
not?
The PRESIDING OFFICER. The Senator is correct.
Mr. KERRY. How does that stand? How much time does each side have at
this point?
The PRESIDING OFFICER. The Senator from Massachusetts has 26 minutes
50 seconds, and the opposition has 23 minutes 53 seconds.
Mr. KERRY. I yield myself 5 minutes.
I listened to the Senator from Connecticut. I must say that I am a
little disappointed, from what I heard, for a simple reason. I haven't
come to the floor of the Senate and talked about the Chamber of
Commerce. I haven't come to the floor of the Senate and talked about
specific companies and interests that are represented or the dynamics
this raised. I think to suggest that somehow what I have put on the
floor represents the interests of just a few law firms really is an
insult to the legislative effort that has taken place here. There is
nothing in here that lawyers like. There is a restraint on plaintiffs
almost every step of the way. This has been negotiated with many
different people. I have sat with high-tech people at great length.
I have tried to do the bidding of the high-tech community to the
greatest degree possible. I have listened to them. I have talked to
Andy Grove three or four times. In his letter to the committee
chairman, he stated that of his four interests, each had been met in
this legislation.
We do exactly what the McCain bill does on cure. We do exactly what
the McCain bill does on the mitigation. We do exactly what they do with
respect to contract preservation. The one distinction in the four
ingredients is a requirement that a company be a good citizen by
looking over its inventory and making a determination as to what it did
or didn't put out into the marketplace that might have the potential
for creating a problem.
My colleagues come to the floor say again and again: We want
remediation; we want to make it get better; we don't want lawsuits. I
don't, either. We want the same remediation.
But if you ask a company to investigate its inventory, in my
judgment, you are doing a better job of encouraging them to remediate
than if you give them a blanket ``out'' from under one of the great
leverages of our judicial system, which is the joint and several
liability. They get it no matter
[[Page S6764]]
what they do. How that is an invitation to fixing the system and making
it better is beyond me.
I think we need to be very clear here. Moreover, we have been told we
are changing contract law. We are not changing contract law. We are
suggesting contract law ought to be respected, and we are very clear
about that. In fact, we uphold the contract law as it is, State for
State.
No one has answered this question: Why should a company be able to
escape responsibility for an intentional, willful, wanton, reckless or
outrageous, willfully committed fraud against an individual when it
creates economic loss? If you have economic loss under the provision of
S. 96, you are not permitted to sue with respect to the intentional
willfulness that took place. Why you want to protect a company that so
behaves is beyond me. Another company may have a huge loss of
intellectual property; they may drop their entire database; they may
not be able to provide their contracts to other companies for months;
they have economic loss; there was an intentional defrauding. And we
are not going to hold them accountable for that.
We should be clear as to what we are talking about. This is a very
moderate, very legitimate effort, just as legitimate without any
insinuations of who may be directing the interests of the other side
and just as legitimate to legislate a sound approach to Y2K liability.
I reserve the balance of my time.
The PRESIDING OFFICER. The Senator from Utah.
Mr. BENNETT. Mr. President, I am reluctant to get into this fight
because, as I said before, I am unburdened with legal education.
Occasionally when I hear these legal debates, it makes me grateful for
the fact that I did not go to law school.
However, I feel the need to stand and comment on some of the things
that have been heard and some of the statements that have been made
with respect to this particular amendment.
It is my understanding that anybody who commits an intentional act of
fraud has no relief as a result of this bill. If anybody can contradict
that, I will be happy to hear it, because I do not want, in any way, to
be part of supporting a bill that protects people from intentional
fraud. That is not my purpose.
I must stand, as the chairman of the Senate Special Committee On The
Year 2000 Technology Problem, and tell my colleagues that this is a
unique situation. This has the potential of creating a unique chain of
events that requires a unique solution. That is the purpose of the
McCain-Dodd-Wyden bill, and that is why the bill has a 3-year sunset in
it. We are not changing the world forever. We are crafting, as
carefully as we can, a piece of legislation to deal with the unique
circumstance of the Year 2000.
Mr. KERRY. Will the Senator yield?
Mr. BENNETT. I am happy to yield.
Mr. KERRY. I appreciate the Senator's comment enormously. I want to
call the Senator's attention to the language of the bill. Section 121,
Damages and Tort Claims:
A party to a Y2K action making a tort claim may not recover
damages for economic loss involving a defective device or
system or service unless----
And you have two conditions under which they could.
No. 1, where the loss is provided in the contract; and, No. 2, if the
loss results directly from damage to the property caused by the Y2K
failure.
I have a third, and the Senator's folks are opposed to it. Here is
the third. The defendant committed an intentional tort. Except where
the tort involves misrepresentation or fraud regarding the attributes
or capabilities of the product. Does the Senator want to pass a bill
without that, without the fraud and misrepresentation?
It is in the bill.
Mr. BENNETT. I see my colleague from Oregon wishes to respond to this
and perhaps has a better legal handle on it than I do.
My own layman's reaction would be not to sign a contract that didn't
have a provision for fraud in it, as a businessman.
Mr. WYDEN. I appreciate my colleague yielding.
This goes right to the heart of the debate. We essentially say that
State contract law will govern in these jurisdictions. The Senator from
Massachusetts believes in a variety of instances that there should be
other remedies. He is creating other remedies during this 36-month
period where we are trying to present frivolous lawsuits.
The key principle here and what is now being debated is that under
what Senator McCain, Senator Bennett and Senator Dodd, the leader on
our side on the Y2K issue, have said, we are going to protect State
contract law with respect to economic losses. But we don't feel it is
appropriate to try to create new remedies at this time when we are
trying to prevent these frivolous lawsuits.
I am very appreciative to the Senator from Utah for yielding to me. I
hope our colleagues will see that on this point of economic loss, State
contract law is fully protected.
Mr. BENNETT. I yield to the Senator from Connecticut.
Mr. DODD. Let me give a factual example to make the case. Assume you
have two identical computer systems, system A and system B, sold by the
same manufacturer. They prove to be defective and cause economic
damages of $100 million and lost profits to each purchaser, A and B.
System A crashed because of defective wiring, while system B crashed
because of the Y2K bug. If Congress enacts the proposal suggested by my
colleague from Massachusetts, that would allow no recovery of economic
damages in tort cases. Purchaser B in the example would be able to sue
for economic losses under the Y2K legislation while purchaser A would
not.
There is no justification for such a result. In effect, the net
result of the Y2K bill would be to expand liability in Y2K cases.
Indeed, it would create an incentive for plaintiff's lawyers to look
for any Y2K problem and then make that the predicate for legislation,
exactly the opposite of the policy aim of the legislation.
In the faulty wire case, you only get economic damages and you have
to apply State law. Under the Y2K legislation as proposed by my
colleague from Massachusetts, you are expanding this. We are not trying
to expand law here; we are trying to at least follow a similar pattern.
So there is a fundamental difference: the defective wire in one case,
the defective Y2K problem in the other. You end up with completely
different results and encourage, of course, groping around, looking for
Y2K issues, rather than defective wire which may be the cause of the
problem.
I don't think that is the intent of our colleagues who are generally
supportive of the very proposal we have before the Senate. That does
expand existing law.
Mr. BENNETT. I thank the Senator from Connecticut. I realize the
Senator from Massachusetts wants to engage in this. I ask unanimous
consent that such time as is taken up by the Senator from Massachusetts
be charged to the time of the Senator from Massachusetts rather than
charged against my time.
With that understanding, I am happy to yield to the Senator further.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. KERRY. That is entirely fair. What I would like to do is just
respond and then I will sit down and reserve the remainder of the time.
Let me say to both of my colleagues, and I am glad we are getting to
the nub of this, I say this gently and nicely: Both of the
presentations that were made are incorrect with respect to what I said.
The Senator from Oregon made a bold defense of contract law, and the
economic loss argument that he made refers to the preservation of
existing contract law. But economic loss is a tort claim. It is a tort
claim. His argument is simply irrelevant when he says he is protecting
the capacity of the contract law, so to speak, to be preserved within
the framework of the economic loss argument. Here is why: My colleague
from Connecticut just said we are trying to open this up to some broad,
new thing, and the example he cited would not be, in fact, included. It
absolutely would be included because our language includes both of the
examples that he gave.
If it is provided in the contract, the person would be made whole. Or
if it is the result of a Y2K failure, the person would be made whole.
Here is the only difference. We go one step further. We do not allow
them a whole lot of intentional torts except--and I read from
[[Page S6765]]
the language--``where the tort involves misrepresentation or fraud.''
That is the only ``new thing'' here. So, if the Senator from
Connecticut is really concerned, what he is concerned about is that a
lawyer might be able to lay out, according to the tough standards in
both of our bills, sufficiently precise pleadings with a period to
cure.
You may never have a lawsuit because everybody is going to have a 90-
day period to cure, and we hope they are going to do exactly that. But
if they do not do that and they do meet the sufficiency of the
pleadings, and there also is a sufficiency of a showing of fraud or
misrepresentation, they ought to get their economic losses. What we are
saying is that under S. 96, under the current way it is written, you
are denying economic losses if there is fraud or misrepresentation.
That is the only ``new thing.''
The Senator from Connecticut says we are going to open up some great
Pandora's box, a whole lot of lawyers bringing cases. We have tough
pleading requirements here, really tough. Even after you send in your
first notice of a lawsuit, the company is going to get 90 days to fix
it. Any company that does not fix it in 90 days probably ought to be
held accountable for the fraud and misrepresentation. But your bill
says no to fraud and misrepresentation. Ours says yes. I ask anybody
which they think is more fair.
I reserve the remainder of our time.
The PRESIDING OFFICER. The Senator from Utah.
Mr. BENNETT. Mr. President, again I witness this clash between great
legal minds. Yet, I am informed by a number of other legal minds the
Kerry amendment would, in fact, destroy the effect of the bill. As a
businessman, I always ended up asking my legal team whether it was
appropriate for me to sign a particular lease or contract. I had to
learn to depend on good lawyers. I think we have hired good lawyers in
this situation and I am accepting their advice. I am moved by the
eloquence of my friend from Massachusetts, but I shall not vote with
him.
I want to once again focus on what it is we are doing here. We are
dealing with a unique situation the likes of which we have never seen
in international commerce and probably never will see again. That is
why specific legislation is necessary.
Let me go back to a statement made by my friend from Massachusetts in
the earlier debate when he said: We want people to be driven to examine
their inventory to make sure it is compliant, but if the liability is
limited they will not do that. This is not a question of examining your
inventory to make sure it is compliant. We are already getting examples
of people who have done everything prudent and possible to make sure
that things were compliant with Y2K, only to discover after they had
done everything prudent that it still didn't work. There are bugs
hidden in this kind of problem that cannot in reasonable fashion be
discovered in advance. There is a presumption on the part of the
Senator from Massachusetts that those bugs were there because of some
misrepresentation or fraud. My concern is that there will be that
presumption on the part of a lawyer bringing suit if those bugs occur
in equipment that at one time or another has passed through the hands
of a very wealthy corporation.
This is where proportionality of joint and several liability comes
in. If a corporation with deep pockets has at one time or another had
its hands, figuratively, on a product where such a Y2K glitch occurs,
there will be an obvious invitation to sue that corporation and then
settle out of court for a large settlement because the corporation will
decide, on business terms, it is cheaper to settle than proceed with
the suit.
I have had the experience as CEO of a company of settling a lawsuit
where I felt the merits were firmly on our side but where the economics
said you do your shareholders a better service by taking this
settlement than you do by going to court. I have had personal
experience with that. I know how those kinds of decisions are made. In
a situation where there will be unforeseen consequences and products
that have passed through many hands in order to finally get to where
they go, the temptation to sue the deep pockets will be overwhelming
unless we pass this legislation. Every lawyer that I have spoken to who
has examined the legislation from that point of view has said you
cannot adopt the Kerry amendment. It will gut the legislation. It will
render the whole thing moot, as far as we are concerned.
So I stand here not as a lawyer but as a businessman who has now, for
3 years, immersed himself in the Y2K issue and, frankly, who feels he
understands that issue fairly well. I call on my colleagues to defeat
the Kerry amendment, to pass this legislation, and to give to American
firms--not just high-tech --give to American firms that will be
involved in products that will suffer from Y2K problems the ability to
solve those problems without the specter of huge lawsuits and huge
settlements hanging over them.
Let me go back to one thing I said and repeat it. As I have been
immersed in this issue for the period of time I have, I have come to
realize that it is not strictly a high-tech issue. Yes, the high-tech
community has been the most visible in pushing for this legislation.
But they are by no means the only part of the American economy that
will be affected by this issue. There will be municipalities that can
be sued. There will be cities around this country that will suddenly
discover that essential services do not work, that will have done
everything they thought reasonable to get there only to have some
glitch that they were unaware of come out of the blue.
Then the lawsuits will start. The question will be who was in the
supply chain to produce whatever the device is that failed. Let's see
who has the deepest pockets. It may not be a high-tech company at all.
States are scrambling now to try to pass their own limited liability. I
think that is a mistake. I think the Federal legislation makes a lot
more sense. But let us understand, once again, we have a unique
situation here. We already have anecdotal evidence that shows us how
capricious it can be, in spite of the greatest effort to remediate and
be in control. We do not want to turn this into a playground for
plaintiffs' lawyers who want to take advantage of the class action
circumstance, sue the deepest pockets, take a settlement, and walk away
in a way that is of no advantage to anybody.
If we are making a mistake in this bill, if as we draft it there is
mischief, it is not permanent mischief because the bill is gone at the
end of 3 years. Everything is over at the end of 3 years. No one--no
one--will make any attempt to extend it. Certainly I will not. By
virtue of what the voters of Utah did, I will be here 3 years from now,
if I am still alive, and I will certainly oppose any extension of this
bill. I would think everybody would oppose any extension if somebody
were to bring it up.
We are facing a unique situation. We have a piece of intelligently
crafted legislation to try to deal with that situation, and we should
not let ourselves get convinced that we are somehow changing the basis
of American jurisprudence for all time as we try to take a prudent step
in this particular circumstance.
I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. I yield myself such time as I use.
Let me begin by paying tribute to both the Senator from Connecticut
and the Senator from Utah. I know they have spent a huge amount of
time, and they have done for the entire Senate and the country a great
service in calling attention to and helping people understand the
nature of this problem. I genuinely give both of them great credit for
their leadership and their vision, understanding well over, what, 3
years ago that it was a problem and we needed to address it.
Our difference is not in good faith, in purpose, or intent. It is how
we will or will not do something. I know my colleague from Utah is a
very thoughtful and diligent student of these kinds of issues, and I
share with him his own language with respect to the damages of
limitation by contract, for instance. This is section 110, page 11, of
the bill. It says:
In any Y2K action for breach or repudiation of contract, no
party may claim, nor be awarded, any category of damages
unless such damages are allowed--
(1) by the express terms of the contract; . . . .
Mr. BENNETT. Will the Senator yield? Mr. President, I suggest the
Senator is reading from an old version.
[[Page S6766]]
There is no section 110 in the current----
Mr. KERRY. I apologize, it is now section 11.
Mr. BENNETT. I thank the Senator.
Mr. KERRY. I am reading from the accurate language. The point I am
making is that you only allow damages according to the express terms of
the contract. That contract could be illegal. That contract could be
unenforceable or enforceable under other circumstances under State law.
The language we have added simply says ``unless enforcement of the term
in question would manifestly and directly contravene applicable State
law in effect on January 1, 1999.'' Here is a major difference. You
would, in fact, allow the contract to supersede applicable State law
even if the contract were illegal. That is the way it reads.
There are serious implications in the language that is in the bill
that would have a profound impact, and that is the kind of difference
we have tried to address in pulling together our amendment.
I reserve the remainder of our time.
Mr. DODD. May I address----
Mr. KERRY. On your time.
Mr. BENNETT. I yield to the Senator.
The PRESIDING OFFICER. The Senator from Connecticut is recognized.
Mr. DODD. Mr. President, we are getting arcane. If a contract is
illegal, it is not a contract. Just to say we have a contract, if there
is no consent, if all the principles necessary for it to be a valid
contract are missing, if a contract is inherently illegal, two people
who engage in a contract for illegal purposes is not a contract to be
protected under State law.
Mr. KERRY. With all due respect to my colleague, under the language
in this bill, you will have given it life because you have, in fact,
made it a contract that is binding.
Mr. DODD. We do not protect illegal contracts in this legislation. If
there is any question, let the legislative history confirm that. I do
not think we need confirmation. Upholding an illegal contract by
legislation would require herculean efforts that do not exist in this
particular proposal.
I yield the floor to others who may want to speak.
Mr. KERRY. I yield myself 30 seconds. If there is an illegal
provision in a legal contract, you have the same problem I just
defined. I do not want to get arcane, either. But you have, in the
language of this bill, superseded the capacity of that illegality to be
either a defense or a problem. That is all we are saying. These ought
to be curable issues. We are passing a bill where they have not been
cured. I promise you, if you want to create litigation problems, there
they are.
The PRESIDING OFFICER. The Senator from Utah.
Mr. BENNETT. Mr. President, with some trepidation, I am going to read
some legal language. As a layman, I have a hard time with this, but I
will do my best and I think it is fairly clear. Under section 4 of the
act:
(d) Contract Preservation.--
(1) In general.--Subject to paragraph (2), in any Y2K
action any written contractual term, including a limitation
or an exclusion of liability, or a disclaimer of warranty,
shall be strictly enforced unless the enforcement of that
term would manifestly and directly contravene applicable
State law embodied in any statute in effect on January 1,
1999, specifically addressing that term.
State law is preserved. State law is not overridden in this catchall
provision, if you will, at this stage. At this point, I will quit
trying to practice law.
The PRESIDING OFFICER. Who yields time?
Mr. BENNETT. Mr. President, I will make one additional comment.
Mention was made of Andy Grove. The Senator from Connecticut and the
Senator from Oregon and I, along with several other Senators, had
breakfast with Andy Grove this morning.
Just so the record is clear, the subject of the Kerry amendment came
up in that discussion, and Mr. Grove, if I am quoting him correctly,
said that his lawyers felt that the Kerry amendment would destroy the
bill and leave it with no value. Indeed, my memory says he said that if
the Kerry amendment was adopted, they would be better off without any
bill. I ask the Senator from Connecticut if he has the same memory or
if I am embroidering things.
Mr. DODD. I say to my colleague, we had a very delightful meeting for
an hour and a half with Andy Grove. Those were, as I recall them, his
sentiments expressed to us. He is someone who has been quoted over and
over in the last number of weeks, and we finally got to meet the man
quoted endlessly and found out where he stood on this legislation. Four
or five of us had the privilege this morning of spending an hour and a
half with him and discussing a wide range of issues, including
education policy. He was very clear, I thought, in his expression of
concerns about this effort and the damage that can be caused by the
adoption of this amendment.
Mr. BENNETT. Mr. President, I suggest the absence of a quorum and ask
that the time be charged equally against both sides.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered. The clerk will call the roll.
The legislative assistant proceeded to call the roll.
Mr. KERRY. I ask unanimous consent that the order for the quorum call
be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. KERRY. Mr. President, how much time is remaining on both sides?
The PRESIDING OFFICER. The Senator from Massachusetts has 14\1/2\
minutes, and the Senator from Utah has 5\1/2\ minutes.
Mr. KERRY. I have no objection.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative assistant proceeded to call the roll.
Mr. DASCHLE. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection it is so ordered.
Mr. DASCHLE. Mr. President, I thank my colleagues for the opportunity
to express the views of this Senator on a very important amendment.
I think the biggest question facing the Senate today is not whether
to support the Y2K liability reform. Most supporters, on both sides of
the aisle, agree that we need to protect the high-technology companies
from frivolous lawsuits.
For more than a decade, this industry has been the driving force of
our economy. Its well-being is extremely important to this country and
to all of us.
In South Dakota, Gateway computers is the largest private employer in
the State today. I want a bill that provides Gateway--and every other
member of this industry--with reasonable protections from frivolous
Y2K-related lawsuits.
Businesses need to be able to focus on fixing the problem--not
defending against lawsuits.
But the high technology industry is not the only group that faces
potential difficulties as a result of this problem.
Consumers and other businesses that use and depend on computers face
potential risks as well.
We need to protect consumers who might be hurt by the Y2K bug. We
need to protect their right to seek justice in the courts.
A major problem with the underlying bill, as we consider just how we
do that, is an issue of great importance to many of us; that is, how we
resolve the issue of capping punitive damages that go beyond what is
needed to prevent frivolous Y2K-related lawsuits.
The amendment offered by the Senator from Massachusetts, Mr. Kerry,
and developed by him, and a number of our colleagues, corrects these
problems.
Before I describe the differences between our approach and the
underlying bill, it is important to point out that--on most of the
basic issues--the two proposals are identical to the pending bill.
Both approaches encourage remediation by giving defendants 90 days to
fix a Y2K problem before a lawsuit can be filed.
Both approaches would discourage frivolous lawsuits by allowing
either party to request alternative dispute resolution at any time
during the 90-day waiting period.
Both approaches require anyone seeking damages to offer reasonable
proof--including the nature and amount of the damages--before a class
action suit could proceed.
Both approaches would permit class-action lawsuits to be brought only
if a majority of the people in the lawsuit suffered real harm by real
defects.
[[Page S6767]]
Our approach addresses 95 percent--if not 100 percent--of what those
in the high-technology community have asked for. It addresses all of
the principles they have said are essential.
But there are a number of important ways in which our approaches
differ.
Our proposal carefully balances the rights and interests of the
industry, and consumers.
It limits its remedies to problems that are truly, legitimately Y2K
related.
Our alternative offers high-tech companies more incentives than the
underlying bill to fix the problem--now, while there is still time.
We are concerned that the underlying bill may--perhaps
inadvertantly--provide such blanket protection against all Y2K
problems, including those that could have and should have been avoided,
that companies will lose the incentive to fix problems now.
For example, our amendment provides a balanced and reasonable
solution to the issue of ``proportionality.''
The underlying bill preempts State laws on this issue. It would grant
defendants proportional liability in almost all Y2K cases--no questions
asked.
Our amendment, simply says that Y2K defendants would have to pass a
simple test to quality for this protection.
It is sometimes referred to as the ``good corporate citizen'' test.
And I know my colleague from Massachusetts has discussed this in some
detail this afternoon. All a company has to do to pass the test is to
show that it has identified potential problems and made a good-faith
effort to alert potential victims.
This is a major concession. But we are willing to make it in this
case because of the extraordinary circumstances.
These are reasonable conditions. Every single high tech company we
know of has already met it.
If there are others that have not done so, they do not deserve
special protection from Congress--plain and simple.
There are a number of other ways in which our amendment improves on
the underlying bill:
It does not prohibit consumers from seeking justice in the courts for
real and legitimate Y2K-related problems.
The underlying bill would require consumers to meet so many
conditions before bringing suit that it would effectively shut the
courthouse door.
Our bill establishes strict requirements for class actions to protect
against frivolous suits.
The underlying bill shifts virtually all Y2K suits to the Federal
courts. This has two effects. In many cases, it makes it harder for
consumers to bring a suit. It also increases the strain on an already
backlogged Federal court system.
This is strongly opposed by the Judicial Conference--not only because
of the additional strain it would place on Federal courts, but also
because it would upset the traditional division of responsibility
between State and Federal courts.
I might say, I am continually amused by those on the other side of
the aisle who have expressed themselves as being advocates of States
rights and the Constitution and the requirement that States be given
the prerogative in matters of jurisdiction on this and so many other
areas; but when my colleagues on the other side of the aisle find it
convenient, it seems this shift to Federal responsibility comes so
easily. This is just yet another example of that shift. There have been
scores of those examples in recent years.
Our alternative would not enforce illegal contract terms.
The underlying bill might. It could enforce any and all contracts--
even those that are currently illegal under State and Federal laws.
Our alternative does not protect defendants from liability for
intentionally wrongful acts. It allows victims of such acts to sue for
economic losses.
The underlying bill protects companies even when they knowingly harm
consumers, or use fraud to pressure someone into signing a contract.
Finally, our bill does not include a cap on punitive damages.
The pending bill would limit the amount of punitive damages that
smaller businesses and municipalities could be assessed--regardless of
whether they acted responsibly.
The people who would benefit from a cap on punitive damages are bad
actors who injure others.
Ironically, many of those who would be hurt if this passes are
themselves small businesses.
In summary, our amendment is identical to the underlying bill in
every important, necessary way.
But, it does differ in ways that are critical to consumers, to
businesses, and to the functioning of our courts.
Perhaps the most important difference between our approach and the
underlying bill is that our approach is the only version the President
will sign. We know that. The administration has said so unequivocally
on numerous occasions. Make no mistake, unless the improvements in this
amendment are adopted, the President will veto this bill for going too
far.
So the choice is ours, and the year 2000 is fast approaching. Do we
want to engage in an exercise that would be fruitless? Do we want to
waste precious days debating a bill we know will be vetoed and then
have to start all over? Do we want to limit frivolous Y2K lawsuits?
This year is now more than halfway over. How much more time are we
willing to let go before we agree to work together on a real solution?
The bottom line is, we have the power to fix the Y2K problem today.
We have before us now an approach that targets the real problem and can
be signed into law.
I urge my colleagues to join us in adopting the Kerry-Robb amendment.
I yield the floor, and I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Hutchinson). The clerk will call the roll.
The legislative assistant proceeded to call the roll.
Mr. BENNETT. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BENNETT. Mr. President, I will make one observation, and then I
have a motion.
We hear again on the floor the threat of a Presidential veto. We hear
that increasingly, as if the President should write legislation and we
should supinely accept whatever the President recommends, that our
function is simply to listen to the President, pass legislation that he
announces in advance is acceptable and, thereby, abdicate our
legislative responsibilities.
I am perfectly willing to risk a Presidential veto. I think that is
the appropriate posture for a Member of the Senate.
I ask consent that following the debate in relation to amendment No.
610, the Senate proceed to an amendment to be offered by Senator
Murkowski or his designee and no other amendments in order prior to 6
p.m., and that at 5:50, there be 10 minutes for explanation followed by
a vote in relation to the Kerry amendment No. 610.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BENNETT. Mr. President, I am prepared to yield back all further
time on the Kerry amendment, if Senator Kerry is prepared to yield
back.
Mr. KERRY. Mr. President, I cannot do that. I think Senator Edwards
wants to use a little time.
Mr. BENNETT. Mr. President, how much time remains?
The PRESIDING OFFICER. The Senator from Utah has 1 minute 13 seconds;
the Senator from Massachusetts has 3 minutes 47 seconds.
Mr. BENNETT. Mr. President, I reserve the remainder of my time.
Mr. KERRY. Mr. President, I ask unanimous consent that I be permitted
to yield back my time, with the understanding that if Senator Murkowski
is not permitted to go forward, Senator Edwards can talk until he is,
and if he has gone forward, that Senator Edwards would then be
recognized to speak within the confines of the unanimous consent
agreement just agreed to.
The PRESIDING OFFICER. Is there objection?
Mr. BENNETT. There is no objection.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. KERRY. Mr. President, I yield back the remainder of my time.
Mr. BENNETT. Mr. President, I move to table the Kerry amendment, with
the vote to occur at 6, and I ask for the yeas and nays.
[[Page S6768]]
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
Mr. BENNETT. For the information of all Senators then, the next vote
will occur at 6 in relation to the Kerry substitute.
Amendment No. 612
(Purpose: To require manufacturers receiving notice of a Y2K failure to
give priority to notices that involve health and safety related
failures)
Mr. BENNETT. Mr. President, earlier today Senator McCain filed an
amendment No. 612 to the bill on behalf of Senator Murkowski. It is my
understanding this amendment is acceptable to both sides. Therefore, I
ask unanimous consent to call up the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The legislative assistant read as follows:
The Senator from Utah [Mr. Bennett], for Mr. Murkowski,
proposes an amendment numbered 612.
The amendment is as follows:
Section 7(c) of the bill is amended by adding at the end
the following:
(5) Priority.--A prospective defendant receiving more than
1 notice under this section shall give priority to notices
with respect to a product or service that involves a health
or safety related Y2K failure.
Mr. MURKOWSKI. Mr. President, as we consider S. 96, the Y2K bill, I
want to point out an area of concern that will affect many northern
states, especially my home state of Alaska. January 1, 2000, will
arrive in the middle of winter. Unlike many states in the lower 48,
where a power failure on the first of the year is a major
inconvenience, a power failure in Alaska can have serious consequences
if climate control systems fail.
Earlier this year my home town of Fairbanks saw the thermometer
plummet below 40 degrees Fahrenheit. While I do not doubt the
industrious nature of my fellow Alaskans who have for so long used
their ingenuity and determination to survive in Alaska's cold climate,
any delay in resolving a health or safety related failure in Alaska
cannot only be costly, but also deadly.
Therefore, I am offering an amendment that would require that
companies notified of a Y2K problem must first respond to requests
where the Y2K failures affect the health or safety of the public.
Mr. McCAIN. I thank my colleague from Alaska for offering his
amendment. I point out that his amendment does not only protect
Alaskans. If a consumer radio fails, it's an inconvenience. If a radio
used by the Phoenix police department fails, not only does it put the
life of the police officer carrying it in jeopardy, but it also
jeopardizes the safety of the public he or she protects. A company
should give priority in responding to the Phoenix police station's need
for Y2K failure assistance.
I am pleased to accept the amendment.
Mr. MURKOWSKI. I thank my friend from Arizona for his attention to
this issue.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. The Senator had two amendments. Is this one related to
the safety and health conditions? Is that the Murkowski amendment? That
is the one. OK. No objection.
The PRESIDING OFFICER. Without objection, the amendment is agreed to.
Mr. BENNETT. The Senator from Connecticut may have an objection.
Mr. DODD. I was going to urge that it be set aside for 5 minutes or
so. There is an item that I think might make that a bit stronger.
Mr. BENNETT. Mr. President, I ask unanimous consent it be set aside
for 5 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BENNETT. Mr. President, under the previous order, I understand
now that Senator Edwards will be recognized.
The PRESIDING OFFICER. The Senator from North Carolina is recognized.
Mr. EDWARDS. I thank the Chair.
Mr. President, I will speak briefly to the McCain bill and to Senator
Kerry's amendment, which I think should be recognized as a real effort
by Senator Kerry to cure some of the problems that exist with the
McCain bill.
From my perspective, I think what we are trying to accomplish here is
to find a reasonable, moderate approach that both protects the rights
and interests of consumers while at the same time ensuring that
computer company manufacturers have the protection that they need and
deserve.
There has been a lot of talk today about frivolous lawsuits. The
McCain bill has very little, if anything, to do with frivolous
lawsuits. The two provisions in that bill that all of the Senators have
spent a great deal of time on and that have caused the most controversy
are joint and several liability and economic loss. Those two provisions
have absolutely nothing to do with frivolous lawsuits.
Speaking for myself, and, I think, speaking for Senator Kerry, both
of us are opposed to any kind of frivolous lawsuit. I would be willing
to support any provision that would provide protection against
frivolous lawsuits. The two provisions that we are talking about, the
elimination of joint and several liability and the elimination, from my
perspective, of the right to recover economic loss, are both things
that occur after a defendant has been found responsible. In other
words, before you ever get to those two provisions, you have to first
determine that there has been some irresponsible behavior on behalf of
a defendant.
The idea that those provisions, which are really the most
controversial provisions in this bill, have anything to do with
frivolous lawsuits just doesn't make any sense. They have absolutely
nothing to do with frivolous lawsuits.
For example, joint and several liability has to do with who you can
recover against and what percentage or proportion of your damages you
can recover, once a jury has determined that the defendant acted
irresponsibly or in violation of a contract.
The economic loss provision has to do with whether the small business
owner or the consumer is allowed to recover for lost profits, lost
overhead, out-of-pocket costs, once it has been determined that, in
fact, the defendant is at fault. So the idea that this has anything to
do with frivolous lawsuits is just misleading. The bill has very
little, if anything, to do with frivolous lawsuits.
If what we are concerned about is getting these cases resolved,
creating incentives for consumers, small business people, people who
have purchased computers, people who have a Y2K problem, to work with
the computer manufacturers, with the people who manufacture the
component parts of computers, I think that makes a great deal of
sense. But this bill doesn't do that. Instead, what this bill doesn't
do, in contrast to Senator Kerry's amendment, is strike a proper
balance between providing reasonable protections for computer
companies, while at the same time making sure we protect consumers.
There has been an awful lot of discussion on the floor today about
lawyers and the interests of lawyers. The reality is that lawyers and
the discussion about frivolous lawsuits have little or nothing to do
with this bill. Lawyers didn't make these computers; lawyers didn't
have anything to do with the manufacture of these computer chips. And
it is not lawyers who are going to be injured as a result of this bill.
The people who are going to be hurt are consumers, the people who have
purchased these computers.
I think it is really important that we as Senators focus on the
people who are most likely to be injured as a result of the passage of
this bill. Now, there are two provisions in the McCain bill that I
think Senator Kerry's amendment addresses that are critically
important. The first, and the one I want to focus most of my attention
on, is a provision about economic losses. This is under section 12 of
the bill entitled ``Damages and Tort Claims.''
What this provision does--and this is a provision of the McCain-Dodd-
Wyden bill--is it eliminates the right to recover economic losses by a
small businessman if a computer or a computer chip manufacturer
irresponsibly creates a Y2K problem. Let me give you an example, and I
think this example is very important. A small businessman in
Murfreesboro, NC, is in his business establishment one day and a
computer salesman comes in the door and says: I have this great
computer system I
[[Page S6769]]
want to sell you that will make your operation more efficient. It will
help you operate your cash registers. It will help with your
accounting. It will help with your collections. The businessman heard
about all these Y2K problems, but he was told by the salesman this
system is totally Y2K compliant.
This small businessman, believing what he was told, buys the computer
system. Well, come the year 2000, he begins to have problems, and the
problems shut down his cash registers, shut down his accounting system,
shut down his ability to collect; and this business, which he and his
family have been involved in all their lives, all of a sudden has no
cash-flow. So they lose profit and they continue to incur overhead, and
over a period of 2 or 3 months they essentially lose everything they
have spent their lives working on--all as a result of a Y2K problem
that, in my example, the computer salesman knew existed when he sold
them the computer.
In other words, when he made the statement to this businessman that
this system was totally Y2K compliant, he knew full well what he was
saying was not true. In fact, the evidence available to him indicated
it was not Y2K compliant. So he made a fraudulent misrepresentation, a
misstatement to this businessman.
Under that example, under the terms of the McCain bill, this is what
that businessman who has been put out of business for the rest of his
life--a family business they spent their entire lives building up--is
entitled to recover: The cost of his computer.
So if he spent $3,000 on the computer as a result of this
misrepresentation by the computer salesman, and he has been put out of
business forever, under this bill--which will, by the way, control all
of these cases regardless of what State law provides, and I want to
talk about that in just a moment--this small businessman is out of
business and what he can get back is the cost of his computer. So what
the bill does, in essence, is it provides absolute immunity, with the
exception of the cost of the computer.
I want to be clear about one other thing. There has been a lot of
discussion about punitive damages on the Senate floor. Punitive damages
are damages that are awarded to punish a defendant for highly egregious
conduct. But punitive damages have nothing whatsoever to do with what I
am talking about now. We are now talking about a small businessperson
being able to recover lost profits, having to shut down his or her
business, having to continue to pay overhead in connection with the
operation of that business. These are normal damages to be recovered
without reference to punitive damages.
What I am saying is a very simple thing. If this bill passes, then a
negligent computer chip manufacturer, a computer salesman, or computer
company that sells computers, that outright lies--I am talking about
engages in a fraudulent misrepresentation in their sales--can only be
held responsible for the cost of the computer. That is exactly what
this bill provides.
I respectfully disagree with what my colleague, Senator Wyden, said
earlier today, that all Federal and State remedies for economic loss
are left in place. I think exactly the opposite is true. In fact, what
this bill does is eliminate, to the extent that a cause of action
exists under State law, the ability to recover for economic losses.
So what we have is a huge, huge problem. We have a provision in the
bill where, prospectively, we are going to say to small and large
businessmen and women around this country that if somebody has made a
misrepresentation to you about the computer system you were buying, No.
1, and No. 2, if they irresponsibly and recklessly sold you a computer
system that was not Y2K compliant, i.e., they didn't act with
reasonable care or they acted negligently, what we are going to let you
recover is the cost of your computer; and you cannot recover any of the
costs associated with the operation of your business, your lost
profits, and all of the costs associated with the day-to-day running of
the business.
I don't believe there is an American out there listening to this who
would believe that is fair. It is not fair. Now, I might add, for
Senators Wyden, McCain and Dodd, that there are provisions in this bill
that I have absolutely no problem with. I think we want to create
incentives for people to work together. We want to create incentives
for manufacturers to solve this problem. I think a 90-day cooling off
period is a good idea. I think the idea of having an alternative
dispute resolution so that folks have a mechanism outside having to
file a lawsuit and go to court is a very good idea. These are all very
positive things.
The problem is that, ultimately, there are going to be people across
this country who, because of somebody acting irresponsibly or somebody
misrepresenting something to them, are going to have problems with
their business that will cause lost profits, lost overhead, which could
ultimately lead to a shutdown of their business. And they will be able
to recover absolutely nothing but the cost of their computer. I might
add that later I intend to offer an amendment that specifically
addresses this problem.
I just don't believe that is what the American people would support.
It is fundamentally unfair because what you have is a small
businessperson who acted in good faith, innocently, in purchasing a
computer system, and as a result of a law passed in this Congress, that
person would be out of business, through no fault of his own. But the
person who is at fault and is totally responsible for what happened to
him is only responsible for paying for the cost of the computer. The
bottom line is, if this guy gets hurt and they get caught, what they
have to pay is the money they originally got from these folks, which is
the cost of the computer. That is fundamentally unfair. It violates
every principle of fairness and equity that exists in the law of this
country and has existed for over 200 years. That alone is clearly
enough that this bill should not be supported.
Senator Kerry's amendment addresses that problem. It also addresses
another problem that exists with this bill, which is the issue of joint
and several liability. I have talked about this once before on the
floor, but I think it is really important for the American people to
understand what joint and several liability is. Essentially, it has
existed in the law of this country for a couple hundred years now. It
says that where you have an innocent--as in my example--small
businessman and you have multiple parties on the other side who may be
responsible for what happened, under joint and several liability the
innocent party never has to pay for the loss, that the loss is shared
in some way among the parties who are responsible for that loss. In
this case, it may be the computer chip manufacturers; it may be the
computer company that actually sold the entire system--a whole
multitude of defendants. It is for them to resolve who pays what among
themselves. In my case, the small businessman is innocent. And, as a
result of the current law on joint and several liability, this innocent
party is relieved of having to share the loss with guilty parties.
That is the reason joint and several liability exists. It is the
reason it has existed in law in this country for a long time.
Senator Kerry's amendment sets up what I consider to be a very
moderate, thoughtful approach--that responds to the computer industry
and the high-tech industry's request for some protection against joint
and several liability.
What Senator Kerry says is basically, if you come in and show you
have acted responsibly as a good citizen, you get proportionate
liability; that is, you can never be held responsible for anything more
than your fair share of the damages.
It seems to me, although that is not the law in a great number of
States in this country, that is a reasonable approach. It is a
compromise. There is no question about that. We all recognize that,
while I personally believe joint and several liability makes a great
deal of sense, because it essentially says as a matter of policy we are
going to always make people who are responsible for the loss share that
loss, and never the innocent small businessman pay for the loss.
Senator Kerry has attempted to fashion a compromise that provides
protection for what I believe to be the great bulk of computer
companies that are out there doing business, who have acted
responsibly, who can show that
[[Page S6770]]
they have been good corporate citizens, and when they do that, then
they get proportionate liability, which is what they want.
But there is still, I have to say, the most fundamental problem in
the McCain-Wyden-Dodd bill, which is the provision about economic
losses. Ultimately what it means is, if you can't recover anything but
the cost of your computer, we are giving prospective absolute immunity
to an industry, not knowing at this point what the losses are going to
be for anything except the cost of the computer. It is something we
have never done in the history of this country. It would be a
remarkable thing to do now.
I have to say in response to some remarks I heard from Senator Dodd
earlier, whom I greatly admire and respect, that he talks at great
length about this being a 36-month or a 3-year loss, that there is not
some dramatic change in the law, that it is just 3 years.
Here is the problem. That 3-year period is going to cover every Y2K
loss that occurs because of the nature of this problem. These losses
are going to come up quickly, and they are going to occur starting in
January of the year 2000, or before. By the end of that 3-year period,
the problems will have shown themselves, or they will be gone, or they
won't exist at all.
When Senator Dodd says it is just a 3-year provision, it is a 3-year
provision that covers every single Y2K loss that is going to occur. It
covers them all. We just have to recognize that when he talks about
this being just a 3-year period of time that is being covered, that is
what it is. It covers every Y2K loss that may occur.
The bottom line is this: I think it makes great sense to have a bill
that provides some reasonable protection for the computer industry. I
think Senator Kerry's amendment works very hard at doing that.
I think there are at least two huge problems with the McCain bill,
the most dramatic of which, to me, is that no businessman, no matter
what has been done to him, whether he has been lied to, whether he has
been the victim of irresponsible conduct, whatever it is, all he or she
can ever recover is the cost of the computer, even if he or she has
been put out of business. I don't believe the American people would
think that is fair.
I yield the remainder of my time.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. WYDEN. Mr. President, on this point, Senator Edwards is such a
magnificent lawyer and I am always reluctant to get into this, but the
bottom line in this matter of economic losses is, whatever the
plaintiff is entitled to get under State contract law with respect to
economic losses is what our bill does. That is just the bottom line.
Whatever the plaintiff is entitled to under State contract law is what
they are going to get for economic loss--no more, no less. The bill
keeps the status quo.
I want to take a minute to go to one example. I want to take a minute
to talk about the options available to the typical small business in
these kinds of cases.
Let's say we have a company that buys $10,000 worth of computers from
another company, and they all crash January 3 of 2000. They lose $1
million worth of business as a result. Obviously, they are unhappy.
They write the computer company and they say that crash was the fault
of the computer company, the Y2K failure, and they want it fixed, and
they want their money, they want their $1 million. I want to take a
second and describe what happens in those situations.
The computer company has to get back to the small business within 30
days. It has to make it clear. You have to move. They can say it was a
Y2K failure. The computer company says, ``It is our fault. We will fix
it the way the business wants--the restaurant. We will give you $1
million.''
That is that. They can say they will fix the Y2K problem, but they
should not be responsible for the whole $1 million. They might say,
``We will fix it, but we have to negotiate this out. We are liable for
some. You are liable for some.''
If the small business isn't satisfied with what the computer company
does, they can basically go out and sue immediately in that kind of
situation.
The third kind of example would be, the computer company just stiffs
the small businessperson, is completely unresponsive to what the small
business needs. In that case, the plaintiff, the small businessperson,
can go out and file a suit immediately against the computer company.
Finally, we have raised the example of what happens if that computer
company is bankrupt and insolvent. At that point, the small
businessperson can name in their lawsuit anybody they think is a
responsible party. They can name Intel; they can name Microsoft; they
can name anybody they want. It is at that point the jury is going to
decide what portion of the blame each potential defendant ought to
bear.
That strikes us as sensible. That is the principle of
proportionality. We are saying that you ought to pick up the burden of
the problem you actually produced, but if you did something
intentional, if you ripped somebody off, if you engaged in egregious
conduct, then joint and several applies.
If we are talking about a low net worth of a defendant, it is the
same sort of situation. So the plaintiff isn't left hanging.
As we get towards the final vote, I ask my colleagues to remember
that is what a typical small business is entitled to--those four kinds
of situations, so that at the end of the day they are going to have
their economic losses dealt with just as they would under State
contract law--no more, no less.
Really, we have what amounts to only a handful of real protections
for this 36-month period. Yes, we do say that if a small business is
operating in good faith, we would put some limits on punitive damages.
I guess there can be a philosophical difference of opinion on that.
Reasonable people can differ. But we think that if a small business
acts in good faith, there ought to be some limit in terms of these
punitive damages. There are only a handful of protections.
Again, the 30-day period is a limitation on somebody's right to sue.
That is why we say if you really think you are stiffed, you can go out
and sue immediately. We think it makes sense for a 30-day period to try
to cure these problems.
On the proportionality issue, we are making a change to deal with a
situation where we think that unless somebody engages in an egregious
offense-type of conduct with a low net worth defendant, it is
appropriate in this situation to say you are liable for what you
actually produced.
In addition to this being a bill that lasts for a short period of
time, it does not apply to personal injury problems at all. If somebody
is in an elevator and the computer system falls out and the elevator
drops 10 floors and somebody is badly injured, all existing tort
remedies apply.
I am very hopeful we will have a significant number of our
colleagues, particularly on the Democratic side of the aisle,
supporting this. There have been 10 major changes made in this
legislation since it left the Senate Commerce Committee. Our senior
Democrat, the distinguished Senator from South Carolina, was absolutely
right--the bill that came out of the Senate Commerce Committee was
completely unacceptable in terms of the rights of consumers and the
rights of plaintiffs. I joined him in opposing it.
Since that time, we took out the items that were unfair. A lot of
them happened to be in the House bill--which is completely unacceptable
to me, as well.
This bill is a balanced bill. It tells defendants they have to go out
and cure problems; it tells plaintiffs they have to go out and mitigate
damages. I hope our colleagues recognize that failure to pass a
responsible bill in this area is just like hurling a monkey wrench into
the technology engine that is keeping our economy humming. I hope we
won't do that.
The Senator from North Carolina asked me, before I went through that
enlightening example of small business, to yield. I am happy to do so.
Mr. EDWARDS. I appreciate the work of the Senator from Oregon. We
have talked about this matter a good deal. I appreciate the time spent
doing that.
We do have a fundamental disagreement. My reading of Section 12 says
that people cannot recover economic
[[Page S6771]]
losses. I think if you can't recover economic losses as a result of the
negligence or intentional acts or misrepresentations by a defendant,
then essentially that means all you can ever get is the cost of the
computer--even if you have been put out of business.
I don't think anybody in America would think that is right, fair, or
just.
My first question is if, in fact, all the remedies for recovery of
economic loss--that is lost profits, et cetera--are left in place under
Federal and State law, why do we need a section, Section 12, on that
matter at all in this bill?
Mr. WYDEN. If the Senator will let me reclaim my time, I will read
the precedence we are citing with respect to our opinion that our bill
covers economic losses in line with State law and common law.
Let me read to the Senator the precedent:
The prevailing common law rule is that ``recovery of
intangible economic losses is normally determined by contract
law.''
That is Prosser, 1984.
Accordingly, the courts have essentially allowed plaintiffs to
address these matters in State contract law by Clark v. Int'l Harvester
Company, Chrysler v. Taylor, Inglis v. American Motor Company.
Our position is that the economic loss rule in our bill is merely an
explicit recognition of this sensible principle, which is in line with
the legal precedence I cited, and also Prosser.
Mr. EDWARDS. If the Senator will yield, the problem I have, if it is
true that all State and Federal remedies for economic loss are left in
place, it seems we would need to say nothing about that in this bill.
We could say absolutely nothing and they would remain in place as they
are under existing law, or we could have one sentence and that sentence
would say ``economic losses are permitted as presently exist under
applicable Federal or State law.''
Instead, I have a 2\1/2\ page section on economic loss, and before it
ever gets to mentioning Federal or State remedies for economic loss, it
sets forth a long description of requirements that have to be met--
requirements that don't exist in any State or Federal law.
The reality is this bill sets up requirements that are far more
draconian than exist across this country. Then the amendment says if
you can meet all of those requirements, and the recovery of these
economic losses are permitted under State and Federal law, then you can
recover economic losses.
The truth of the matter is, if it were true that economic losses as
they presently exist in the law and as they exist across this country--
which means people can recover, in my example, more than the cost of
their computer; they can recover for lost profits, their overhead, and
all the costs associated with that, things that most Americans would
consider completely fair, reasonable, and just--if that were true, we
do not need a provision about this at all. We sure do not need 2\1/2\
pages about it. Or we could do it in one sentence: Existing recoveries
for economic losses are permitted under applicable Federal or State
law.
Instead, we have 2\1/2\ pages. We have a provision that essentially
eliminates the right to recover economic losses, even in the case of
someone who has had a fraudulent representations made to them about the
product they are purchasing.
Can the Senator show me the specific language that simply says all
Federal and State law remains in place, without any other requirements?
Mr. WYDEN. I appreciate having the chance to look at any alternative
language the Senator from North Carolina wants to pursue.
The Senator raised the question of whether or not plaintiffs ought to
be able to circumvent the provisions of State contract law by
repackaging suits as tort claims. That has not been allowed by the
courts.
If the Senator is talking about something else, we are happy to look
at this. What we have in our legal analysis, and I have cited the
specific cases that back up our particular point, is an indication that
we believe we are protecting plaintiffs and plaintiffs' rights to
recover in line with State contract law on economic losses.
If the Senator is not trying to ``tortify'' contracts, I am certainly
willing to work with him on any kind of language.
Mr. EDWARDS. Mr. President, I don't have any problem at all with the
idea of protecting existing contracts. I think Senator Kerry's
amendment does exactly that. I think the problem we are confronted
with--and I have asked this question a couple of times--this 2\1/2\
pages on economic loss does not say that State remedies prevail.
I might add, I believe your home State of Oregon allows the recovery
of economic losses under the circumstances that I am describing where
someone has acted irresponsibly. So we have a bill that will change
laws not only in other places around the country but in your home
State.
Let me give you an example of what I am talking about.
Mr. WYDEN. If I could reclaim my time to respond to the Senator,
first, we made it very clear regarding economic losses. We want to see
people recover in line with their State contract law.
If the Senator can show me something in the 2\1/2\ pages that he is
so alarmed about--he has referred to the 2\1/2\ pages now three or four
times--if the Senator can show me something in those 2\1/2\ pages that
indicates that a plaintiff could not recover through their State
contract law economic losses, I guarantee myself, Senator Dodd, and
Senator McCain are interested in working with the Senator on it.
We cannot find anything. We have precedence and we have a legal
analysis that backs up our point of view. If the Senator finds
something in those 2\1/2\ pages that the Senator thinks indicates that
a plaintiff cannot recover their economic losses according to State
contract law, we will be very open to seeing it.
Mr. EDWARDS. For just a moment, if I could just give an example of
what I am referring to, let's suppose a computer has been sold by a
computer company that sells a system. They have sold it to a small
businessman. There is a Y2K problem and the small business is put out
of business. They have lost millions of dollars over the course of
several months. What we determine, when the investigation is done, is
that what caused the problem is a chip, a computer chip that was sold
by a manufacturer with whom this purchaser never had any interaction.
Or it was some program that was loaded onto the computer. And the
plaintiff never had any relation with the software manufacturer. Of
course they would not; they bought the computer at a computer store
from some computer salesman.
Under the provisions of this bill, the person who was actually
responsible, that is the manufacturer of the computer chip or software
that was not Y2K compliant--you cannot recover against that responsible
person for economic losses under the express provisions of this
paragraph in Section 12. In fact, the Senator and I both know in
reality that is what is most likely to happen. What most people are
going to confront when they have a Y2K problem is some very isolated,
discrete part of their computer system that caused the problem. It is
not going to be the entire system. My point being there is no contract
between the purchaser and that responsible party, that party in my
example who is acting irresponsibly.
What you are doing in this bill is you are absolutely cutting off the
right of this innocent businessman to recover anything more than what
he has lost, what he has lost out of his pocket, what he has lost as a
result of not being able to make sales. This bill is very clear about
that, I say to Senator Wyden. I don't think it can be interpreted in
any other way.
Mr. WYDEN. Our interpretation and our legal analysis, which I am
happy to give, indicates the plaintiff can recover exactly what they
are entitled to today. They are not going to get any more.
I recognize what the agenda is here. I respect that we have a
difference of opinion. But the bottom line is--I am happy to give our
legal analysis--they can recover exactly what they are entitled to
today.
Mr. KERRY. If the Senator will yield for a moment on just a point
further, the language in section 2 says ``such losses result directly
from damage to tangible personal or real other property.''
The economic losses my colleague is skillfully referring to may be
the much
[[Page S6772]]
larger losses that come from, say, the intellectual property failure.
Mr. WYDEN. I think the Senator is talking about the tort section.
Mr. KERRY. No, he is referring--excuse me, yes, I am, at this point.
But that is a similar complication here of what the Senator is
eliminating without being aware that is, in fact, being eliminated.
Mr. WYDEN. Mr. President, if I can reclaim my time, there is a
difference of opinion here on the matter of economic losses. In the
2\1/2\ pages the Senator from North Carolina has cited, we believe
every plaintiff is going to be able to recover exactly what they are
entitled to recover today. If in fact there is some evidence to the
contrary, we will certainly be happy to pursue that.
Mr. HOLLINGS. Will the distinguished Senator yield?
Mr. KERRY. Will the Senator yield?
Mr. WYDEN. Let me yield, if I can, to Senator Hollings.
Mr. HOLLINGS. When the Senator says ``exactly what he is entitled to
under the contract,'' when I go buy a computer from you, under my
contract I am not contracting for any economic loss or loss of
customers, or wasted moneys for advertising because the business has
closed down, or any of the other economic losses. When the Senator says
``exactly under State contract law,'' the contract is only for the item
itself. State contract law is not State tort law. I take it that is the
difference. ``Exactly what he is entitled to,'' not under State tort
law but under State contract law; isn't that the Senator's position?
Mr. WYDEN. If I could refer the distinguished Senator from South
Carolina to the specific section, I have been talking about section 11,
contractual damages. I gather the Senator from North Carolina, who is
getting us into this area, was largely talking about the tort section.
That, of course, is the difference of opinion here. I believe it would
be a mistake to try to ``tortify'' these contractual rights at this
time when we are staring, early in the next century, at all of these
liabilities.
I have three good friends with whom I agree on probably the vast
majority of issues that come up in this body who see it otherwise. I
recognize that. But I want to, again, in the name of trying to work
things out, make it clear if there is anything in the contract
section--in the contract section--that would suggest a plaintiff cannot
get the economic losses they are entitled to under State contract law,
I am very certain Senator McCain and Senator Dodd and I will be happy
to look at that. We do have a difference of opinion on this matter
involving torts.
Mr. HOLLINGS. How could they be entitled to anything, any economic
losses under State contract law when it was not contracted for? You
see, you just contract to buy the item. If I go into Circuit City, or
whatever it is, and get the computer, I don't say: Now, wait a minute,
if something goes wrong with this computer here 60 days from now or
something else like that and my business is closed down for 90 days or
whatever, then I want the loss of customers, the loss of good will, and
all these economic losses. I am only contracting for the item.
So when you say ``exactly what he is entitled to under State contract
law,'' it is saying in the same breath he is not entitled to any
economic loss under tort law. Isn't that the case?
Mr. WYDEN. The jurisdictions differ. But what we are trying to adhere
to, with respect to economic losses and contracts, is the status quo.
If there is some evidence we can be shown indicating otherwise, we will
be happy to take a look at it.
I have taken an awful lot of time. I yield the floor.
Mr. EDWARDS. Can I ask Senator Wyden one last question?
The PRESIDING OFFICER (Mr. Santorum). The Senator from North
Carolina.
Mr. EDWARDS. I want to make sure we are clear about this for purposes
of our discussion. Does my colleague now concede that for any claim
other than under contract, that economic losses are being completely
eliminated by this bill? Does he concede that?
Mr. WYDEN. No. Not at all. In fact, let me again read from our legal
analysis:
The economic loss rule is a widely recognized legal
principle that has been adopted by the United States Supreme
Court in the vast majority of States. It states a party who
has suffered only economic damages must generally sue to
recover those damages under contract law, not under tort law.
Tort law generally applies only where a party has suffered
personal injury or damages to property other than the
property in dispute.
So we are having, I guess, a duel of legal analyses. But we are happy
to share ours. We believe, again, the court precedents and the specific
analysis I am citing make it very clear that recovery that is available
today for economic losses under State contract law is not being altered
in any way by this bill.
The PRESIDING OFFICER. The Senator from North Carolina.
Mr. EDWARDS. Mr. President, if I can respond just very briefly, there
are two fundamental problems I respectfully disagree with Senator Wyden
about. The first of those problems is he talks at great length about
State contract law. I do not have any problem with State contract law
being totally enforced. I believe the law generally ought to be
enforced and that includes State contract law. The problem is in the
real world, most of the time, as Senator Hollings pointed out, to the
extent there is any written contract that contract is drafted by the
manufacturers. It is not drafted by a small businessman who is buying a
computer. So the Senator knows as well as I do it is a farce to say
there is going to be a provision in the contract that provides for
economic losses. It is not going to be anywhere in any contract,
because the contracts have been written by teams of lawyers who drafted
these contracts to protect the seller. They are the people who are in
the position of economic power.
So the reality is there is not going to be anything in the written
contract if there is a written contract. That is one problem.
But there is a second problem that is even larger than that, which is
in many cases it is not going to be the contracted-with party who is
responsible. The contract is between a purchaser and a seller. The
seller is selling a computer system and the negligent or irresponsible
party is not the seller who has included many computer chips in his
computer system.
The PRESIDING OFFICER. The Senator's time has expired. Under the
previous order, the Kerry amendment is now up for 5 minutes of debate
on each side, equally divided.
Mr. EDWARDS. Mr. President, I ask unanimous consent for 1 more
minute.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. EDWARDS. If I can finish this thought, the bottom line is in many
cases--in fact, in the vast majority of cases--the computer company
that is responsible for putting a small businessman out of business,
for all the losses that the small businessman incurs is not going to
have a contract. In fact, the only way the person who is ultimately
responsible can be held accountable is through a cause of action for
breach of warranty or breach of product warranty and negligence, and
this bill eliminates the right of that small businessman to recover any
of his losses other than the cost of the computer.
The result of this discussion is Senator Wyden now recognizes that,
and with all due respect, I do not believe the American people will
find that fair.
The PRESIDING OFFICER. Who yields time? If neither side yields time,
time will be charged to both sides.
Mr. SESSIONS addressed the Chair.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. SESSIONS. Mr. President, this country is facing an unusual and
very dangerous legal situation. I understand and appreciate the details
given by the Senators as they have debated the nature of contracts and
damages and economic loss rule and negligence as compared to contract
law. It is pretty complex.
Historically, we have created rules under which to file. For
contracts, you have burden of proof. If you file under tort, you have
another standard you have to prove. All of those are complex, and we
ought to be openminded to make sure we are proceeding in a way so as to
create a statute that is effective and will achieve what we want.
It is time for us to face up to the fact that we do need some change
in this Y2K computer problem. Our Nation is facing a real challenge. We
could end
[[Page S6773]]
up with massive litigation in every single county in America: lawyers
on both sides filing lawsuits arguing over how much business was lost
in this grocery store, how much this bank lost; arguing over punitive
damages, standards of proof; the computer companies situated in one
State are having to defend themselves against 50 separate State laws;
sometimes individual judges within individual States, if they do not
have guidance, may rule differently than one expects them to rule.
Under the circumstances of this situation, as a person who does
believe States ought to do those things they do best, and the Federal
Government ought not to take over, when we are dealing with the
computer industry--which is not only interstate but international and
is a fundamental source of our productivity increases--that industry
can be sued thousands of times throughout the country, and as a result,
they will be weakened economically, they will be substantially less
able to fix a problem that may occur and will spend more and more time
with lawyers and on litigation than they need.
We need to create a system which focuses on fixing the problem, and
that does mean changing the way we have to do business for this one
problem for a maximum of 3 years. This is what we need to do. We do not
need to allow our Nation to assault from every possible venue that
exists in this country the computer industry, which Alan Greenspan has
indicated is one of the primary reasons for our productivity increases
as a nation, why our Nation is doing better than other nations, and why
we need to keep it that way.
I see the distinguished Senator from Arizona has arrived. There may
be some time remaining. I will be glad to yield the floor to him.
The PRESIDING OFFICER. One minute 25 seconds remains.
Mr. DODD. How much time remains on all sides?
The PRESIDING OFFICER. The Senator from Massachusetts has 5 minutes;
the Senator from Alabama has 1 minute 24 seconds. Who yields time?
Mr. SESSIONS. I yield the floor.
Mr. McCAIN. We reserve the remainder of our time.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, over the course of the day, there has been
a lot of argument about what we seek to do and do not seek to do. I
want to make it very clear. Both sides are seeking a fair and sensible
way to address the Y2K problem. There is no argument that one side
wants frivolous suits, the other does not. There is no argument that
one side somehow wants to keep business from flourishing. We are all on
the same side of the high-tech industry and of the capacity of that
industry to flourish.
The question is, what is the fairest, most balanced way to
effectively approach the question of how we will do that.
Senator Edwards from North Carolina has very effectively demonstrated
one of the real flaws in the bill as presented by the Senator from
Arizona. The economic losses will be denied in a way, particularly in a
situation where there is fraud or misrepresentation, that no American
deems to be fair.
Equally important, when you balance the fundamental components of
this bill on the question of proportional damages and who gets them and
when, there is a difference between us in what we assert is the
appropriate qualification for businesses to merit the proportional
damages.
The McCain bill automatically makes available, with a few small
exceptions, those proportional damages to businesses without any
fundamental mitigation requirement; that is the essence of this bill.
On the other hand, the proposal I submit with Senator Daschle, Senator
Reid, Senator Robb, Senator Akaka, Senator Mikulski, and others, is a
proposal that embraces 90 days for a cure period, just as the McCain
bill does. It embraces a responsibility to mitigate, just as the McCain
bill does. It preserves contract law, just as the McCain bill does. But
it also requires a good citizenship standard, an effort by companies to
determine the potential--not the reality--the potential, not to find to
a certainty, but to declare the potential that they may have a Y2K
problem, and then in good faith to make available to the people with
whom they have dealt the information about that potential.
It is hard to believe the Senate would not be willing to embrace the
notion that companies ought to embrace the full measure of the purpose
of this bill, which is mitigation, by making that good effort in order
to determine what their liability may be.
Our bill encourages remediation. It requires notice and opportunity
to cure. It imposes additional duty on plaintiffs when the defendant
does act responsibly. It requires the plaintiff to undertake certain
mitigation efforts which is fairly unprecedented. It discourages
frivolous lawsuits by encouraging alternative dispute resolution. It
increases the pleading requirements. None of these, incidentally, are
things the lawyers have asked for and none of them are things the
lawyers like.
It asserts an increased materiality requirement so that the complaint
has to identify with specificity the basis of the complaint which they
make. We discourage frivolous class action lawsuits with a minimum
injury requirement for any class action and a materiality requirement.
We protect business with contract preservation, with strict
limitations on damages awarded for economic loss, and also, unlike the
McCain bill, we embrace the notion that individual consumers should not
be cut out from their capacity to redress their problems.
In the end, I believe the real issue is: Do we want to accomplish
what we have set out to do, which means, will the President of the
United States sign the bill? The President has made it clear the McCain
bill will not be signed into law without the kinds of changes Senator
Edwards and I and others have articulated.
So we can go through the Pyrrhic exercise or we can try to fully
legislate. I think it is clear that we are offering an alternative that
is fair, sensible, protects consumers, and at the same time protects
businesses in this country.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. HATCH. Mr. President, I rise today to support what will be
offered as the bipartisan amendment to S. 96, the Y2K Act. I also rise
to oppose Senator John Kerry's alternative to the Y2K Act.
The Y2K Act has gone through significant and myriad changes. In the
spirit of constructive compromise, Senators of both parties have come
together to work out their differences to produce S. 1138, the
bipartisan Dodd-McCain - Hatch - Feinstein - Wyden - Gorton-Lieberman-
Bennett amendment. Why? Because these and other Senators realize the
importance of resolving a potential Y2K litigation crisis. These and
other Senators have placed the vitality of the nation over any
exaggerated loyalty to one political party.
Y2K-related lawsuits pose the greatest danger to industry's efforts
to fix the problem. All of us are aware that the computer industry is
feverishly working to correct--or remediate, in industry language--Y2K
so as to minimize any disruptions that occur early next year.
What we also know is that every dollar that industry has to spend to
defend against especially frivolous lawsuits is a dollar that will not
get spent on fixing the problem and delivering solutions to technology
consumers. Also, how industry spends its precious time and money
between now and the end of the year--either litigating or mitigating--
will largely determine how severe Y2K-related damage, disruption, and
hardship will be.
Many fear that if Congress does not act, the American high tech
industry, a leader in the world and a significant source of our
exports, will be severely damaged. This is particularly true for the
economies of cutting-edge high tech states--such as my home state of
Utah--whose private sector is a leader in the information revolution.
Why retard the industry that has led the recent boom of the American
economy? Why kill the goose that lays the golden egg?
Let me restate what I have said on numerous occasions. The potential
financial magnitude of the Y2K litigation problem is enormous. To
understand this enormity, we should consider the estimate of Capers
Jones, Chairman of Software Productivity Research, a provider of
software measurement, assessment and estimation products and services.
Mr. Jones suggests
[[Page S6774]]
that ``for every dollar not spent on repairing the Year 2000 problem,
the anticipated costs of litigation and potential damages will probably
amount to in excess of ten dollars.'' The Gartner Group estimates that
worldwide remediation costs will range between $300 billion to $600
billion. Assuming Mr. Jones is only partially accurate in his
prediction--the litigation costs to society will prove staggering. Even
if we accept The Giga Information Group's more conservative estimate
that litigation will cost just two dollars to three dollars for every
dollar spent fixing Y2K problems, overall litigation costs may total $1
trillion.
Even then, according to Y2K legal expert Jeff Jinnett, ``this cost
would greatly exceed the combined estimated legal costs associated with
Superfund environmental litigation . . . U.S. tort litigation. . .and
asbestos litigation.'' Perhaps the best illustration of the sheer
dimension of the litigation monster that Y2K may create is Mr Jinnett's
suggestion that a $1 trillion estimate for Y2K-related litigation costs
``would exceed even the estimated total annual direct and indirect
costs of all civil litigation in the United States,'' which he says is
$300 billion per year.
These figures should give all of us pause. At this level of cost,
Y2K-related litigation may well overwhelm the capacity of the already
crowded court system to deal with it.
Looking at a rash of lawsuits--there already have been 66 Y2K
lawsuits filed nationwide and the number is growing--we must ask
ourselves, what kind of signals are we sending to computer companies
currently engaged in or contemplating massive Y2K remediation? What I
fear industry will conclude is that remediation is a losing proposition
and that doing nothing is no worse an option for them than correcting
the problem. This is exactly the wrong message we want to be sending to
the computer industry at this critical time.
I believe Congress should give companies an incentive to fix Y2K
problems right away, knowing that if they don't make a good-faith
effort to do so, they will shortly face costly litigation. The natural
economic incentive of industry is to satisfy their customers and, thus,
prosper in the competitive environment of the free market.
This acts as a strong motivation for industry to fix a Y2K problem
before any dispute becomes a legal one. This will be true, however,
only as long as businesses are given an opportunity to do so and are
not forced, at the outset, to divert precious resources from the urgent
tasks of the repair shop to the often unnecessary distractions of the
court room. A business and legal environment which encourages problem-
solving while preserving the eventual opportunity to litigate may best
insure that consumers and other innocent users of Y2K defective
products are protected.
The bipartisan compromise amendment accomplishes these ends. It is
significant to note that the Chair and Vice-Chair of the Senate's
Special Committee on the Year 2000 Technology Problem, my good friends
and respected colleagues Robert Bennett and Christopher Dodd, endorse
the bipartisan amendment. Both these Senators have developed great
expertise in Y2K and related matters during their leadership of the
special committee. They were instrumental in crafting the compromise
amendment.
The Kerry proposal, on the other hand, is partisan. As I understand
it, it was in part drafted with the White House. It has not been
endorsed by one Republican. While I firmly believe that Senator Kerry
and other Democrat Senators who crafted the amendment sincerely believe
that they are doing good, their amendment clearly eviscerates the
protections established by S. 96. It reduces the incentives created in
the bill for reducing litigation and resolving Y2K problems outside the
court room. Let me explain.
The Kerry Amendment significantly weakens the class action section of
S. 96. Class actions are a significant source of abuse. I have seen
this as Chairman of the Judiciary Committee. Both plantiffs and
defendants' attorneys have all too often been successful in rigging the
system. Far too often, sweetheart deals are entered into whereby the
plaintiff's attorneys negotiate huge fees, the defendants buy
litigation peace through a nation-wide class action settlement that
acts as res judiciata and bars all, even meritorious, future
litigation, and class members are given mere trifles, such as coupons
for products that hardly can be considered just compensation.
Far too often, Federal jurisdiction is defeated by joining just one
nondiverse class plaintiff--even if the overwhelming number of parties
are from differing states. This wrecks the clear purpose of Federal
Rule of Civil Procedure 23--to provide for a Federal forum for class
actions where the litigation problem is national in scope. A federal
forum ameliorates myriad state judicial decisions that are conflicting
in scope and onerous to enforce. Now, I am a great proponent of
federalism and the right of our states to act as what Justice Brandeis
termed national laboratories of change. But it is axiomatic that a
national problem needs an uniform solution. That is the justification
for Congress' Commerce Clause power and its consequent promulgation of
Rule 23. That is the justification for the Y2K Act itself, in which the
Y2K defect is clearly a national problem in need of a Federal answer.
Because of the short 2 or 3 year timespan for litigation, all of
these problems are magnified in the Y2K context. There already have
been filed 31 Y2K class action lawsuits with all the attendant problems
associated with class action abuse. Before all is said and done, I
expect many more to be filed. S. 96 deals with the problems generated
by class actions in two ways: first, a certification requirement to
demonstrate a common material defect is mandated. This assures that
class action joinder is available only if common questions of law and
fact exist. Second, minimal diversity is allowed. Thus, a substantial
number of parties must be from different states and joinder of one or
two nondiverse parties cannot defeat Federal jurisdiction. Moreover, to
assure that Federal courts are not saturated with class actions
independently filed or removed from state court, the amount in
controversy must be over one million dollars.
To its credit, the Kerry Amendment adopts the common material defects
showing requirement. But it is silent as to the need for minimal
diversity to assure that the Federal courts will have jurisdiction over
what is after all a national problem. To be sure, I am aware that the
Judicial Conference opposes this provision fearing a substantial
increase in Federal class actions. But I am also aware of their
tendency to overreact. They made no study of the issue. Their concerns
were mere ipse dixits, statements made as true with no foundation as to
their truth.
To the contrary, the nonpartisan Congressional Budget Office has made
a study of both S. 96, the bill reported out of Commerce, and S. 461,
the Hatch-Feinstein Y2K measure, the bill reported out of the Judiciary
Committee. Both bills have nearly identical provisions.
Concerning the class action provisions of S. 461, CBO first
recognized that because of the incentives found in the bill it expects
``that parties to lawsuits would be encouraged to reach a settlement.
Thus, we anticipate that many lawsuits would not result in trial, which
can be [time-consuming] and expensive.'' CBO went on and noted that
``some class action lawsuits could be shifted from state to federal
court under S. 461 because the bill would ease restrictions for filing
such actions in Federal court.'' What is important, however, is their
ultimate conclusion: ``On balance, CBO estimates that the savings from
eliminating trials for many lawsuits would more than offset any
increased costs that might be incurred from trying additional class
action lawsuits in federal court.'' (My emphasis). In other words, in
the only study done of the class action issue, it is concluded that the
Y2K Act's class action provision would not result in the flooding of
the federal courts with unneeded and expensive litigation.
A provision of S. 96 that the Kerry Amendment actually strikes is the
punitive damages limitation provision. Now both S. 96 and S. 461
contained caps on punitive damage awards. The caps applied to all
prevailing parties and limited punitive damages to the greater of three
times compensatory damages or $250,000, or the lesser of that amount if
a small business was
[[Page S6775]]
the defendant. The reason for these caps are clear. Runaway punitive
damages have hindered economic growth and productivity nationwide.
Businesses are often forced to settle spurious suits when faced with
millions in punitive damages. Thus, prices for goods and services are
unnecessarily raised with consumers suffering the most. Because of the
concentrated time period, this problem will be magnified for Y2K
actions.
The bipartisan Dodd-McCain-Hatch-Feinstein amendment modifies the
punitive damage provision. In the spirit of compromise, the caps were
limited to small business and individuals with a net worth of less than
$500,000. There were two reasons for this change. The first is that
small businesses and most individuals would be ruined by immense
punitive dmamages. The other reason is that punitive damages in this
situation do not serve the intended deterrent effect. In fact,
insolvency and bankruptcy creates a counterincentive to remediate Y2K
glitches. Why would a small business voluntarily notify customers of
potential Y2K defects if the business could face ruin for its good
citizenship?
But Senator Kerry even opposes this watered down provision. The
reason for Senator Kerry's opposition for even this moderate provsion
is that even caps for small business would allegedly reduce the
deterrent effect of those damages. Surely, however, the prospect of
treble damages provides adequate incentives for companies that need
monetary threats to make efforts at compliance. The current, unlimited
punitive regime simply encourages suits by lawyers who hope to hit the
lottery, while driving up the settlement value of insubstantial claims.
Let me turn to the proportionate liability section of S. 96. It is
good to see that Senator Kerry has moved closer to our position. Prior
drafts of his amendment completely weakened this provision. Senator
Kerry's latest attempt in most respects is verbatim the same as the
bipartisan amendment.
The system of modified proportionate liability in S. 96 makes sense
as a matter of both equity and of litigation management. Based on the
already existing proportionate liability provision of the Federal
Private Securities Litigation Reform Act of 1995, it ensures that
defendants will not be forced to pay for injuries that are not their
fault. It discourages specious lawsuits because plaintiffs' lawyers
will not be able to take advantage of the archaic joint and several
liability doctrine whereby a deep-pocket defendant will inevitably have
to pay the entire judgment so long as a jury can be persuaded to find
it is even one percent responsible. And the proportionate lability
section will avoid coercive settlements prevalent in a joint and
several liability scheme.
The Kerry provision essentially adopts the proposal in S. 96, which
recognizes that it is unfair to assume that defendants should be forced
to pay for damages that are not their fault. But the Kerry draft also
eliminates proportionate liability if the defendant fails to inform the
plaintiff of a potential Y2K problem before December 31, 1999. This is
true even if the defendant business demonstrates that it was innocent,
or had no knowledge of the defect. Suppose a retailer, having no reason
to believe the manufactured product sold was defective, could not and
did not notify the purchaser of the Y2K defect. In that case the
retailer would be subject to joint and several liability under Kerry.
The result is that deep-pocketed defendants who are subject to strike
suits will have to assume that they face limitless liability, and,
therefore, will have no choice but to pay a coercive settlement, even
if the defendant was innocent of any knowledge of the defect.
The Kerry Amendment duty to mitigate requirement has been so limited
that it will not encourage remediation. The amendment provides that
plaintiffs cannot recover damages for injuries that they could have
reasonably avoided in light of information provided to the plaintiff by
the defendant. It does not impose such a limit if the plaintiff
obtained the relevant information from third parties or other sources.
The provision in the Kerry Amendment is much more narrow than the
general common law of the duty to mitigate. If the plaintiff in fact
obtained information from any source that would have allowed it to
avoid injury, it makes no sense to allow the plaintiff to ignore that
information, to suffer the injury, and then to force someone else to
pay its damages.
There is another significant problem with the Kerry Amendment. The
amendment eliminates all intentional torts--except where the tort
involves fraud or misrepresentation about the product--from the scope
of S. 96's codification of the Economic Loss Rule, regardless of the
relationship between the parties. This exemption would significantly
narrow existing law in many states and undermine the purpose of the
Rule in cases involving two contracting parties.
Breach of contract, intentional or otherwise, does not generally give
rise to a tort claim; it is simply breach of contract. The Economic
Loss Rule thus prevents tort remedies--such as lost profits and other
economic losses--where the parties were in privity and could have
negotiated consequential damages and other economic losses. The rapidly
emerging trend, therefore, among the States is to apply the Economic
Loss Rule to bar fraud claims where those claims merely restate claims
for breach of contract. The Rule does not, however, bar fraud claims
arising independent of a contract. Additionally, the Kerry Amendment
would significantly override State law and allow recovery of economic
loss in cases of intentional torts even where such recovery would be
prohibited by State law. This seems to create a new cause of action for
recovery of economic loss in cases of intentional torts and is
unacceptable. The Kerry Amendment also would apply the Economic Loss
Rule to only actual defects and not anticipated failures. Thus many
lawsuits based on anticipated failures would not fall under the
Economic Loss Rule.
Finally, the Kerry Amendment carve-out for noncommercial suits will
permit a huge range of abusive actions. Carving out noncommercial
suits--including class actions--will permit a huge range of abusive
actions. Abusive class actions on behalf of consumers are one of the
greatest dangers in the Y2K area because such suits are easily created
and controlled by plaintiffs' lawyers. While the Kerry Amendment does
apply the minimum injury certification requirement to individual class
actions, it does not apply to the proportionate liability and other
substantive provisions in such cases. Besides, why should not consumers
get the benefit of the bill's terms, which will speed remediation and
negate the need for costly lawsuits, as CBO opined.
It is clear that the Kerry Amendment has serious flaws. I sincerely
believe that Senator Kerry and the sponsors of his amendment are well-
meaning. Their goals are in harmony with ours. But they are mistaken if
they believe that their proposal would solve the Y2K problem. That is
why I ask all Senators to support S. 96, as modified by S. 1138, the
Dodd-McCain-Hatch-Feinstein amendment.
Mr. LOTT. Mr. President, as the Senate considers S. 96, the Y2K Act,
I rise to first praise the bipartisan work of Senator McCain and
Senator Wyden. They have worked tirelessly to construct an effective,
fair bill that will address the important issue of liability as it
relates to the Year 2000--or Y2K. There are enough challenges for
America's industry and governments to ensure that they are Y2K
compliant. We all know how vexing computer problems can be.
This bill is constructive, positive legislation. It allows companies
in the information technology industry to focus their limited resources
on solving Y2K related problems in computer software by preventing
frivolous litigation. Litigation which would divert those limited
resources away from solving Y2K programming deficiencies.
With only 205 days left until the globe turns the page on the
calendar to a new century and a new millennium, the Y2K problem is a
crucial matter and must be fixed.
Lawsuits are already being filed regarding the Y2K problem, and
Congress must act now to ensure that frivolous suits are prevented. Our
legal system allows those who have indeed suffered because of the fault
of another party to have their grievances adjudicated in court. This
bill protects that process. This bill allows plaintiffs to bring suit
[[Page S6776]]
for Y2K related problems if these problems are not addressed. This
bill, however, prevents and places limits on opportunistic and
unwarranted suits.
Senator McCain and Senator Wyden have worked closely together to
address this relevant matter, and I congratulate them for their
efforts. Their approach has gained support from a substantial number of
our colleagues--from both sides of the aisle.
I would also like to recognize the efforts of Senator Hatch and the
Judiciary Committee. They too have brought additional attention and
clarity to the issue of Y2K liability problems. Senator Bennett and the
Special Committee on the Year 2000 Technology Problem have also been
invaluable in educating the Senate. Although his task force does not
have legislative authority, he has explored all facets of the public
policy dilemma. The Special Committee has continued to investigate this
matter and provide education on preparations for the new century.
Yes, there were three separate efforts from three different vantage
points to ensure that the Senate gets to a solution rapidly. The
participating Senators have brought expertise and legitimate concerns
from their various roles and responsibilities within the Senate. All of
our colleagues will benefit from their collective efforts.
I am delighted that, without further delay, the full Senate can now
begin consideration of S. 96--the result of the diligent efforts of
many. I am proud to be a cosponsor and urge all Senators to support a
solution that ensures America's continued prosperity.
Mr. McCAIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. I remind my colleagues of a letter that has already been
made a part of the Record from the Year 2000 Coalition, which has more
organizations and groups in it probably than I have ever seen--the
entire high-tech community--addressed to Senator Kerry:
``We urge you to support S. 96 and to not introduce an amendment to
it.''
``[T]he Coalition does not support the amendment . . . that is being
circulated in your name.''
Have no doubt about where the high-tech community is on this
amendment.
I ask unanimous consent for 2 minutes for the Senator from
Connecticut.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. DODD. I thank my colleague.
Let me just again state to my colleagues, this is a 3-year bill. We
are not changing tort law for all time. We are not even changing tort
law. This is narrow in scope. It affects just Y2K issues for a limited
duration to try to resolve the Y2K issues.
Let me say to my friend from Massachusetts, again, I respect what his
intentions may be, but the adoption of the Kerry amendment expands,
rather than contracts, the area of law we are trying to deal with here.
My colleague from Oregon has stated it well. You cannot, because you
do not like the contract, all of a sudden decide you want to get into
torts. I appreciate a plaintiff's lawyer wanting to do that, but we
ought to be trying to fix these problems, not litigate these problems.
That is what the McCain bill is designed to do.
My fervent hope is my colleagues will understand the fundamental
difference and support the underlying legislation and not allow this
bill to be destroyed, in effect, by adopting a measure here that would
create more litigation, more problems, make it far more difficult for
Americans who are going to be afflicted by this problem with the Y2K
issue. With all due respect to its authors, I urge the rejection of the
amendment and the support of the underlying McCain bill.
The PRESIDING OFFICER (Mr. Smith of Oregon). All time has expired.
The question is on agreeing to the motion to table amendment No. 610.
The yeas and nays have been ordered.
The clerk will call the roll.
The legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from Idaho (Mr. Crapo) and
the Senator from Colorado (Mr. Campbell) are necessarily absent.
The result was announced--yeas 57, nays 41, as follows:
[Rollcall Vote No. 159 Leg.]
YEAS--57
Abraham
Allard
Ashcroft
Baucus
Bennett
Bond
Brownback
Bunning
Burns
Chafee
Cochran
Collins
Coverdell
Craig
DeWine
Dodd
Domenici
Enzi
Feinstein
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kyl
Lieberman
Lincoln
Lott
Lugar
Mack
McCain
McConnell
Moynihan
Murkowski
Nickles
Roberts
Santorum
Sessions
Smith (NH)
Smith (OR)
Snowe
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
Wyden
NAYS--41
Akaka
Bayh
Biden
Bingaman
Boxer
Breaux
Bryan
Byrd
Cleland
Conrad
Daschle
Dorgan
Durbin
Edwards
Feingold
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Mikulski
Murray
Reed
Reid
Robb
Rockefeller
Roth
Sarbanes
Schumer
Shelby
Specter
Torricelli
Wellstone
NOT VOTING--2
Campbell
Crapo
The motion was agreed to.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, I ask unanimous consent that Senator Leahy
now be recognized to offer an amendment with debate limited to 30
minutes equally divided, and following that debate the Senate proceed
to vote in relation to the Leahy amendment with no amendments in order
prior to the vote.
Before I finish this unanimous consent request, for the benefit of my
colleagues, I do not intend to use the full 15 minutes on this side. I
think my colleagues can anticipate a time for a pretty rapid vote by
the time Senator Leahy is finished.
Finally, I ask my colleagues who have amendments on the list of 12
amendments to agree to time agreements, so perhaps we could dispense
with this bill tomorrow at an early moment.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
The PRESIDING OFFICER. The Senator from Vermont is recognized.
Mr. LEAHY. Mr. President, I ask my time not begin until the Senate is
in order.
The PRESIDING OFFICER. The Senate will be in order.
The Senator from Vermont is recognized.
Amendment No. 611 To Amendment No. 608
(Purpose: To exclude consumers from the Act's restrictions on seeking
redress for the harm caused by Y2K computer failures)
Mr. LEAHY. Mr. President, I call up amendment No. 611.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Vermont (Mr. Leahy) proposes an amendment
numbered 611 to amendment No. 608.
Mr. LEAHY. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place, insert the following:
SEC. . EXCLUSION FOR CONSUMERS.
(a) Consumer Actions.--This Act does not apply to any Y2K
action brought by a consumer.
(b) Definitions.--In this section:
(1) Consumer.--The term ``consumer'' means an individual
who acquires a consumer product for purposes other than
resale.
(2) Consumer product.--The term ``consumer product'' means
any personal property or service which is normally used for
personal, family, or household purposes.
Mr. LEAHY. Mr. President, this bill as presently drafted would
preempt the consumer protection laws of each of the 50 states and
restrict the legal rights of consumers who are harmed by Y2K computer
failures.
Why is this bill creating new protections for large corporations
while taking away existing protections for the ordinary citizen?
We all know that individual consumers do not have the same knowledge
or bargaining power in the marketplace as businesses with more
resources. Many consumers may not be aware of potential Y2K problems in
the products that they buy for personal, family or household purposes.
[[Page S6777]]
Consumers just go to the local store downtown or in the neighborhood
mall to buy a home computer or the latest software package. They expect
their new purchase to work. But what if it does not work because of a
Y2K problem?
Then the average consumer should be able to use his or her home
state's consumer protection laws to get a refund, replacement part or
other justice.
The liability limits in S. 96 would protect companies whose acts or
omissions result in harm to consumers' products or services--even if
those companies manufactured or sold products that they knew would fail
when the date changes to the Year 2000.
Is that fair?
Let me give you a real life example of how an ordinary person might
be harmed by this bill. In 1999, Joe Consumer buys a computer program
and on the package is the claim: ``This software is guaranteed to serve
you well for years to come.'' But in the fine print in the shrink wrap
that comes with the software is a disclaimer of all warranties, either
express or implied.
Joe Consumer's software package, that he brought in 1999, is not Y2K
compliant. He calls and writes the software company to get it fixed but
all he gets in response is a form letter telling him to buy the latest
upgrade.
Under this bill, Joe Consumer would have to wait 90 days for his day
in court and might not have a remedy at all.
Joe Consumer would normally be able to pursue justice based on a
failure of the implied warranty of marketability of the software
because it was not Y2K compliant. Or he would normally be able to
pursue justice under his state consumer protection laws. And he
normally would be able to pursue justice with other consumers harmed by
this Y2K defective software on a fairer and more efficient class-action
basis. But not under S. 96.
This bill says that the written contract prevails, even if it limits
or excludes warranties. Enforceable written contracts under this bill
would include the fine-print, boiler-plate language that is standard in
the packaging of computer hardware or software.
A consumer does not have any power to negotiate this fine print,
boiler-plate, shrink-wrap. This shrink wrap is all one sided in favor
of the computer manufacturer. In fact, in some cases, computer
manufacturers even try to take away the right of a consumer to go to
court in the fine print of their shrink wrap. In addition, this bill
would override the Uniform Commercial Code and all state laws that
protect consumers by making certain warranty disclaimers unenforceable.
The consumer protections in the U.C.C. and state law protect individual
consumers from having unfair terms imposed on them by manufacturers of
products with far greater economic power.
But this bill makes all state consumer protection laws null and void
against the fine print terms of any computer manufacturer's shrink
wrap. Maybe we should rename this bill, the ``Y2K Shrink Wrap
Protection Act.''
Moreover, S. 96 would severely restrict the use of class actions by
consumers even when common questions of fact and law predominate in
their cases and the class action would be a fair and efficient method
to resolving their dispute. The use of class actions in state courts
permit consumers to band together to seek justice in ways that an
individual could not afford to take on alone. These state laws were
enacted to protect the average consumer.
But these basic consumer protections would be eliminated under this
bill's Federal peremption provisions.
And no new Federal rights for consumers would replace these lost
state consumer protections under this bill. That is not right.
My amendment uses the same consumer exclusion language in last year's
Hatch-Leahy Year 2000 Information and Readiness Disclosure Act. My
amendment contains the same definition of consumer and consumer product
that was in that consensus measure, which passed the full Senate by a
unanimous vote and was signed into law about seven months ago. Our bill
become law because it was balanced, in sharp contrast to S. 96 as
currently drafted.
I would hope the full Senate could agree to this amendment since it
uses the same language that we agreed to last year on the Y2K
information sharing law.
Last year, when we passed Y2K legislation to encourage remediation
efforts, we clearly let stand existing consumer protections under state
law. This same policy should apply to the pending legislation, which
currently proposes to limit a consumer's legal rights even in cases
involving fraud or other intentional misbehavior by product
manufacturers or sellers.
In fact, the precedent for using last year's Year 2000 Information
and Readiness Disclosure Act as a model for S. 96 have already been
set. S. 96 includes an exclusion for governments acting in a
regulatory, supervisory or enforcement capacity. The exact language in
the bill was lifted from the Y2K information disclosure law of last
year. I believe this government exception make sense, particularly for
SEC enforcement actions, and improves the underlying bill.
Moreover, section 13(d) of S. 96 also explicitly provides that the
protections for sharing information in our Y2K law shall apply to this
bill.
If the protections for businesses from last year's Y2K information
disclosure law are good enough for this bill, then the exclusion from
last year's Y2K law for consumers should also be good enough for this
bill. Last year's Y2K information disclosure law was a balanced measure
in part because it protected consumers from its provisions. Adding the
same consumer carve out by adopting my amendment would give balance to
this one-sided bill.
Passing this amendment would improve the chances of S. 96 actually
being signed into law by the President, instead of being vetoed as a
bill that protects special interests at the expense of the average
consumer. My amendment is supported by consumer rights associations
including Consumers Union, Public Citizen, Consumers Federation of
America, and the United States Public Interest Research Group. I ask
unanimous consent that a letter from these consumer advocates in
support of the Leahy amendment be printed in the Record at the end of
my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See Exhibit 1.)
Mr. LEAHY. Mr. President, allowing consumers access to their home
state consumer protection laws is the right thing to do. I urge my
colleagues to vote for this amendment.
Exhibit 1
Consumers Union, Public Citizen, Consumer Federation of
America, U.S. PIRG,
June 8, 1999.
Dear Senator: As the full Senate prepares to consider S.
96, The McCain-Wyden-Dodd legislation limiting the liability
of companies responsible for Y2K computer processing
failures, the undersigned consumer groups remain concerned
about the negative effects this legislation will have on
consumers with legitimate Y2K claims. While we would support
legislation to provide incentives to companies to evaluate
and address Y2K problems and product defects, we believe that
S. 96 will have the opposite consequences.
Insulating companies from Y2K liability will only serve to
protect those who have done the least to address their
problems and will render consumers far more vulnerable as a
result. We ask that you support the Leahy amendment, which
would exempt consumer cases from this legislation. Most
experts expect Y2K litigation to be brought primarily by
businesses against other businesses. These litigants will
have contracts with one another that have been drafted to
protect their individual interests. Consumers will not have
benefit of these protections in the marketplace.
In addition, there is federal precedent for a consumer
carve-out in Y2K legislation. The language of the Leahy
amendment is the same language that appears in the law passed
last year, the Y2K Readiness and disclosure Act. Among the
provisions of S. 96 that are most harmful to consumers:
Elimination of Joint and Several Liability. The sweeping
change in this longstanding tort concept will likely leave
consumers uncompensated for damages if one or more defendants
cannot be held liable for the full amount of loss suffered.
The two narrow exceptions to this provision will be of little
benefit to most plaintiffs, and many could be left without
full compensation, even for their economic losses.
Class Actions Removed to Federal Court. Any class action
with aggregated damages of $1 million or more could be
removed to federal court, where cases are likely to face a
large backlog of cases and thus long delays and additional
expense. S. 96 also requires notification by return mail to
each potential plaintiff in a class action, a provision that
may well make bringing these cases financially and
practically impossible--leaving class members without a
remedy.
[[Page S6778]]
Caps on Punitive Damages. S. 96 caps punitive damage at
$250,000 or three times compensatory damages, whichever is
less, for defendants with a net worth less than $500,000 or
businesses with fewer than 50 employees, unless plaintiffs
can prove the defendant specifically intended to injure them.
Caps on punitive damages send the wrong signals to the most
irresponsible companies, acting as a disincentive to fix
problems before they occur.
Disclaimer of Implied Warranties. In most states, products
are warranted to be fit for the purpose for which they are
sold. Under S. 96, warranty disclaimers on the packaging or
software--the fine print that consumers rarely read--may keep
consumers from recovering for defective products and the
losses they cause, unless they are proven to manifestly
contradict state law, a difficult standard to meet.
For these reasons, we ask you to support Senator Leahy's
consumer protection/consumer carve-out amendment.
____
Examples of How Senate Y2K Liability Bill is Unfair to Consumers
The examples below demonstrate the ways in which S. 96
would make it difficult, if not impossible, for consumers
with legitimate claims to get full compensation from
responsible parties. This legislation will have a direct
effect on consumers and will likely result in many consumers
being left without a remedy for Y2K problems.
the case of the non-compliant software
In 1998, Mrs. Betty Barnes purchases a new home computer,
paying an extra $500 for special software that will allow her
to pay her bills and manage her household finances using the
system. One year later, Mrs. Barnes finds that the software
is not Y2K compliant and will not work after the Year 2000.
She calls the store where she bought the software to get a
version of the software that will work. The store tells her a
``patch'' to correct the problem is available but will cost
an additional $250. Mrs. Barnes then writes to the software
manufacturer asking for a fix for the defective program. The
manufacturer writes back within 30 days telling her that she
will have to pay $250 for the Y2K compliant version of the
program.
Under the bill, Mrs. Barnes must wait an additional 60 days
before she can bring any legal action against the software
manufacturer. The manufacturer has met its obligation by
responding to the letter even though the company did not
agree to fix the problem for a reasonable price. Mrs. Barnes
has no right to a free fix or a reasonably priced upgrade
under S. 96. She must wait 60 days even if the manufacturer
has proposed an unfair solution to the problem. Mrs. Barnes
has no bargaining power to force the manufacturer to offer a
more fair solution.
S. 96 does have an exception to the 60-day waiting period:
Mrs. Barnes can sue for injunctive relief. She speaks to a
lawyer and finds out this will not help her in her case.
Injunctive relief is difficult to obtain; it requires proof
of (1) irreparable injury if the problem is not dealt with
immediately, (2) a strong likelihood of winning on the merits
and (3) no adequate remedy at law. Mrs. Barnes is unlikely to
be able to prove irreparable injury. Even if she could, her
likelihood of prevailing on the merits is diminished by the
federal law that makes it harder for plaintiffs in Y2K cases
to win. (She could show that she has no adequate remedy at
law because she cannot sue at this stage.)
Mrs. Barnes is forced to wait for two months before she can
file suit. During this time, she is unable to use the
software for which she paid $500.00--she can't balance her
checkbook, she can't pay her insurance or mortgage, she can't
do her taxes.
After the 60-day period expires, Mrs. Barnes lawyer files
suit against the software manufacturer. under S. 96, she has
to plead her case with specificity, even though she knows
little at this point about her case except that her software
isn't Y2K compliant and she has been barred from conducting
any discovery while the 60 day period ran out. The
manufacturer moves to dismiss the case, arguing that S. 96
protects them from Mrs. Barnes' suit. The software package
has a disclaimer that says, in fine print, ``there are no
warranties, express or implied, that apply to the sale of
this product.'' Under S. 96, the terms of a contract--
including a warranty--prevail over any consumer protection
statutes in state law unless the language in the contract is
deemed to ``manifest and directly'' contradict state law. The
software company argues that the state law that disfavors
this kind of disclaimer does not ``manifestly and directly''
contradict state law. Since this is an issue of first
impression, each side must present legal arguments on this
issue, adding much cost and delay to the suit. If Mrs. Barnes
loses, she will have no legal recourse, even if the
manufacturer knowingly sold her defective software.
Luckily, Mrs. Barnes survives the motion to dismiss. She
and her lawyer now have the chance to conduct discovery. They
learn that there are a number of companies involved
in manufacturing of her particular software, and they move
to add them as defendants. The companies based in the
United States claim little or no responsibility for the
Y2K failure. They all point to a Japanese software maker
as the source of the problem. Mrs. Barnes can't sue the
Japanese software maker since it does not do business in
the U.S. If the jury finds that the Japanese company is
the defendant most at fault, S. 96's limitations on joint
and several liability will mean Mrs. Barnes can never
recover fully for her damages.
Without evidence of specific intent to injure nor knowing
commission of fraud, as required under S. 96, Mrs. Barnes
cannot hold all defendants jointly and severally liable. Mrs.
Barnes learns that the U.S. manufacturer recklessly placed
this software on the market without bothering to check that
is was Y2K compliant. But ``reckless conduct'' isn't enough
under S. 96 to allow the court to hold the U.S. manufacturer
liable for the entire injury, even though the injury could
not have occurred without its participation. Since Mrs.
Barnes damages are not equal to 10% of her net worth as
required under S. 96, she is not eligible to use that
provision to bring the case for an ``uncollectible'' share.
Mrs. Barnes can get only that percentage the jury says the
U.S. manufacturer is responsible for causing.
If the Japanese company is judgment-proof, the U.S.
manufacturer could be responsible for up to 50% more of its
initial share. If the jury finds the U.S. manufacturer was
20% liable and the Japanese company was 80% liable, and Mrs.
Barnes can't collect from the Japanese company, the U.S.
manufacturer is responsible for 50% more than its original
share, a total of 30%. Mrs. Barnes can never recover the
other 70% damages she is owned.
the case of the consumer class action
S. 96 provisions on class actions will result in
meritorious cases being dismissed, leaving consumers with no
practical means for collecting damages.
Assume the same facts as above, but this time Mrs. Barnes
learns that a number of other consumers have bought the same
software and are having the same problems. Together they file
a class action suit in Mrs. Barnes' home state against the
manufacturer. They are able to meet the material defect
requirement imposed on those filing class actions as well as
the heightened pleading standards. The manufacturer, noting
that there are plaintiffs from a number of different states,
under the rules of S. 96 would be entitled to file a motion
to remove the case to federal court. The federal court,
required to resolve differences between and among state laws,
decides there are not enough common issues of law among the
various state laws, and the class action is returned to the
state. The class is disbanded there. While individuals are
free to bring suit on their own, each case is for such small
monetary value, few consumers or lawyers are interested or
willing to pursue the case individually. Mrs. Barnes can't
find a lawyer to take her case and she is left without a
remedy.
the case of the chemical disaster
Mrs. Jacqueline Jensen owns a home several streets away
from the Acme Chemical Company. Like 85 million other
Americans, she lives and works within 5 miles of the one or
more of the nation's 66,000 facilities that handle or store
high hazard chemicals.
On January 1, 2000 Acme's safety system fails and hazardous
chemicals are released into the air and onto the land in the
neighborhoods, forcing Mrs. Jensen and others to evacuate
their homes. People are allowed back to their homes after 2
days, but Mrs. Jensen's property is contaminated, including
her well. Mrs. Jensen retains an attorney and files a tort
claim to recover for the damage to her property.
Acme Chemical claims that a Y2K computer failure was
partially at fault for the safety system malfunction. Mrs.
Jensen did not know Y2K was a defense, so she and her lawyer
did not look up the new statute or file a per-litigation
notice before filing suit. Under S. 96, Acme treats
the complaint as the notice, even though it does not
contain all of the required information because Mrs.
Jensen and her lawyer initially had no idea this was a Y2K
case and there was a new law to follow in addition to the
requirements of filing a civil suit under state law.
Under S. 96, even when consumers' homes and surrounding
properly is contaminated, they cannot file suit right away,
even though they aren't waiting for a computer malfunction to
be fixed. The waiting period applies to all cases, even those
where it is not relevant. Mrs. Jensen must wait 30 days for
Acme to respond to her notice/complaint. In 30 days Acme
responds by saying it cannot pay for the cleanup and lost
value of Mrs. Jensen's home. Nonetheless, Mrs. Jensen still
must wait an additional 60 days to refile her lawsuit. S. 96
only requires defendants to state what steps, if any, they
will take within 60 days for the additional waiting period to
commence. All discovery is stayed during this period, so Mrs.
Jensen and her attorney have no way to gather additional
information about the events surrounding the chemical spill.
In two months, Mrs. Jensen refiles her suits against Acme
and Safety Systems, Inc., the company that installed its
computers. Under S. 96, she must plead her case with
particularity in the complaint. While she can state her
damages as required, she has difficulty specifying the
material defect that caused the accident and specific
evidence of the defendants' state of mind since she has still
not been able to do discovery in the case. The defendants
move to dismiss the complaint for failure to meet the
pleading requirements. After briefs back and forth debating
what the new law requires, the judge does dismiss the case
but without prejudice, allowing Mrs. Jensen an opportunity to
file an amended complaint (now her third).
Somehow, Mrs. Jensen finds enough information to survive
another motion to dismiss
[[Page S6779]]
and finally has her day in court. After hearing the case, the
jury finds that both defendants acted recklessly and
outrageously for not identifying and fixing the Y2K problems
at the plant, and awards Mrs. Jensen $300,000 to compensate
her for her property damages and the need to replace her
water supply. The jury finds that Acme is 70 percent
responsible and Safety Systems 30% liable. The jury also
finds by clear and convincing evidence that Acme's conduct is
so outrageous as to warrant punitive damages and assesses a
one million-dollar punitive damage award. The jury also finds
substantial evidence that Safety Systems knew the system it
installed might not work and that it should have fixed the
Y2K problem, which is enough for them to be assessed punitive
damages under state law, but Mrs. Jensen could not make that
showing by clear and convincing evidence as required by S.
96.
Under S. 96, a consumer who suffers harm limited in amount
of punitive damages she can collect. The total amount of Mrs.
Jensen's award from the jury is $1.3 million dollars--
$1,210,000 against Acme ($210,000 compensatory and $1,000,000
punitive) and $90,000 against Safety Systems. Acme employes
40 people, so the punitive damages awarded against them is
reduced by the judge according to the cap under S. 96 to
$250,000. The adjusted award is now $550,000 against Acme and
Safety Systems.
Acme cannot pay for all of the damage caused by the
accicent to Mrs. Jensen and her neighbors and files for
bankruptcy. Safety Systems pays Jensen $90,000, but this is
not nearly enough to let her clean up her property and get a
new water supply--especially after she pays her legal costs.
She tries to collect from Acme, but without success. After 3
months, she applies to the court to require Safety Systems to
pay the rest of the compensatory damage award. Under state
law, they could be required to pay the full amount, but under
S. 96, the maximum they would have to pay is 30% of the
uncollectible share but no more than 50% over Safety Systems'
own contribution. Under this formula, Mrs. Jensen is able to
collect an additional $45,000 from Safety Systems, leaving
her with a actual unrecoverable damages to her property--i.e.
direct economic loss--of $165,000 exclusive of legal fees and
costs.
Although the jury found that Safety Systems acted
recklessly, they do not have to pay the full amount of the
compensatory award--even if they could afford to do so.
Under her state's law, Mrs. Jensen would have received
$1,300,000, that is, full compensation for her losses from
the responsible parties. Because of S. 96, Mrs. Jensen will
be left with only $135,000, not nearly enough to compensate
for her loss and pay her legal fees and costs.
the case of the disclosed medical records
Mrs. Sally Sargent lives in a small town. Her physician is
treating her for HIV. She has been seen at the local hospital
during bouts of pneumonia, but more recently has been on
drugs that have improved her overall health and enabled her
to work. Her biggest fear is that her employer will learn of
her HIV status, which will surely mean the loss of her job in
a rather straight-laced company and that her children will be
ostracized at school. She has been assured by the hospital
that all of her records will be kept confidential.
The hospital records department ignored its potential Y2K
problem, though they were warned by hospital administrators
to check the record system for Y2K bugs. As a result, the
hospital's computer records are mistakenly distributed to
abroad group of hospital personnel. One of those hospital
employees has a child who attends school with Mrs. Sargent's
daughter. This mother becomes very agitated, calls the school
with the information, and before long the rumor about Mrs.
Sargent's medical condition gets around to the whole
community. Mrs. Sargent's daughter is ostracized from her
classmates, and she herself suffers great emotional distress.
When her employer discovers she has HIV, she is fired from
her job.
Under S. 96, her emotional distress and mental suffering
claim is not exempted from the bill, as are personal injury
cases involving physical injuries. Failing to exempt cases
brought for emotional distress and mental suffering, if they
happen to occur unaccompanied by physical injury, is grossly
unfair to individuals who have suffered real harm. In this
case, Mrs. Sargent would have to meet all of the procedural
hurdles and substantive legal limitations if she tried to sue
the hospital for negligent or intentional infliction of
emotional distress and her lost wages and related damages.
Mr. McCAIN. Mr. President, this amendment, for all intents and
purposes, will emasculate the bill. It will deny consumers, those least
able to pay for attorneys, to hire attorneys to solve any Y2K problems,
the average consumer the ability to resolve a problem quickly, within a
maximum of 90 days, without litigation.
It also allows more of the Tom Johnson-type lawsuits: No requirement
that there be an actual injury, no requirement that there be a real
problem. This would negate the attempt by S. 96 to limit frivolous
lawsuits.
I yield back the remainder of my time.
Mr. LEAHY. How much time remains?
The PRESIDING OFFICER. The Senator has 6 minutes 20 seconds.
Mr. LEAHY. I understand the distinguished Democratic leader desires
to speak, so I will hold the floor for a moment.
Mr. McCAIN. Does the Senator want an up-or-down vote?
Mr. LEAHY. Please.
So colleagues will understand, in last year's Y2K bill which this
Senate passed unanimously, which the President signed into law, we had
basic consumer protections and business protections. In this bill, we
bring forward business protections but we don't bring forward the
consumer protections we passed last year.
Let's be consistent; let's make sure we give consumers at least as
much protection as we give businesses. That is what I am asking for and
all I am asking for in the Leahy amendment. I also say if it passes, it
improves the chance of this actually being signed into law.
I yield to the distinguished Senator from South Dakota.
Mr. DASCHLE. I thank the distinguished Senator from Vermont. I
applaud the Senator for his amendment.
12,000th Vote for Senator Stevens
Mr. DASCHLE. Today, I call the attention of all my colleagues to a
very important and historic achievement by one of the Senate's most
remarkable Members. With this vote, Ted Stevens will cast his 12,000th
vote in his career.
It is certainly fitting that Senator Stevens represents Alaska in the
United States Senate. He has lived in that great state and worked for
its residents since before it was a state. In fact, as Solicitor of the
Department of the Interior, Ted was instrumental in setting the
groundwork for Alaska's admission to the Union in 1959.
In 1964, Ted was elected to the Alaska House of Representatives. Two
years later, his colleagues elected him House Majority Leader, an honor
that surprises none of us who have first hand knowledge of Ted's
legendary tenacity, legislative acumen and dedication to his
constituents.
Senator Stevens brought that determination and skill to the Senate in
1968. I'm sure that every Senator has his or her own anecdote to
document Ted's dedication and effectiveness as a legislator.
Ted once declared that his constituents ``sent me here to stand up
for the state of Alaska.'' No one who served with Ted over the past
thirty years can doubt his commitment to do just that.
In fact, some surely wonder at times if he isn't more of an
ambassador than a Senator.
Ted has endeavored to ensure that promises made to Alaska under the
Statehood Act are kept. He helped pass the Native Claims Act in 1971
and played a pivotal role in bringing the oil pipeline to Alaska in
1973. He joined with Senator Warren Magnuson in co-authoring the 200
mile fishing limit that protects all coastal states from encroachment
by foreign fishing fleets and helps sustain America's fisheries.
In the late 1970s, when President Carter made the creation of
wilderness areas in Alaska a national priority, Ted worked with his
characteristic focus and tenacity to ensure that the Alaska Lands Act
protected his state's interests as much as possible. After the Exxon
Valdez accident in 1989, Ted managed legislation that not only financed
the cleanup of the despoiled coastline, but also required double-
hulling on tankers.
Senator Stevens has worked tirelessly and effectively for Alaska. But
his accomplishments are certainly not limited to the 49th state. Ted's
career documents his far reaching influence on national policy and
dedication to the institution of the Senate as well.
Ted has been a leader in the defense area for his entire career, as
chairman of the Defense Appropriations Subcommittee and now the full
Appropriations Committee. And he has developed recognized expertise in
science and technology issues through his long and distinguished
service on the Commerce Committee as well.
Ted has a deep affection for the Senate and has labored to preserve
the character, integrity and prerogatives of the institution. He has
chaired the Rules Committee and served in the leadership as Majority
Whip.
Ted Stevens is recognized for his no-nonsense style, limitless energy
and
[[Page S6780]]
ability to get things done--not to mention an impressive collection of
neckties.
Everybody in the Senate knows that Ted's word is good, and he has
earned the high esteem of his colleagues through his hard work and
devotion to his job.
Mr. President, it is indeed a pleasure to serve with Ted Stevens, and
to count him as a friend. I congratulate Ted on his achievement, and
thank him for his numerous contributions to his state, his country and
the United States Senate.
Mr. KENNEDY. Mr. President, I congratulate my colleague from Alaska,
Senator Ted Stevens on reaching his 12,000th vote. He is a remarkable
colleague and I admire the outstanding leadership that he has shown on
so many issues. Senator Stevens is a person of great integrity and
energy and works tirelessly for his state of Alaska. I have worked
closely with him on many occasions and it is with admiration that we
celebrate his 12,000th vote.
His accomplishments as Chair of the Appropriations Committee are too
numerous to list. Handling the nation's spending is a complex,
difficult task, yet, Senator Stevens handles this responsibility with
finesse and great skill.
Senator Stevens is active on a range of issues that are of great
importance nationally and to his home state of Alaska. He is a great
advocate for fishing families, a great protector of Native-Americans,
and a leader on promoting quality health care and research. His
leadership on national defense is also remarkable.
Senator Stevens holds a special place in his heart for children and
his advocacy on behalf of early education will help us achieve the
nation's school readiness goals. He was one of the first in the Senate
to recognize the importance of new brain research documenting the vital
role of early stimulation during the first three years of life, and he
is a leading advocate for early education. Working to ensure that every
child reaches his or her full potential, Senator Stevens has introduced
legislation that will improve the quality and accessibility of early
programs for millions of children under the age of 6. He is committed
to making sure that children receive the educational boost they need to
start school ready to read and ready to learn. With Senator Stevens
leadership, I know we will make school readiness a reality for every
child in this country.
Senator Stevens also recognizes the importance of the family and the
central role that parents play in their children's lives. While others
talk about putting families first, Senator Stevens acts on that
commitment by including funds on his appropriations bills for this
purpose. Recently, he introduced an amendment to the Juvenile Justice
bill that will provide essential funds to strengthen supports for
parents.
Put simply, Senator Stevens is a credit to Alaska, the Senate, and
this country. He is a great Senator and a good friend. We are fortunate
to be able to celebrate his 12,000th vote with him, and look forward to
many more votes in the future from this great Senator from Alaska.
The PRESIDING OFFICER. The majority leader.
Mr. LOTT. Mr. President, I commend Senator Daschle for his comments
about Senator Stevens. He is about to cast his 12,000th vote.
Senator Daschle observed the interesting array of Ted Stevens' tie.
My favorite one is the Tasmanian devil. When he comes in with that tie
on, you know an appropriations bill is fixing to be moved through the
Senate. But he has been a great Member of the Senate. He is a great
friend. He is a credit to his State of Alaska.
He has had an unbelievable career, including being a Flying Tiger,
the 14th Air Force, in World War II. He is a graduate of UCLA and
Harvard Law School. He has overcome that. He was a solicitor at the
Interior Department under the Eisenhower administration, and he
certainly was a powerful advocate for Alaska statehood. He served in
the Alaska House of Representatives. He was appointed to the Senate in
1968, and he has been elected five times since.
My greatest experience with the distinguished Senator from Alaska was
when he served as the whip of the majority in the Senate, and I was the
whip for the minority in the House. Unlike what most people think,
where there is this natural difficulty between the House and the
Senate, he was never anything but helpful to me personally. He helped
the two institutions work together. Because of his leadership, we
addressed a number of important problems for the legislative activities
and the security of the U.S. Capitol Building.
His wife Catherine and six children are here, a wonderful assemblage
of people. Catherine does a great job at keeping Senator Stevens on the
straight and narrow. She is a wonderful lady. We thank her for the
sacrifice she makes in allowing Senator Stevens to be here, sometimes
through late nights, to allow him to accumulate these 12,000 votes.
On behalf of the Senate, I extend our appreciation and thanks to
Senator Stevens, a great Senator from Alaska, for what he has done for
his State and for our Nation.
(Applause, Senators rising.)
Mr. STEVENS. Thank you very much. I appreciate it.
Mr. President, I am humbled and honored by the statements of our two
leaders in the Senate. It is true I have a deep reverence for this
body. When I was in the Eisenhower administration, I sat up in the
gallery many nights during the period when the Senate was considering
Alaska's statehood. I gained the reverence that I have for the body now
from those experiences.
It is truly an honor to serve in this body. Some people, I guess,
have taken it a little bit for granted. I still pinch myself every once
in a while to make sure I am allowed the opportunity to be present in
this body, to be a U.S. Senator.
I value the friendships I have had on both sides of the aisle more
deeply than I can say.
I am very proud to say for other reasons many members of my family
are here in the gallery tonight. Our daughter, Lily, graduates from
high school tomorrow. Tonight the National Guard has flown my grandson,
John Covich, into Washington to give me an award from the USO and the
National Guard. So this is a double celebration for me.
Just having the privilege to still be alive and be part of this body
is more than anyone can know after the accident that I had years ago
and the feeling I had about life then turned around. It turned around
primarily because of the friendship and the helping hand I got from
every Member of the Senate who was here then, and I continue to value
the friendship of every one of you tonight. Thank you very much.
(Applause, Senators rising.)
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, I yield the remainder of my time.
Mr. LEAHY. Mr. President, if there is any time remaining, I yield it
back. I am pleased to give my friend a chance to cast the 12,000th vote
on this amendment. He is one of the best friends I have ever had in the
Senate.
Mr. McCAIN. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. All time has been yielded back. The question
is on agreeing to amendment No. 611. The yeas and nays have been
ordered.
The clerk will call the roll.
The legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from Idaho (Mr. Crapo) and
the Senator from New Hampshire (Mr. Gregg) are necessarily absent.
Mr. REID. I announce that the Senator from Delaware (Mr. Biden) is
necessarily absent.
The result was announced--yeas 32, nays 65, as follows:
[Rollcall Vote No. 160 Leg.]
YEAS--32
Akaka
Boxer
Breaux
Byrd
Cleland
Conrad
Daschle
Dorgan
Durbin
Edwards
Feingold
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Mikulski
Murray
Reed
Reid
Rockefeller
Sarbanes
Schumer
Torricelli
Wellstone
NAYS--65
Abraham
Allard
Ashcroft
Baucus
Bayh
Bennett
[[Page S6781]]
Bingaman
Bond
Brownback
Bryan
Bunning
Burns
Campbell
Chafee
Cochran
Collins
Coverdell
Craig
DeWine
Dodd
Domenici
Enzi
Feinstein
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kerrey
Kyl
Lieberman
Lincoln
Lott
Lugar
Mack
McCain
McConnell
Moynihan
Murkowski
Nickles
Robb
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
Wyden
NOT VOTING--3
Biden
Crapo
Gregg
The amendment (No. 611) was rejected.
Mr. LOTT. Mr. President, I move to reconsider the vote, and I move to
lay that motion on the table.
The motion to lay on the table was agreed to.
____________________