[Congressional Record Volume 145, Number 82 (Thursday, June 10, 1999)]
[Senate]
[Pages S6821-S6835]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                Y2K ACT

  The Senate continued with the consideration of the bill.
  Mr. McCAIN. Mr. President, I ask unanimous consent that Senator 
Edwards be recognized to offer two amendments as provided in the 
previous consent, and time on both amendments be limited to 1 hour 
total, to be equally divided in the usual form, and no amendments be in 
order to the Edwards amendments.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCAIN. Mr. President, before yielding, we would expect votes on 
the

[[Page S6822]]

two Edwards amendments probably within an hour or less. That is our 
desire, and we will clear that with the leaders on both sides.
  Mr. President, I yield the floor.
  Mr. EDWARDS addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Carolina.


                 Amendment No. 619 to Amendment No. 608

  Mr. EDWARDS. 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 North Carolina [Mr. Edwards] proposes an 
     amendment numbered 619.

  Mr. EDWARDS. 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:

       Strike Section 12 and insert the following:

     ``SEC. 12. DAMAGES IN TORT CLAIMS.

       ``A party to a Y2K action making a tort claim may only 
     recover for economic losses to the extent allowed under 
     applicable state or federal law in effect on January 1, 
     1999.''

  Mr. EDWARDS. Mr. President, the purpose of this amendment is to deal 
with section 12 of the McCain-Dodd-Wyden bill. Let me read it first to 
make it clear what the amendment deals with. I am quoting from the 
amendment now, and this would replace section 12 in the existing bill:

       A party to a Y2K action making a tort claim may only 
     recover for economic losses to the extent allowed under 
     applicable State or Federal law in effect on January 1, 1999.

  We have drawn this amendment in the narrowest possible fashion, and 
we did that for a number of reasons. Number one, there has been great 
concern voiced on the floor of the Senate about allowing and continuing 
to enforce existing contracts under contract law. This amendment has no 
impact on that whatsoever. The provisions in the McCain bill that 
provide for the enforcement of contract law remain in place.
  I also say to my colleagues that if this amendment is adopted in the 
very narrow form in which it has been presented, all of the following 
things, which I think many Members of the Senate want to support, 
remain present in this bill.
  Punitive damages will remain capped. The bill will continue to apply 
to everyone--consumers and businessmen and businesswomen. Joint and 
several liability is completely gone. In other words, proportionate 
liability, which has been a subject of great discussion, remains in 
place. The duty to mitigate remains in place. The 90-day waiting period 
remains in place. The limitations on class actions remain in place. The 
requirements of specificity and materiality in pleadings remain in 
place.
  All of the things that have been discussed at great length and have 
been at the top of the list of what these folks have been trying to 
accomplish on behalf of the computer industry remain in place.
  What this amendment is intended to do is close a loophole. It is a 
loophole that is enormous. Here is the reason. We will enforce, under 
the provisions of the McCain bill, a contract. The problem is, there 
are millions and millions of computer sales that occur in this country 
every year that are subject to no contract; there is no contract 
between the parties. Under the provisions of the McCain bill, as it is 
presently, if a consumer or a small businessperson purchases a 
computer, there is no written contract between the parties, which will 
be true in the vast majority of cases; so there is no contract to 
enforce, there is no agreement between the parties on the specific 
terms of what can be recovered and what the limitations of those 
recoveries are.
  Let's suppose, in my example, that a blatant, fraudulent 
misrepresentation has been made to the purchaser. Unless we do 
something to amend this section, since there is no contract in place, 
we will put the purchaser in the position of being able to recover 
absolutely nothing but the cost of their computer. For example, a small 
family-run business in a small town in North Carolina--Murfreesboro, 
NC--buys a computer system. There is no written contract of any kind 
between the parties. What happens is, their computer system doesn't 
work; it is non-Y2K compliant. It turns out that the people who sold it 
to them knew it was non-Y2K compliant and, in fact, misrepresented when 
they made the sale that it was Y2K compliant. So we have, in fact, what 
probably is a criminal act in addition to everything else, a fraudulent 
misrepresentation.
  Unless this amendment is adopted, if that family business has lost 
revenues, lost income, lost profits, while they continue to incur 
overhead, they are unable to recover even their out-of-pocket losses--
the money they have to actually pay as a result of their computer being 
non-Y2K compliant--simply because there is no contract between the 
parties. That would be true even under the most egregious situation, 
i.e., where a fraud has occurred, where a misrepresentation has 
occurred, where a criminal act has occurred, even under those extreme 
circumstances.
  Unless this amendment is adopted in its very narrowly drawn form, 
that purchaser, small businessperson or consumer, is limited to the 
recovery of the cost of their computer, even though their family-owned 
business, which has been in business forever, has been put out of 
business, even though they have lost thousands of dollars in revenue, 
even though they have had to pay out of their pocket for losses that 
have occurred as a result of a fraud committed against them. Even if 
the defendant can be put in jail for their conduct, this small 
businessperson is out of business, and what they can recover against 
this defendant is the cost of their computer.
  There is a huge, huge loophole that exists in this bill as presently 
drafted, and that loophole is for all those cases across America where 
there is no contract. That is going to be true in the vast majority of 
cases. Most people don't have contracts. They go to the computer store 
and they buy a computer. Some computer salesman comes to their business 
or home and sells them a computer. So what we are left with is what 
happens to those folks--the folks who don't have a contract, which is 
going to be the vast majority of Americans, businessmen, businesswomen, 
consumers who have purchased computers. They are not going to have a 
contract.
  I will tell you who will have a contract. The folks who will have 
contracts--therefore, their remedies will be clearly defined in the 
contract--will be big businesses. That will be true of the computer 
companies who sell their products because they can afford to hire a big 
team of lawyers to represent them and draft contracts for them. That 
will be true of big corporate purchasers of computer systems who need 
them in the operation of their business, such as Kaiser-Permanente and 
other big companies that use computers. The lawyers get together and 
draft the contracts and everybody knows from the beginning what the 
responsibilities of both the seller and the buyer are.
  The problem we have is that it is not going to be the big guys who 
are going to be protected. It is the little guy who has absolutely no 
protection. The only conceivable remedy they have is in tort.
  What we did in this very narrowly drafted provision is say they can 
recover economic losses only to the extent allowed already under State 
law or Federal law, which means that to the extent in Arizona there may 
be a limitation, or in Utah, or in Oregon, a limitation on what folks 
can recover and what they have to prove. There are some States that 
only allow pure out-of-pocket losses to be recovered--not lost profits. 
There are many States that have limitations on these things.
  We create absolutely no cause of action, no tort claim. We create 
nothing that does not already exist. But we close the loophole. The 
loophole we close is for those millions and millions of Americans who 
will not have a contract. It is just that simple. All the other 
protections in this bill remain in place.
  I want to say to my colleagues who have voted already against Senator 
Kerry's amendment, who intend to vote on final passage for the McCain 
bill, that you can vote for this amendment very narrowly drawn which 
closes the loophole that exists and still vote for the bill on final 
passage. I will not be doing that myself, because I think there are 
other problems in the bill. But this amendment does not create any 
problem with that.

[[Page S6823]]

  I just want to point out a couple of things which were said yesterday 
during the debate by my friend, Senator Wyden from Oregon.
  He said:

       I just 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.

  That is a verbatim quote.
  This amendment couldn't be any clearer. All it does is keep existing 
State law in place for those people who do not have a contract. It is 
that simple. If they have a contract, the contract is going to control 
because the section immediately preceding section 11 specifically 
requires that the courts enforce the existing contract. But for all 
those folks out there who do not have a contract and who may have been 
lied to, or who may have had misrepresentations made to them and are 
maybe subject to criminal conduct, they have no remedy whatsoever under 
this bill. That is the reason we have drawn it so narrowly.
  Again, Senator Wyden pointed out yesterday that he believes they 
should recover exactly what they are entitled to today, that the law is 
exactly what they are entitled to recover today, and there are numerous 
quotes throughout the day where Senator Wyden spoke to this issue.
  What I say to my friend Senator Wyden is what I really believe we are 
doing here. I know he expressed concern yesterday about creating causes 
of action, creating force in Senator Kerry's bill, and I understood 
those concerns. What we have done is draft this in a way that can't 
possibly create anything. What it says is they may only recover for 
economic losses to the extent allowed already under existing State 
or Federal law.

  When you put that combination in with the provision immediately 
preceding it that requires contracts to be enforced, then I think what 
we have done is closed a loophole, closed it in the narrowest possible 
fashion. Leave all the restrictions that already exist on economic 
recovery in this country in place, deal with those millions of 
Americans who could have been the subject of fraud, abuse, and 
misrepresentation and allow them to recover, because otherwise they 
have no possible way of recovering. They have no contract. But to the 
extent folks have a contract, we are going to enforce that contract. We 
are going to require that the courts enforce that contract.
  I think this really dovetails perfectly with what I believe to be the 
intent of the McCain-Wyden bill.
  The bottom line on this amendment is this: It is narrowly drawn. 
Those folks who intend to vote on final passage for the McCain bill can 
vote for this amendment perfectly consistent with their desire to do 
everything they can to protect the computer industry. But for that 
class of people who have no contract, who have no cause of action 
whatsoever, this creates nothing. It simply allows under existing law 
for them to pursue whatever claim they have--only those people who have 
absolutely no contract. If they have a contract, the contract is going 
to be enforced, and it ought to be enforced. I have no problem with 
that whatsoever.
  I urge my colleagues to support this amendment. It is narrowly drawn. 
I think it is consistent entirely with the purposes of the McCain bill. 
It leaves all the protections in place that the folks who support the 
McCain bill believe in. It closes an enormous loophole that exists in 
this law at the present time.
  I reserve the remainder of my time.
  Mr. HATCH. Mr. President, I appreciate the remarks of my colleague, 
and I appreciate what he is trying to do. This bill is trying to 
resolve what really are unlimited litigation possibilities. If we don't 
pass this bill, that could really wreck our computer industry and wreck 
our country and would make it even more difficult to get the computer 
industry and everybody involved in Y2K problems to really resolve these 
problems in advance of the year 2000.
  I rise to oppose the Edwards amendment, which basically strikes the 
economic loss section of S. 96, the Y2K bill.
  I have followed carefully the debate of the bill. And, as of now, it 
is the Dodd-McCain-Hatch-Feinstein-Wyden substitute, S.1138, that we 
are now debating.
  My observation is that during this debate there has been much 
confusion over the economic loss section.
  Let me attempt to clarify this matter.
  It is important to note that the economic loss rule is a legal 
principle that has been adopted by the U.S. Supreme Court and by most 
States.
  The rule basically prevents ``tortification'' of contract law, the 
trend that I view with some alarm.
  The rule basically mandates that when parties have entered into 
contracts and the contract is silent as to ``consequential damages,'' 
which is the contract term for economic losses, the aggrieved party may 
not turn around and sue in tort for economic losses. Thus, the 
expectation of the parties are protected from undue manipulation by 
trial attorneys. The party under the rule may sue under tort law only 
when they have suffered personal injury or damage to property other 
than the property in dispute.
  The economic loss rule exists primarily or principally because of the 
importance of enforcing contractual agreements. If the parties can 
circumvent a contract by suing in tort for their economic losses, any 
contract that allocates the risk between the parties becomes worthless.
  The absence of the economic loss rule would hurt contractual 
relations and create an economic and unnecessary economic cost to 
society as a whole. It would encourage suppliers to raise prices to 
cover all of the risks of liability and would encourage buyers to 
forego assurances as to the quality of the product or service. If 
anything goes wrong, simply sue the supplier under tort law.
  The economic loss rule also reflects the belief that the parties 
should not be held liable for the virtually unlimited yet foreseeable 
economic consequences of their actions, such as the economic losses of 
all the people stuck in traffic in a car accident.
  In light of this, most States apply the rule without regard to 
privity, and the vast majority of States that have considered the rule 
have applied it not only to products but to the services as well with 
some exceptions for ``professional services,'' such as lawyers and 
``special relationships''.
  Why then should Congress codify the economic loss rule with regard to 
Y2K actions or litigation?
  First, adopting the economic loss rule helps identify which parties 
have the primary responsibility of ensuring Y2K compliance. It is one 
of the major goals of the Y2K legislation to encourage companies to do 
all they can to avoid and repair Y2K problems, and adoption of the 
economic loss rule helps us to do exactly that.
  Second, adoption of the economic loss rule preserves the parties' 
ability to enter into meaningful contractual agreements and preserves 
existing contracts. Parties who suffer personal injury or property 
damage, other than to the property at issue, could still sue in tort, 
or in contract, while those suffering only economic damages would be 
able to sue in contract.
  Third, adoption of the rule would strengthen existing legal 
standards. We have the rule in this bill, and there is very good reason 
to have it in this bill.
  By strengthening existing legal standards, we would avoid costly and 
potentially abusive litigation as a result of the Y2K failures.
  That is what we are trying to avoid.
  This bill only lasts 3 years. It then sunsets. The bill's purpose is 
to get through this particularly critical time without having the 
Federal courts and the State courts overwhelmed by litigation, yet at 
the same time providing people with a means of overcoming some of these 
problems. That is the whole purpose of this bill.
  If this amendment is adopted, that whole purpose will be subverted. 
It is not a loophole at all, as Senator Edwards contended. If we change 
this rule and adopt this amendment, we surely will have courts clogged, 
we surely will have undue and unnecessary litigation, and in the end we 
surely are not accomplishing what we need to accomplish--encouraging 
the companies to do what is right and to get the problems solved now. 
That is what we want to do. This bill will do more toward getting that 
done than anything I can think of.

[[Page S6824]]

  Lastly, adoption of the economic loss rule would establish a uniform 
national rule applicable to Y2K actions. This would help to avoid the 
patchwork of State legal standards that would otherwise apply to Y2K 
problems and actions. The subtle and complex idiosyncrasies and the 
rule's applications by the various States strongly indicate the need 
for a uniform national rule with regard to Y2K actions.
  Without a uniform rule, which we have in this amendment, every issue 
concerning Y2K liability may have to be litigated in each different 
State. This increases the already enormous costs of Y2K litigation.
  As I stated, the Supreme Court has adopted and endorsed the economic 
loss rule, which has greatly influenced State law. The leading case is 
East River S.S. Corp. v. Transamerica Delaval, Inc. In that case, the 
company that chartered several steamships sued the manufacturer of the 
ship's turbine engines in tort for purely economic damages, including 
repair costs and lost profits caused by the failure of the turbines to 
perform properly. In a unanimous decision, the Supreme Court denied 
recovery in tort under the economic loss rule. The Court's ruling was 
based in large part on the propriety of contract law over tort law in 
cases involving only economic loss.
  The Court goes on to say:

       The distinction that the law has drawn between tort 
     recovery for physical injuries and warranty recovery for 
     economic loss is not arbitrary and does not rest on the 
     ``luck'' of one plaintiff in having an accident causing 
     physical injury. The distinction rests, rather, on an 
     understanding of the nature of the responsibility a 
     manufacturer must undertake in distributing his products. 
     When a product injures only itself the reasons for imposing a 
     tort duty are weak and those for leaving the party to its 
     contractual remedies are strong . . . Contract law, and the 
     law of warranty in particular, is well suited to commercial 
     controversies of the sort involved in this case because the 
     parties may set the terms of their own agreements. The 
     manufacturer can restrict its liability, within limits, by 
     disclaiming warranties or limiting remedies. In exchange, the 
     purchaser pays less for the product . . .

  The Court's ruling was also based on the fact that allowing recovery 
in tort would extend the turbine manufacturer's liability indefinitely:

       Permitting recovery for all foreseeable claims for purely 
     economic loss could make a manufacturer liable for vast sums. 
     It would be difficult for a manufacturer to take into account 
     the expectations of persons downstream who may encounter its 
     product. In this case, for example, if the charterers--
     already one step removed from the transaction [which included 
     the shipbuilder in between]--were permitted to recover their 
     economic losses, then the companies that subchartered the 
     ships might claim their economic losses from delays, and the 
     charterers' customers also might claim their economic losses, 
     and so on. ``The law does not spread its protections so 
     far.''

  Let me turn to state law cases. The leading case on this issue is 
Huron Tool and Engineering Co. v. Precision Consulting Services, Inc., 
532 N.W.2d 541 (Mich. Ct. App. 1995). In Huron, the Michigan Court of 
Appeals held that the Economic Loss Rule barred plaintiff's fraud claim 
against a computer consulting company to recover purely economic loss 
caused by alleged defects in a system provided under contract. The 
court explained:

       The fraudulent representations alleged by plaintiff concern 
     the quality and characteristics of the software system sold 
     by defendants. These representations are indistinguishable 
     from the terms of the contract and warranty that plaintiff 
     alleges were breached. Plaintiff fails to allege any 
     wrongdoing by defendants independent of defendant's breach of 
     contract and warranty. Because plaintiff's allegations of 
     fraud are not extraneous to the contractual dispute, 
     plaintiff is restricted to its contractual remedies under the 
     UCC. The circuit court's dismissal of plaintiff's fraud claim 
     was proper.

  Hotels of Key Largo, Inc. v. RHI Hotels, Inc., 694 So.2d 74, 77 
(Fla.Ct. App. 1997), holding that the Economic Loss Rule barred 
plaintiff's fraud claim seeking to recover economic loss caused by the 
defendant's failure to promote the plaintiff's hotel per contractual 
agreement, says: ``[W]here the only alleged misrepresentation concerns 
the heart of the parties' agreement simply applying the label 
`fraudulent inducement' to a cause of action will not suffice to 
subvert the sound policy rationales underlying the economic loss 
doctrine.''.
  Raytheon Co. V. McGraw-Edison Co., Inc., 979 F Supp. 858, 870-73 
(E.D. Wisc. 1997), holding that the Economic Loss Rule barred tort 
claims, including strict-responsibility, negligent, and intentional 
misrepresentation claims, brought by purchaser of real property against 
seller to recover purely economic loss caused by environmental 
contaminants in the soil says: ``[T]he alleged misrepresentations 
forming the basis of Raytheon's fraud claims are inseparably embodied 
within the terms of the underlying contract . . . [Therefore,] Raytheon 
cannot pursue its fraud claims.''
  AKA Distributing Co. V. Whirlpool Corp., 137 F.3d 1083, 1087 (8th 
Cir. 1998), holding under Minnesota law that the Economic Loss Rule 
barred plaintiff's fraud claim based on defendant's statements that the 
plaintiff would be engaged as a vacuum-cleaner distributor for a long 
time despite one-year contract says: ``[I]n a suit between merchants, a 
fraud claim to recover economic losses must be independent of the 
article 2 contract or it is precluded by the economic loss doctrine.''
  Standard Platforms, Ltd v. Document Imaging Systems Corp., 1995 WL 
691868 (N.D. Cal. 1995, an unpublished opinion holding that the 
Economic Loss Rule barred plaintiff's fraud claim based on defects in 
Jukebox disk drives manufactured by defendant says: ``In commercial 
settings, the same rationale that prohibits negligence claims for the 
recovery of economic damages also bars fraud claims that are subsumed 
within contractual obligations. . . . [Plaintiff's] fraud claim is 
precluded because it does not arise from any independent duty imposed 
by principles of tort law.''
  This rule regarding intentional torts is not new but is in fact a 
restatement of old principles separating contract law from tort law. In 
general, breach of contract, intentional or otherwise, does not give 
rise to a tort claim; it is simply breach of contract. Thus many courts 
in addition to those above have held, without mentioning the Economic 
Loss Rule, that claims such as fraud emerging only from contractual 
duties are not actionable. See, e.g., Bridgestone/Firestone, Inc. V. 
Recovery Credit Services, Inc., 98 F.3d 13 (2d Cir. 1996), holding 
under New York law that plaintiff's fraud claim against a collection 
agency to recover funds collected by the defendant under contract with 
the plaintiff was not actionable where the fraud claim merely restated 
the plaintiff's claim for breach of contract: ``[T]hese facts amount to 
little more than intentionally-false statements by [the defendant] 
indicating his intent to perform under the contract. That is not 
sufficient to support a claim of fraud under New York law.''
  In sum, the application of the Economic Loss Rule to intentional 
torts, such as fraud, is best summarized by the U.S. Court of Appeals 
for the Eighth Circuit in AKA Distributing Co., listed above:

       A fraud claim independent of the contract is actionable, 
     but it must be based upon a misrepresentation that was 
     outside of or collateral to the contract, such as many claims 
     of fraudulent inducement. That distinction has been drawn by 
     courts applying traditional contract and tort remedy 
     principles. It has been borrowed (not always with 
     attribution) by courts applying the economic loss doctrine to 
     claims of fraud between parties to commercial transactions.--
     AKA Distributing Co., 137 F.3d at 1086 (internal citations 
     omitted).

  In sum, the economic Loss provision in the Y2K act is not a radical 
provision or change in law. That is why I oppose its removal from the 
bill, which in essence the Edwards amendment would accomplish.
  This is not a simple problem. This is something that we have given a 
lot of thought to. For those who believe we should have unlimited 
litigation in this country because of alleged harms, this is not going 
to satisfy them. For those who really want to solve the Y2K problem and 
to save this country trillions of dollars, the amendment of the 
distinguished Senator from North Carolina will not suffice.
  The amendment of the Senator from North Carolina, attempts to freeze 
the State law of economic losses--freeze it in place. However, the 
States are not uniform in this area.
  One of the things we want to accomplish with this Y2K bill --which is 
only valid for 3 years, enough to get us through this crisis--is to 
have uniformity of the law so everybody knows what the law is and 
everybody can live within the law and there will be incentives for 
people to solve the problems in advance, which is what this bill is all 
about.

[[Page S6825]]

  The purpose of the Y2K Act is to ensure national uniformity. A 
national problem needs a national solution. That is why we need the 
national economic loss doctrine or rule, based on the trends in State 
law towards them. We do need uniformity if we are going to solve this 
problem, or these myriad of problems, in ways that literally benefit 
everybody in our society and not just the few who might want to take 
advantage of these particular difficulties that will undoubtedly exist. 
We all know they will exist.
  The remediation section of this bill gives a 3-month time limit to 
resolve some of these problems. We hope we can. On the other hand, we 
don't want to tie up all of our courts with unnecessary litigation.
  I have to emphasize again that this bill has a 3-year limit. This 
provision ends in 3 years. That is not a big deal. It is a big deal in 
the sense of trying to do what is right with regard to the potential of 
unnecessary litigation that this particular Y2K problem really offers.
  Let me just mention, I know the distinguished Senator from North 
Carolina is aware that his own State has adopted the economic loss 
rule. Let me raise one particular case in North Carolina, the MRNC 
case.
  Let me offer a few comments on this case.

       Specifically, with respect to what losses are recoverable 
     in the products liability suit, North Carolina's court 
     recognized that the state follows the majority rule and does 
     not allow the recovery of purely economic losses in an action 
     for negligence.

  It cites a number of cases which I ask with unanimous consent be 
printed in the Record.

       At issue in this case is whether MRNC suffered economic 
     loss. Central to the resolution of this issue is what 
     constitutes economic loss. The court noted that when a 
     product fails to perform as intended, economic loss results. 
     Economic loss is essentially ``the loss of the benefit of the 
     users bargain.'' ``[T]he distinguishing central future of 
     economic loss is . . . its relation to what the product was 
     supposed accomplish.'' So economic loss should be available 
     for only contract claims. Tort law should not be allowed to 
     skirt contract law. In other words, contract law should not 
     be ``tortified.'' This is what the Y2K Act codifies. Economic 
     loss should not be allowed in cases where a contract exists. 
     This is the law of North Carolina and most states.

  I ask unanimous consent these matters be printed in the Record at 
this particular point.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                      AT&T Corporation, Plaintiff,

                                   v.

   Medical Review of North Carolina, Inc., Defendant and Third-Party 
                               Plaintiff,

                                   v.

   Carolina Telephone & Telegraph Company and Northern Telecom Inc., 
                        Third-Party Defendants.

                          No. 5:94-CV-399-BR1.

   United States District Court, E.D. North Carolina, Feb. 10, 1995.

       Long-distance telephone company brought action against 
     customer, seeking payment for past-due charges for long-
     distance telephone services. Customer counterclaimed, and 
     brought third-party complaint against telephone company, that 
     installed telephone system which included voice mail system, 
     and system manufacturer, alleging manufacturer was negligent 
     and breached implied warranty, arising from alleged telephone 
     line access by unauthorized users via system, resulting in 
     long-distance telephone charges. Manufacturer moved to 
     dismiss. The District Court, Britt, J., held that: (1) under 
     North Carolina law, customer's negligence claim against 
     manufacturer sought to recover purely economic loss, which 
     was not recoverable under tort law in products liability 
     action, and (2) customer's breach of warranty claim against 
     manufacturer was not ``product liability action'' under 
     Products Liability Act so as to render applicable Act's 
     relaxation of privity requirement.
       Motion granted.


                   [1] federal civil procedure   1722

       170Ak1722--For purposes of motion to dismiss for failure to 
     state claim, issue is not whether plaintiff will ultimately 
     prevail, but whether claimant is entitled to offer evidence 
     to support claim. Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.A.


                  [2] federal civil procedure    1829

       170Ak1829--For purposes of motion to dismiss for failure to 
     state claim, complaint's allegations are construed in favor 
     of pleader. Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A.


                       [3] products liability  6

       313Ak6--When action does not fall within scope of North 
     Carolina's Products Liability Act, common-law principles, 
     such as negligence, and Uniform Commercial Code still apply, 
     but they apply without any alteration by Act, which might 
     otherwise occur had Act applied. U.C.C. Sec. 1-101 et seq.; 
     N.C.G.S. Sec. 99B-1(3).


                     [4] products liability    17.1

       313Ak17.1--Under North Carolina law, long-distance 
     telephone company customer's negligence claim against 
     manufacturer of voice mail system, alleging customer suffered 
     harm in charges for unauthorized long-distance telephone 
     calls as result of manufacturer's failure to change standard 
     preset dialing access code and to provide instructions and 
     warnings concerning alteration of access code, sought to 
     recover purely economic loss, which was not recoverable under 
     tort law in products liability action, where allegations 
     centered on product's failure to perform as intended, and no 
     physical injury had occurred.


                      [5] products liability    6

       313Ak6--Under North Carolina law, elements of products 
     liability claim for negligence are evidence of standard of 
     care owed by reasonably prudent person in similar 
     circumstances, breach of that standard of care, injury caused 
     directly by or proximately by breach, and loss because of 
     injury.


                     [6] products liability    17.1

       313Ak17.1--Under North Carolina law, with respect to losses 
     that are recoverable in products liability suit, recovery of 
     purely economic losses are not recoverable in action for 
     negligence.


                             [7] SALES  425

       343k425--Under North Carolina law, long-distance telephone 
     company customer's breach of warranty claim against 
     manufacturer of voice mail system, with which customer was 
     not in privity, arising from charges imposed on customer for 
     unauthorized long distance telephone calls allegedly 
     resulting from manufacturer's failure to inform customer of 
     system's susceptibility to toll fraud if certain 
     precautionary measures were not taken, was not ``product 
     liability action'' under Products Liability Act so as to 
     render applicable Act's relaxation of privity requirement, 
     where customer had only alleged economic loss. N.C.G.S. 
     Sec. 99B-2(b).
       See publication Words and Phrases for other judicial 
     constructions and definitions.


                      [8] PRODUCTS LIABILITY  17.1

       313Ak17.1--North Carolina's Products Liability Act is 
     inapplicable to claims in which alleged defects of product 
     manufactured by defendant caused neither personal injury nor 
     damage to property other than to manufactured product itself. 
     N.C.G.S. Sec. 99B-2(b).


                             [9] SALES  255

       343k255--When claim does not fall within North Carolina's 
     Products Liability Act, privity is still required to assert 
     claim for breach of implied warranty when only economic loss 
     is involved. N.C.G.S. Sec. 99B-2(b).
       *92 Marcus William Trathen, Brooks, Pierce, McLendon, 
     Humphrey & Leonard, Raleigh, NC, for AT & T Corp.
       Craig A. Reutlinger, Paul B. Taylor, Van Hoy, Reutlinger & 
     Taylor, Charlotte, NC, for Medical Review of North Carolina, 
     Inc.
       James M. Kimzey, McMillan, Kimzey & Smith, Raleigh, NC, for 
     Carolina Tel. and Tel. Co.

                                 Order

       BRITT, District Judge.
       Before the court are the following motions of third-party 
     defendant Northern Telecom Inc. (``NTI''): (1) motion to 
     dismiss, and (2) motion to stay discovery proceedings. 
     Defendant and third-party plaintiff Medical Review of North 
     Carolina, Inc. (``MRNC'') filed a response to the motion to 
     dismiss and NTI replied. As the issues have been fully 
     briefed, the matter is now ripe for disposition.

                                I. Facts

       In 1990, MRNC purchased a new phone system from third-party 
     defendant Carolina Telephone & Telegraph Company (``Carolina 
     Telephone''). Included within this system, among other 
     things, was a Meridian Voice Mail System, manufactured by 
     NTI. Carolina Telephone installed the phone system and 
     entered into an agreement with MRNC to provide maintenance 
     for the system.
       Plaintiff AT & T Corporation (``AT & T'') provided certain 
     long distance services to *93 MRNC. AT & T has calculated 
     charges that MRNC allegedly owes for June 1992 in the amount 
     of $93,945.59. MRNC claims that unauthorized users gained 
     access to outside lines via the Meridian Voice Mail System 
     and placed long distance calls. MRNC contends these 
     unauthorized charges comprise part of the June 1992 bill.
       AT & T filed a complaint against MRNC to recover these 
     charges which were past-due. Subsequently, MRNC filed a 
     counterclaim against AT & T and a third-party complaint. As 
     part of its third-party complaint, MRNC alleges NTI, as the 
     manufacturer of the Meridian Voice Mail System, was negligent 
     and breached an implied warranty. MRNC seeks to recover of 
     NTI charges, interest, costs and expenses it may incur as a 
     result of the action brought by AT & T.

[[Page S6826]]

                             II. Discussion

       [1][2] Pursuant to Fed.R.Civ.P. 12(b)(6), NTI has filed a 
     motion to dismiss for failure to state a claim upon which 
     relief can be granted. With such a motion, ``the issue is not 
     whether a plaintiff will ultimately prevail but whether the 
     claimant is entitled to offer evidence to support the 
     claim.'' Revene v. Charles County Comm'rs, 882 F.2d 870, 
     872 (4th Cir.1989) citing Scheuer v. Rhodes (416 U.S. 232, 
     236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974)). The 
     complaint's allegations are construed in favor of the 
     pleader. Id.
       [3] MRNC contends North Carolina's Products Liability Act 
     pertains to its claims. This act applies to ``any action 
     brought for or on account of personal injury, death or 
     property damaged caused by or resulting from the manufacture 
     . . . of any product.'' N.C.Gen.Stat. Sec. 99B-1(3). Among 
     other things, the Act defines against whom a claimant may 
     bring an action. See id. Sec. 99B-2. ``The Act, however, does 
     not extensively redefine substantive law.'' Charles F. 
     Blanchard & Doug B. Abrams, North Carolina's New Products 
     Liability Act: A Critical Analysis, 16 Wake Forest L. Rev. 
     171, 173 (1980). When an action does not fall within the 
     scope of the Act, common law principles, such as negligence, 
     and the Uniform Commercial Code still apply; but, they apply 
     without any alteration by the Act, which might otherwise 
     occur had the Act applied. See Gregory v. Atrium Door and 
     Window Co., 106 N.C.App. 142, 415 S.E.2d 574 (1992); Cato 
     Equip. Co. v. Matthews, 91 N.C.App. 546, 372 S.E.2d 872 
     (1988).

                          A. Negligence Claim

       [4][5][6] In its first claim against NTI, MRNC alleges NTI 
     negligently failed ``to change the standard preset dialing 
     access code in the [system] prior to delivery and 
     installation at MRNC'' and negligently failed to give 
     appropriate instructions and warnings concerning alteration 
     of the standard preset dialing access code. The elements of a 
     products liability claim for negligence are ``(1) evidence of 
     a standard of care owed by the reasonably prudent person in 
     similar circumstances; (2) breach of that standard of care; 
     (3) injury caused directly or proximately by the breach; and 
     (4) loss because of the injury.'' Travelers Ins. Co. v. 
     Chrysler Corp., 845 F.Supp. 1122, 1125-26 (M.D.N.C. 1994) 
     (quoting McCollum v. Grove Mfg. Co., 58 N.C.App. 283, 286, 
     293 S.E.2d 632, 635 (1983)). Specifically, with respect to 
     what losses are recoverable in a products liability suit, 
     North Carolina follows the majority rule and does not allow 
     the recovery of purely economic losses in an action for 
     negligence. Chicopee, Inc. v. Sims Metal Works, Inc., 98 
     N.C.App. 423, 432, 391 S.E.2d 211, 217, review denied and 
     granted, 327 N.C. 426, 395, S.E.2d 674, and reconsideration 
     denied, 327 N.C. 632, 397 S.E.2d 76 (1990), and appeal 
     withdrawn, 328 N.C. 329, 402 S.E.2d 826 (1991). At issue in 
     this case is whether MRNC suffered economic loss. Central to 
     the resolution of this issue is what constitutes economic 
     loss.
       Before determining the nature of economic loss, examining 
     the reasoning behind the majority rule disallowing recovery 
     for such loss is instructive. The rule's rationale rests on 
     risk allocation. See 2000 Watermark Ass'n v. Celotex Corp., 
     784 F.2d 1183, 1185 (4th Cir.1986) (analyzing whether South 
     Carolina courts would adopt the majority position).
       Contract law permits the parties to negotiate the 
     allocation of risk. Even where the law acts to assign the 
     risk through implied warranties, it can easily be shifted *94 
     by the use of disclaimers. No such freedom is available under 
     tort law. Once assigned, the risk cannot be easily 
     disclaimed. This lack of freedom seems harsh in the context 
     of a commercial transaction, and thus the majority of courts 
     have required that there be injury to a person or property 
     before imposing tort liability.
       The distinction that the law makes between recovery in tort 
     for physical injuries and recovery in warranty for economic 
     loss is hardly arbitrary. It rests upon an understanding of 
     the nature of the responsibility a manufacturer must 
     undertake when he distributes his products. He can reasonably 
     be held liable for physical injuries caused by defects by 
     requiring his products to match a standard of safety defined 
     in terms of conditions that create unreasonable risks of harm 
     or arise from a lack of due care.
       Id. at 1185-86. The manufacturer can insure against tort 
     risks and spread the cost of such insurance among consumers 
     in its costs of goods. Id. at 1186.
       Some courts examining the nature of the claimant's loss 
     focus on whether the damages result from a failure of the 
     product to perform as intended or whether they result from 
     some peripheral hazard. See, e.g., Fireman's Fund Am. Ins. 
     Cos. v. Burns Elec. Sec. Servs. Inc., 93 Ill.App.3d 298, 48 
     Ill.Dec. 729, 417 N.E.2d 131 (1980); Arell's Fine Jewelers v. 
     Honeywell, Inc., 170 A.D.2d 1013, 566 N.Y.S.2d 505 (1991). 
     When some hazard occurs which the parties could not 
     reasonably be expected to have contemplated, the result is 
     noneconomic loss. Fireman's Fund Am. Ins. Cos., 48 Ill.Dec. 
     at 731, 417 N.E.2d at 133. Yet, when a product fails to 
     perform as intended, economic loss results. Id. Economic loss 
     is essentially ``the loss of the benefit of the user's 
     bargain.'' Id. ``[T]he distinguishing central feature of 
     economic loss is . . . its relation to what the product was 
     supposed to accomplish.'' Id.
       The Fourth Circuit apparently views physical harm as a 
     distinguishing factor between noneconomic and economic 
     losses. See 2000 Watermark Ass'n, Inc., 784 F.2d at 1186. 
     ``The UCC is generally regarded as the exclusive source for 
     ascertaining when the seller is subject to liability for 
     damages if the claim is based on intangible economic loss and 
     not attributable to physical injury to person or to a 
     tangible thing other than the defective product itself.'' Id. 
     (citing W. Page Keeton et al., Prosser and Keeton on Torts 
     Sec. 95A, at 680 (5th ed. 1984))
       The application of either approach--the benefit of the 
     bargain approach or the physical harm approach--which North 
     Carolina might adopt would lead to the conclusion that MRNC 
     has suffered pure economic loss. MRNC alleges it suffered 
     harm as a result of NTI's failure to change the standard 
     preset dialing access code before delivery and installation 
     at MRNC and as a result of NTI's failure to provide 
     instructions and warnings concerning the alteration of the 
     access code. The harm is in the form of monetary loss, if 
     MRNC is required to pay AT & T. Clearly, MRNC's allegations 
     center on the product's failure to meet MRNC's expectations, 
     or in other words, failure to perform as intended. That 
     someone might gain access to the system and place 
     unauthorized calls could reasonably be expected to be within 
     the parties' minds. In addition, no physical injury has 
     occurred. The only injury MRNC asserts is damage to its 
     financial resources. Based on the foregoing reasons, MRNC 
     seeks to recover purely economic loss and such loss in not 
     recoverable under tort law in a products liability action in 
     North Carolina. North Carolina's Products Liability Act does 
     not change this result, and the applicability of the Act is 
     not at issue as to the claim. Therefore, NTI's motion to 
     dismiss the negligence claim is GRANTED.

                  B. Breach of Implied Warranty Claim

       [7] MRNC contends NTI breached an implied warranty by 
     failing to inform MRNC of the system's susceptibility to toll 
     fraud if certain precautionary measures, such as changing the 
     access code, were not taken. North Carolina's Product 
     Liability Act relaxes the privity requirement with respect to 
     a claim for breach of implied warranty. See Sharrard, McGee & 
     Co. v. Suz's Software, Inc., 100 N.C.App. 428, 432, 396 
     S.E.2d 815, 817-18 (1990).
       *95 A claimant who is a buyer, as defined in the Uniform 
     Commercial Code, of the product involved . . . may bring a 
     product liability action directly against the manufacturer of 
     the product involved for breach of implied warranty; and the 
     lack of privity shall not be grounds for dismissal of such 
     action.
       N.C.Gen. Stat. Sec. 99B-2(b). This section applies to a 
     ``product liability action'' as that term is defined in the 
     Product Liability Act, Chapter 99B. See id. As noted 
     previously, a ``product liability action'' is ``any action 
     brought for or on account of personal injury, death or 
     property damage caused by or resulting from the manufacture . 
     . . of any product.'' Id. Sec. 99B-1(3). In the instant case, 
     the issue is whether MRNC's breach of implied warranty claim 
     is a ``product liability action'' under the Act, thereby 
     abrogating the necessity of privity between MRNC and NTI.
       [8][9] The Act is inapplicable to claims ``where the 
     alleged defects of the product manufactured by the 
     defendant caused neither personal injury nor damage to 
     property other than to the manufactured product itself.'' 
     Reece v. Homette Corp., 110 N.C. App. 462, 465, 429 S.E.2d 
     768, 769 (1993); see Cato Equip. Co., 91 N.C. App. at 549, 
     372 S.E.2d at 874. When the claim does not fall within the 
     Act, privity is still required to assert a claim for 
     breach of an implied warranty where only economic loss is 
     involved. Gregory, 106 N.C. App. at 144, 415 S.E.2d at 575 
     (quoting Sharrard, McGee & Co., 100 N.C. App. at 432, 396 
     S.E.2d at 817-18 and questioning whether this rule is 
     still good policy); see Arell's Fine Jewelers, Inc., 566 
     N.Y.S.2d at 507.
       Here, MRNC does not deny that privity does not exist 
     between itself and NTI. MRNC claims it is entitled to 
     maintain an action under the Products Liability Act and, 
     thus, would fall within the exception to the privity 
     requirements in the context of breach of implied warranty. 
     However, MRNC does not allege the defects in the Meridian 
     Voice Mail System resulted in any physical injury or property 
     damage. It has only alleged economic loss. See supra part 
     II.A. In such a situation, the general rule regarding privity 
     remains intact. Without privity, MRNC cannot maintain its 
     breach of implied warranty claim. Therefore, NTI's motion to 
     dismiss the breach of implied warranty claim in GRANTED.

                            III. Conclusion

       For the foregoing reasons, third-party defendant NTI's 
     motion to dismiss is GRANTED as to both claims, and as to 
     this party the action is DISMISSED. This ruling moots NTI's 
     motion to stay discovery proceedings and, thus, such motion 
     is DENIED.

  Mr. HATCH. Mr. President, I understand what the distinguished Senator 
from North Carolina is attempting to do. He is a very skilled lawyer, 
and a very good lawyer, and from my understanding primarily a 
plaintiffs' lawyer in the past. I have been both a defense and 
plaintiffs lawyer, and I presume maybe he has also, and I have a lot of 
respect for him and I understand what he is trying to do.
  The fact of the matter is, we have a 3-year bill here, that sunsets 
in 3 years,

[[Page S6827]]

that is trying to solve all kinds of economic problems in our country 
that could cripple our country and cause a major, calamitous drop in 
everything if we do not have this bill, plus it could destroy our 
complete software and computer industry in a short period of time if we 
get everything tied up in litigation in this country because we are 
unwilling to pass this bill with this amendment on, that we have worked 
so hard, with Senator Dodd, to bring about.
  If we do not pass this bill with this amendment, as amended by this 
amendment, the Dodd-McCain-Hatch-Feinstein-Wyden amendment--and 
Sessions amendment--I apologize for leaving out Senator Sessions' name. 
He has worked hard on this bill. But if we don't pass this bill with 
this language in it, then I predict we will have undermined the very 
purposes we are here to try to enforce.
  This bill is an important bill. This bill assures every aggrieved 
party his day in court. It does not end the ability to seek 
compensation. What it does, however, is to create procedural incentives 
that for a short time delay litigation in order to give companies the 
ability to fix the problem without having to wait for a judgment from 
some court--which could take years. But in this particular case, I want 
to remind all that the bill sunsets in 3 years. It is limited in a way 
that prevents what would be catastrophic losses in this country, 
unnecessary losses if this bill is enacted. That is why we should quit 
playing around with this bill and get it passed.
  I don't care that the President of the United States says, he is not 
going to veto this bill. He would be nuts to veto it. This is a 
bipartisan bill. This amendment is a bipartisan amendment, and it has 
been worked out over a very long period of time and through a lot of 
contentious negotiations. We finally arrived at something here that can 
really solve these problems.
  Sincerely motivated as is the distinguished Senator from North 
Carolina, I hope our colleagues will vote this amendment down, because 
it will really undermine, at least in my opinion and I think in the 
opinion of many others, what we are trying to do here. What we are 
trying to do here is in the best interests of our country.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Carolina.
  Mr. EDWARDS. If I can respond briefly to the comments of the 
distinguished Senator from Utah, first I say to Senator Hatch I am 
absolutely willing, and the people of North Carolina are willing, to 
live with the law in North Carolina. What my amendment does is leave 
all existing law in place in this very narrow area.
  The problem is that, for example, I know under North Carolina law, if 
a fraudulent misrepresentation--if a crime--is committed, if somebody 
makes a fraudulent misrepresentation and as a result somebody is put 
out of business, they are entitled to recover their economic losses, 
because there is an exception for intentional fraud, there is an 
exception for a criminal act.
  The McCain bill has no such exception. It has no exceptions at all.
  Mr. HATCH. Will the Senator yield on that point?
  Mr. EDWARDS. Yes, I will.
  Mr. HATCH. The McCain bill doesn't affect that. If fraud is committed 
consumers in most states will be able to recover even economic losses 
under state statutes. This is not altered by the Y2K Act. So, if there 
is fraud committed or a criminal act committed, you are going to be 
able to have all your rights, even in States like North Carolina, where 
they codify the economic loss rule. So that is not affected by this 
bill at all.
  The only thing that will be affected by this bill, if your amendment 
is adopted there will be an increase of wide open and aggressive 
litigation. Without your amendment, we will not have a uniformity of 
rule that will help us to get to the bottom of this matter. So with 
regard to the count on fraud, with regard to real fraud, or statutory 
fraud, with regard to criminal acts, the defendants will still be 
liable for what the distinguished Senator believes they should be 
liable for.
  Mr. EDWARDS. I say to Senator Hatch I respectfully disagree with 
that. If you look at the section, it has no exceptions of that nature 
in it at all. It has no exception. There is a powerful limitation on 
the recovery of economic loss, essentially eliminating the right to 
recover for economic loss. And there is no exception in that section 
for intentional, there is no exception for fraud and misrepresentation, 
there is no exception for egregious, reckless conduct. None of those 
things is excepted from the limitation on economic loss.
  I might add, to the extent we are looking for uniformity when we are 
going to enforce contracts--there has been a great deal of discussion 
about contract law--we are going to enforce contracts under State law. 
So whatever the State law is, in the various States across the country, 
is going to be enforced under State law.
  So what I respectfully disagree with the Senator about is what I 
believe my amendment does, which is, in a very narrow fashion, it works 
in concert with the section immediately preceding it, and the section 
immediately preceding it requires every court in this land to enforce 
any existing contract. So if there is a contract, that contract will be 
enforced. It cannot be subverted by any kind of tort claim.
  What my amendment does, is it allows a remedy to all those millions 
of people who could have been the victims of fraud, who could have been 
the victims of reckless conduct, who could have been the victims of 
carelessness and negligence, who have absolutely no remedy; they cannot 
recover any of their out-of-pocket losses or any of those things. What 
my amendment does is it creates no new torts, no causes of action, no 
anything. When you talk, at great length, about the economic loss rule, 
the Supreme Court, and how various States have adopted it, it simply 
leaves that law in place. That is all it does, and only for those folks 
who have no other remedy because they have no contract.
  Mr. HATCH. Will the Senator yield?
  Mr. EDWARDS. I will.
  Mr. HATCH. That is what the Senator's amendment does. But in this 
total, overall bill, there is a statutory compensation, statutory 
exemption.
  Most States--in fact, I think virtually all States--have consumer 
fraud statutes that provide for the right to sue that allow for 
economic loss if there is an intentional fraud or criminal violation.
  Mr. EDWARDS. Will the Senator yield for a question on that?
  Mr. HATCH. The underlying bill does not change that. It does provide 
for an exception for statutory law. Where a State has a statutory 
provision, this bill does not change that.
  The Senator's position that intentional torts and common law fraud 
would not be remedied under this bill is incorrect.
  Mr. EDWARDS. Only with respect to economic loss, which is what we are 
talking about.
  In any event, my belief is, what we are dealing with is a situation 
where anybody, any little guy in the country who has no contract 
basically has no remedy. They cannot do anything.
  To the extent we talk about this being just a 3-year bill, that 3-
year period, in the nature of the Y2K problem, is going to cover every 
single Y2K problem that exists in the country. This problem is going to 
erupt in the year 2000. Three years is plenty of time to cover every 
single problem that is going to occur in this country. To the extent 
the argument is made that it is a limited bill, it is going to cover 
every single Y2K loss that will occur in this country.
  What I am trying to do with this amendment, which is very narrowly 
drawn, is create no new claims, no new causes of action, to have a 
provision that works in concert with the requirement that contracts be 
enforced. But for all those folks who have no contract, if their State 
allows them to recover for out-of-pocket losses, then they would be 
allowed to do that. If they have been the victim of fraud, if they have 
been the subject of criminal conduct, if they have been the victim of 
simple recklessness or negligent conduct, only if their State allows 
that would they be allowed to recover that loss.
  Every other limitation in this bill stays in place: No joint and 
several, caps on punitive damages, duty to mitigate, 90-day waiting 
period, alternative dispute resolution, limitation

[[Page S6828]]

on class action, specificity of pleadings and materiality--all those 
things stay in place.
  We are simply saying for those little guys across America who do not 
have a team of lawyers representing them drafting contracts, they ought 
to have a right to recover what they had to pay out of pocket as a 
result of somebody being irresponsible with respect to a Y2K problem.


                 Amendment No. 620 to Amendment No. 608

  Mr. EDWARDS. Mr. President, I ask that the previous amendment be set 
aside and I send another amendment to the desk and ask for its 
immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative assistant read as follows:

       The Senator from North Carolina [Mr. Edwards] proposes an 
     amendment numbered 620 to amendment No. 608.

  Mr. EDWARDS. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 7 (7), line 12 (12), after ``capacity'' strike 
     ``.'' and insert:
     ``; and
       ``(D) does not include an action in which the plaintiff's 
     alleged harm resulted from an actual or potential Y2K failure 
     of a product placed without reasonable care into the stream 
     of commerce after January 1, 1999, or to a claim or defense 
     related to an actual or potential Y2K failure of a product 
     placed without reasonable care into the stream of commerce 
     after January 1, 1999. However, Section 7 of this Act shall 
     apply to such actions.''

  Mr. EDWARDS. Mr. President, the purpose of this amendment is very 
simple. It is to provide that this bill, which provides many 
protections to those people who sell computer products for Y2K 
problems, not apply after January 1 of 1999, after this bill began its 
process of consideration in the Congress, because it is absolutely 
obvious that everybody in the country has known about this problem for 
many years and has been documented. It has actually been known for a 
period of 40 years and intensely watched over the last few years. 
Certainly every computer company in the world knew about Y2K before the 
beginning of January 1, 1999, when we began consideration of this 
legislation. There is a reason that this amendment is needed and 
necessary. Let me give an example.
  There are 800 medical devices that are produced by manufacturers 
across this country that are date sensitive and critical to the health 
care of people in this country, because a malfunction can cause injury 
to people.
  Approximately 2,000 manufacturers sell these medical devices. About 
200 of those manufacturers, 10 percent, have yet to contact the FDA 
about whether their medical devices are Y2K compliant. After being 
asked numerous times by the FDA, they have given no response. These are 
people who have been on notice for a long time about this problem.
  It is really a very simple amendment. What the amendment says is, 
beginning in 1999, when everybody on the planet knew that this was a 
huge problem, if you kept selling non-Y2K-compliant products, you 
certainly should not have any of the protections of this bill, with one 
exception: We still keep in place the 90-day cooling off or waiting 
period because we think it is reasonable for the manufacturer or the 
seller to have that period of time to look at the problem and work with 
the purchaser to see if it can be resolved, even if they put a product 
in commerce unreasonably knowing that this problem existed.
  The amendment says that folks who kept selling, beginning in 1999, 
non-Y2K-compliant products, knowing full well that this problem 
existed, knowing that the Congress was about to consider legislation on 
this issue and knowing that they were acting irresponsibly, should not 
have the protection of the McCain bill. That is the purpose and reason 
for this amendment.
  The FDA example is a perfect example. We have 200 companies out there 
who are unwilling to tell the FDA they have even looked to determine 
whether their medical products that involve the safety and lives of 
people are Y2K compliant.
  There is nothing in the McCain bill that prevents companies from 
continuing--I mean through today--selling non-Y2K-compliant products. I 
know in the spirit in which this bill was offered and intended that my 
colleagues would not have intended that we continue to allow, as a 
nation and as a Congress, people to engage in reckless, irresponsible 
conduct without holding them accountable for that, even today, knowing 
full well this problem exists. It simply excises from protection of 
this bill all those folks who continue, even today, to sell non-Y2K-
compliant products unreasonably; that is, knowing that they are selling 
non-Y2K-compliant products.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, parliamentary inquiry. Does this amendment 
modify the prior amendment; does it supersede the prior amendment?
  The PRESIDING OFFICER. The previous amendment was set aside, and this 
is a separate amendment.
  Mr. HATCH. Mr. President, this amendment basically is, in my opinion, 
too broad and too vague to provide guidance. It would cause more 
litigation, and what we are trying to do is prevent litigation that 
literally is unjustified.
  This amendment does not take into account the practical reality that 
the standard of care is determined as part of the case. Thus, how would 
a plaintiff know what the pleading requirements are under S. 96 for 
specificity? How would they know that? If it simply depends on the 
allegation of the plaintiff, then no plaintiff would fall under the 
requirements of this bill. This could result in tremendous abuse. Talk 
about loopholes, this would be the biggest loophole of all in the bill. 
The fact of the matter is, what we are trying to do in this bill is 
avoid litigation.
  The distinguished Senator from North Carolina talks about protecting 
the little guy out there, and the way that is done generally is through 
class actions, where the little guy gets relatively little, but those 
in the legal profession make a great deal. That is what we are trying 
to avoid, a pile of class actions that are unjustified under the 
circumstances where the manufacturers and all these other people go 
into the bunkers and get a bunker mentality rather than resolving these 
problems in advance. The whole purpose of this bill is to get problems 
resolved, to get our country through what could be one of the worst 
economic disasters in the country's history.

  The Y2K bill before us sets an important criteria for fixing the 
problems. There needs to be specificity in plaintiffs' pleadings--in 
fact, both plaintiffs' and defendants' pleadings--so glitches can be 
fixed before litigation.
  This amendment would allow ``reasonable care standards,'' which must 
be shown in negligence cases. It does not have to be pleaded with 
specificity. This would defeat the very purpose of this act, which is 
trying to get us to be more specific so those who have problems will be 
able to rectify those problems and remediate those problems.
  The goal here is to solve problems, not allow any one side or the 
other to get litigation advantage. We are not trying to give the 
industries litigation advantage. We are not trying to give big 
corporations litigation advantage. We are trying to solve problems. I 
commend all of those on this bill who have worked so hard to do so.
  If we accept this amendment, my gosh, we will not only not solve 
problems, we will not have specificity in pleadings, we will never know 
what is really going on, and we will have massive class actions all 
over this country that will tie this country in knots over what really 
are glitches that possibly could be corrected in advance.
  I yield the floor.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. I thank Senator Hatch for his very important and 
persuasive input in this debate. I appreciate it very much.
  I did want to save a few minutes for Senator Sessions to make his 
remarks. I yield to the Senator from Alabama.
  The PRESIDING OFFICER. The opponents have 4 minutes remaining.
  Mr. SESSIONS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alabama.

[[Page S6829]]

  Mr. SESSIONS. I associate myself with the excellent analysis by 
Senator Hatch. He chairs the Judiciary Committee. He has had hearings 
on this very problem. I think he has explained the situation very well.
  We need, in the course of dealing with computer Y2K problems, a 
uniform national rule. That is what we are attempting to do here. One 
of the great problems for the computer industry is that they are 
subject to 50 different State laws. The question is, Can they be 
unfairly abused in the process of massive litigation? I suggest that 
they could be, and actually that the entire industry could be placed in 
serious jeopardy.
  I recall the hearings we had in the Judiciary Committee on asbestos. 
There were 200,000 asbestos cases already concluded, and 200,000 more 
are pending. Some say another 200,000 may be filed. What we know, 
however, is that in that litigation 70 percent of the asbestos 
companies are now in bankruptcy. We do not have all the lawsuits 
completed yet.
  We also know that only 40 percent of the money they paid out actually 
got to the victims of this asbestos disease. That is not the way to do 
it, and that is what is going to happen in this case.
  What the Senator from North Carolina is basically arguing is for each 
State to keep its own economic loss rule, as I would understand his 
argument. But the problem with this is that a clever State could run 
out tomorrow and change its economic loss rule, or the court could rule 
and allow a few States to drain this industry, while other States are 
maintaining the national rule.
  First and foremost, the economic loss rule is a traditional rule of 
law. This statute basically says that. We will use a national rule for 
economic loss. It is a significant issue because we are blurring the 
differences between tort and contract.
  Alabama used to have common law pleading in which they were very 
careful about how you pled a case. You had to plead in contract or you 
had to plead in tort. If you pled in contract, you were entitled to 
certain damages. If you pled in tort, you were entitled to other 
damages. But you had to prove different elements under each one to get 
a recovery. The courts have said certain actions are not tort and 
certain action are not contract--they are only one.
  This legislation that is proposed would say, let's accept the 
national rule, the rule that has been clearly approved by the U.S. 
Supreme Court. Senator Hatch quoted from the U.S. Supreme Court in a 
unanimous verdict in approving this economic loss rule.
  I think it would be a big mistake for us to go back to the 50-State 
rule instead of the uniform rule so that we can get through this one 
problem, the Y2K problem, and limit liability and focus our attention 
on fixing the problem rather than lawsuits. If we have lawsuits in 
every single county in America, we are not going to have 200,000, we 
are going to have 400,000, or more. We have to end that. I know my time 
is up.
  The PRESIDING OFFICER. All time of the opponents has expired.
  The Senator from North Carolina has--
  Mr. DODD. I ask unanimous consent for 1 minute.
  The PRESIDING OFFICER. Is there objection?
  Without objection, the Senator from Connecticut is recognized for 1 
minute.
  Mr. DODD. The Senator from Alabama said it. Look, this is one of 
those issues where we have legislators, as Senators, who are constantly 
trying to find compromise. Reaching a 100-vote consensus, I guess, is 
the ideal representation of that. But occasionally there is just a 
division here. You have to make a choice on where you are going to go 
with this.
  This is a 36-month bill to deal with a very specific, real problem. I 
just left a hearing this morning on the medical industry. We are not 
talking about personal injuries here, but to give you some idea, there 
are some serious problems in terms of compliance we are seeing across 
the country. You have to decide here whether or not you want to expand 
litigation, which is a legitimate point.
  There are those who think the only way to deal with this is to rush 
to court. I respect that. I disagree with it, but respect it. Or do you 
decide for 36 months we are going to try to fix the problem to try to 
reduce the race to the courthouse?
  Those of us who are in support of this bill come down on that side. 
The only way you are going to do it is to have some uniform standards 
across the country. We all know, as a practical matter--any first-year 
lawyer would tell you--you would run to the State that has the easiest 
laws and get into court.
  If you disagree, you ought to vote for the Edwards amendment. If you 
think we ought to fix the problem, we think you should reject it so we 
can solve this over the next 36 months.
  I thank my colleagues.
  The PRESIDING OFFICER. The Senator from North Carolina.
  Mr. EDWARDS. I say to my friend, Senator Dodd, he and I actually 
agree about the vast majority of what he just said. I think this bill 
in place, if it passes, will do all the things the computer industry 
wants to protect them against Y2K problems.
  Joint and several liability is gone. There is a cap on punitive 
damages. The duty to mitigate isn't present. There is a 90-day waiting 
period, cooling off period. We have the 36 months. We have class action 
limitations. We have specificity and materiality of pleading.
  This is a very narrow, simple thing that we are trying to accomplish 
with this first amendment. We will enforce contracts as they exist. 
That is what these folks have been talking about at great length, and 
that is exactly what we should do.
  The problem is with those folks who do not have a contract, which is 
going to be the vast majority of Americans. When Senator Sessions says 
that the economic loss rule is a traditional rule, he is right about 
that. What my amendment says is that traditional rule stays in place 
exactly as it is.
  The problem is, the provision in this bill, in the McCain bill, is 
not the traditional rule. It contains no exceptions of any kind--no 
exceptions for fraud, no exceptions for reckless conduct, no exceptions 
for irresponsibility. The result of that is, regular people who buy 
computers--small businessmen, small businesswomen, consumers, folks who 
do not have an army of lawyers who went in and crafted contracts on 
their behalf--have no remedy. They simply have no remedy; they cannot 
get anything, not even their out-of-pocket loss. That is what the 
McCain bill does.
  What I have done in the narrowest conceivable fashion is drawn an 
amendment that allows those folks to recover only what their State law 
permits them to recover. It is just that simple. That is on the first 
amendment.

  On the second amendment, I just can't imagine what the argument is 
against this, although I heard the distinguished Senator from Utah 
argue against it. The very idea that people who are today, in 1999, 
selling non-Y2K-compliant products irresponsibly--and that is what is 
required--if they sell it without knowing about it, then they are still 
covered by the bill. Under my amendment, if they sell it knowingly, if 
they sell it irresponsibly in 1999, today, it simply says: Surely the 
Congress of the United States is not going to protect you. You have 
known about this forever. We are not going to continue to protect you.
  It is not going to create a flood of litigation. I have to 
respectfully disagree with my friend, Senator Hatch. That makes no 
sense at all. If the consumer didn't buy the product in 1999, and they 
can't show the product was sold and put into the stream of commerce 
irresponsibly in 1999, then the McCain bill is going to apply to them. 
Surely my colleagues do not want to provide this Congress's, this 
Senate's protection, stamp of approval for people to keep selling 
noncompliant Y2K products, including, in my example, people who sell 
medical devices that can cause injury and death to people. I just don't 
believe my colleagues on either side of the aisle want their stamp on 
allowing people to keep doing this, even though they are fully aware of 
it.
  That is simply what my amendment addresses. It says if you are still 
selling this stuff, and you are selling it non-Y2K compliant, and you 
know what you are doing, you don't get the benefit of the McCain bill.
  It couldn't be any simpler than that. I respectfully suggest to my 
colleagues

[[Page S6830]]

they do not want to put their stamp on people who have known about this 
problem forever and are doing nothing about it. Not only that, 
knowingly continuing to sell non-Y2K-compliant products that can cause 
injury to business, and, in the medical device fields, can cause injury 
to people, I just do not believe my colleagues on either side of the 
aisle would want to support that. This amendment cures that problem.
  With that, I yield back the remainder of my time and ask for the yeas 
and nays on both amendments.
  The PRESIDING OFFICER. The yeas and nays have been requested. Is 
there a sufficient second?
  There is a sufficient second.
  The yeas and nays are ordered on both amendments.


                       Vote On Amendment No. 619

  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
619. The yeas and nays are ordered.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Alaska (Mr. Stevens) is 
necessarily absent.
  Mr. REID. I announce that the Senator from Hawaii (Mr. Inouye) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 41, nays 57, as follows:

                      [Rollcall Vote No. 161 Leg.]

                                YEAS--41

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dorgan
     Durbin
     Edwards
     Feingold
     Graham
     Harkin
     Hollings
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Mikulski
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Shelby
     Specter
     Thompson
     Torricelli
     Wellstone

                                NAYS--57

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     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
     Roth
     Santorum
     Sessions
     Smith (NH)
     Smith (OR)
     Snowe
     Thomas
     Thurmond
     Voinovich
     Warner
     Wyden

                             NOT VOTING--2

     Inouye
     Stevens
       
  The amendment (No. 619) was rejected.


                       Vote on Amendment No. 620

  The PRESIDING OFFICER. The question now is on agreeing to amendment 
No. 620.
  The yeas and nays have been ordered.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Alaska (Mr. Stevens) is 
necessarily absent.
  Mr. REID. I announce that the Senator from Hawaii (Mr. Inouye) is 
necessarily absent.
  The PRESIDING OFFICER (Mr. Fitzgerald). Are there any other Senators 
in the Chamber desiring to vote?
  The result was announced--yeas 36, nays 62, as follows:

                      [Rollcall Vote No. 162 Leg.]

                                YEAS--36

     Akaka
     Biden
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dorgan
     Durbin
     Edwards
     Feingold
     Graham
     Harkin
     Hollings
     Johnson
     Kennedy
     Kerrey
     Kerry
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lincoln
     Mikulski
     Murray
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Shelby
     Specter
     Torricelli
     Wellstone

                                NAYS--62

     Abraham
     Allard
     Ashcroft
     Baucus
     Bayh
     Bennett
     Bingaman
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Dodd
     Domenici
     Enzi
     Feinstein
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kohl
     Kyl
     Lieberman
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Moynihan
     Murkowski
     Nickles
     Robb
     Roberts
     Roth
     Santorum
     Sessions
     Smith (NH)
     Smith (OR)
     Snowe
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
     Wyden

                             NOT VOTING--2

     Inouye
     Stevens
       
  The amendment (No. 620) was rejected.
  Mr. GORTON. Mr. President, I move to reconsider the vote by which the 
amendment was rejected.
  Mr. HOLLINGS. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from California.


                 Amendment No. 621 To Amendment No. 608

 (Purpose: To ensure that manufacturers provide Y2K fixes if available)

  Mrs. BOXER. Mr. President, I have an amendment which I send to the 
desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from California [Mrs. Boxer] proposes an 
     amendment numbered 621 to amendment No. 608.

  Mrs. BOXER. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       In section 7(e) insert at the end the following:
       (5) Special rule.--
       (A) In general.--With respect to a defendant that is a 
     manufacturer of a device or system (including any computer 
     system and any microchip or integrated circuit embedded in 
     another device or product), or any software, firmware, or 
     other set or collection of processing instructions to 
     process, to calculate, to compare, to sequence, to display, 
     to store, to transmit, or to receive year-2000 date-related 
     data that experienced a Y2K failure, the defendant shall, 
     during the remediation period provided in this subsection--
       (i) make available to the plaintiff a repair or 
     replacement, if available, at the actual cost to the 
     manufacturer, for a device or other product that was first 
     introduced for sale after January 1, 1990 and before January 
     1, 1995; and
       (ii) make available at no charge to the plaintiff a repair 
     or replacement, if available, for a device or other product 
     that was first introduced for sale after December 31, 1994.
       (B) Damages.--If a defendant fails to comply with this 
     paragraph, the court shall consider that failure in the award 
     of any damages, including economic loss and punitive damages.

  Mrs. BOXER. Mr. President, before I start to explain the amendment, I 
wonder if I may engage in a colloquy with the managers of the bill to 
make sure we are on the same path.
  As I understand it, after conversing with Senators Hollings and 
McCain, there has been an agreement that we will have a vote at 2 
o'clock on this particular amendment--I want to make sure I am correct 
on that--and that we will come back at 10 to 2 and each side will have 
5 minutes at that time.
  Mr. GORTON. Unfortunately, we have been notified of an objection to 
that request on this side. We cannot agree to it right now. We are 
going to try to work it out.
  Mrs. BOXER. We will just start the debate and see how long it takes 
us.
  Mr. President, this bill is an important bill to the State of 
California. I want to put it in a certain perspective. I very much want 
to vote for a Y2K bill, and that is why I supported the Kerry 
alternative which I believe is a fair and balanced bill because, after 
all, what we are trying to do is get the problem fixed.
  A lot of times I listen to this debate and it gets very lawyerly, and 
that is fine. I am not an attorney. What I want to do is get the 
problem fixed. What I want to do is be a voice for the consumer, the 
person who wakes up in the morning and suddenly cannot operate his or 
her computer; the small businessperson who relies on this system, and, 
frankly, a big businessperson as well. I want to make sure what we do 
here does not exacerbate the problem. I want to make sure what we do 
here gets the problem fixed. That is what all the Senators are saying 
is their desire: to get the problem fixed.
  The reason I support the Kerry bill and think it is preferable to the 
underlying bill is that I believe it is more balanced. If you are a 
businessperson and, as Senator Hollings has pointed out, many times you 
make a decision based on the bottom line--most of the

[[Page S6831]]

time--what you will do is weigh the costs and the benefits of taking a 
certain action. If you have a certain number of protections the Senate 
has given you, and those protections mean you have a better than even 
chance in court of turning back a lawsuit, you are apt to say: Maybe I 
will just gamble and not fix this problem, because I have a cooling off 
period.
  Frankly, in the underlying bill, the only thing that has to be done 
by the manufacturer involved is, he has to write to the person who 
thinks they may be damaged. That is all they have to do. They do not 
have to fix the problem. They do not even have to say they are going to 
fix the problem. They just have to say: Yes, I got your letter and I am 
looking at the situation.
  Then you look at the rest of the law, and the bar is set so high that 
I believe some businesspeople--certainly not all--will say: I am 
probably better off not fixing the problem.
  I go back to the original point. If your idea is to fix the problem, 
we ought to do something that encourages the problem to be fixed.
  I totally admit, each of us brings a certain set of eyes to the bill. 
When I look at the underlying bill, I see some problems. Others think 
it is terrific, that it will lead to a fix of the problem, and therein 
lies the debate.
  Every time I listen to this debate, I hear colleagues of mine who 
support this bill talk about how much they love the high-tech industry, 
how important the high-tech industry is to this country, how important 
it is that we do not do anything to reverse an economic recovery.

  All I can say is, no one can love the high-tech industry more than 
the Senator from California--I should say the Senators from 
California--because it is the heart and soul of our State. I do not 
have to extol Silicon Valley, the genius of the place, the fact that it 
is now being replicated in other parts of California, in San Diego, for 
example, in Los Angeles, where they have these high-tech corridors. It 
is wonderful to see what is happening.
  The last thing I want to do is hurt that kind of industry and hurt 
that kind of growth. But there is something a little condescending when 
my colleagues who support the underlying bill stand up and say: You are 
going to hurt the industry if you do not support the underlying bill. I 
think it is demeaning. I think it is demeaning to Silicon Valley.
  This is a strong industry. This is an ethical industry. These are 
good, decent people with good business sense and a sense of social 
justice, if you look at what they are doing in their local communities. 
To make it sound as if they need special protections and they need to 
be coddled is something that I do not ascribe to.
  I think it is a lack of respect. Yes, we have a problem here. Let's 
try to fix it. But to assume that this industry cannot stand up and fix 
a problem somehow troubles me. It is not respectful of the industry. It 
says there are some people who may need to have this special 
protection, and not fix the problem of the consumers.
  So when I look at the bill, I say, what really is in this bill that 
will lead to a fix of the problem? I have to tell you, in my heart of 
hearts, I really do not see it. I support a cooling off period. I think 
everybody does--most people do, because we do not know exactly what is 
going to hit us. Let's have a cooling off period. But something ought 
to be done in the cooling off period--more than just simply having a 
letter.
  If I write a letter to company X and say, ``I woke up this morning; 
my computer failed me; I'm a small businessperson; I'm in deep trouble; 
fix it,'' you know what the McCain bill says? I have a right to get a 
letter back within 30 days telling me what the company is going to do. 
What does that do for my business? What does that do for me? What does 
that do to help me get back on line? Nothing. As I read the bill, that 
is all that is required.
  So I want to fix the problem. I want to do it fairly. Under this 
underlying bill, suppose you bought the computer in 1998 or 1999. They 
could charge you more for the fix than the computer itself. You might 
just say: I am just getting rid of this computer. I am going to go out 
and buy a new one. You know what. You might then go to court; you would 
be so angry.

  So I don't see what we are doing in this bill that is real. I want to 
offer something that is real. That is what I do in this amendment.
  I want to tell you where I got the idea for this amendment, because I 
want you to know I did not think it up, as much as I wish I did. The 
consumer groups brought this to me--not the lawyers, not the high-tech 
people, the consumer groups. They said: We really don't want to have to 
go to court. We want to fight for a fix. We have this good idea. Guess 
where it was found, word for word, almost. Congressman Cox's and 
Congressman Dreier's original bill on Y2K contains this wonderful idea 
that, in the cooling off period in the bill, after you write to the 
company or companies involved, they must write back to you. And if they 
determine there is a fix available--and it is their determination, 
nobody else's--they have to fix the problem.
  What we have said in this amendment is, if the fix is on a system 
that is between 1990 and 1995, they can charge you the cost of the fix. 
So the company is out nothing, because we figure it may be a little 
more complicated than the later models. If it is after 1995, to 1999, 
then they have to do it for free, because--I have listened to Senator 
Hollings, and perhaps he can help me out with this point--most of the 
companies knew about this problem a long time ago. And, more than that, 
a vast majority of them are fixing the problem. They are doing it for 
nothing.
  Mr. HOLLINGS. Will the distinguished Senator yield?
  Mrs. BOXER. I am delighted to.
  Mr. HOLLINGS. I am intrigued by the Senator's comments with respect 
to the industry itself. This Senator does not know of a lousy computer 
manufacturer. It is the most competitive industry in the world. You 
have to have the most brilliant talent around you. As they say, it 
changes every other year. Or every year, and so forth, it is outdated. 
So, that being the case, there are no real laggards or hangers-on.
  Right to the point, does the Senator realize, for example, that they 
have to file with the Securities and Exchange Commission what we call a 
10-Q report; namely, of the Y2K problem? Do they know of the problem? 
What is the potential risk under the problem? What is to be done in 
order to correct that particular problem, and otherwise? What is the 
cost to the company? The stockholders want to know this information.
  The Securities and Exchange Commission requires it. Just looking at 
the Boeing Company Y2K report under their 10-Q report: ``The State of 
Readiness. The company recognized the challenge early, and major 
business units started work in 1993.''
  Did the Senator realize that?
  Mrs. BOXER. I actually was not aware many of them started the fix 
that early.
  Mr. HOLLINGS. Well, going further, does the Senator realize, for 
example--we are going to have lunch with the distinguished leader, Mr. 
Dell of Dell Computer--as of December 14 of last year, in their 10-Q 
report they state: ``All products shipped since January 1997 are Y2K-
certified. Upgrade utilities have been provided for earlier hardware 
products''?
  Mrs. BOXER. I was not aware of that, that the Dells were Y2K-
compliant as of 1997.

  Mr. HOLLINGS. Does the distinguished Senator realize ``no 
material''--no material cost? So they are not looking for a bill.
  I hope we do not pass a bill. Then, when the world ends, as some of 
the Senators around here are saying, and the computer industry is 
ruined, Dell will be the only one left. I will be all for them. That is 
really the history of all of them. I have Yahoo. I have all the rest of 
them here listed.
  But I think that is the point the distinguished Senator from 
California is making, who would know better than any, that this is a 
most responsible industry. They are not trying to get rid of the old 
models.
  This particular legislation, the Senator's amendment makes sure they 
do not get rid of the old models. It is like a car company saying: We 
are going to bring out a new model come January 1, so all the old 
models that we sell all this year are going to have all kinds of 
gimmicks or glitches. But let's make them 90 days or let's let them get 
a letter back or something else of that

[[Page S6832]]

kind. If the automobile industry came to Washington and asked for that, 
we would laugh them out of court.
  Mrs. BOXER. I want to make a point. It is a very subtle point to 
make. But by discussing minute after minute these special protections 
that go beyond the fair protections that I believe are warranted--and, 
by the way, my friend from Oregon made this a much better bill; I give 
him tremendous credit for that--but in my view, they still have special 
protection that, frankly, the greatest business in the world does not 
really need to have, because they are good people, because they are 
making the fixes, because their future depends upon how the consumer 
rates them.
  Mr. HOLLINGS. Certainly.
  Mrs. BOXER. What I am fearful of is that in the end we are protecting 
the bad apples. And I do not mean to use Apple Computer. Apple Computer 
got this a long time ago. They are all compliant. But we will wind up--
because so much of the industry cares about this, wants to make the 
fixes--protecting those few that are bad. I am very worried.
  Mr. DURBIN. I think the Senator makes an excellent point. I ask the 
Senator if she will yield for a question.
  Mrs. BOXER. Yes.
  Mr. DURBIN. Because many people think this is a debate between the 
computer and software companies versus the trial lawyers; choose whose 
side you are going to be on. People forget we are talking about the 
consumers of the products, the people who buy computers and software. 
These are businesses, too. These are doctors and manufacturers and 
retail merchants who rely on computers to work.
  This bill basically says, if you bought a computer that, it turns 
out, stops working come January 1 in the year 2000, we are going to 
limit your ability to recover for wrongdoing by the person who sold it 
to you. We will limit it. Unlike any other category of defendants in 
American courts, save one that I can think of, we are going to say this 
is a special class of people; those who make computers and software are 
not going to be held accountable like the people who make automobiles, 
and the folks who make equipment, the folks who make virtually 
everything in the world, including all of us.
  Everybody gathered here in this Chamber can be held liable in court 
for our wrongdoing. If we make a mistake, we can be brought before a 
jury, and they can decide whether our mistake caused someone damage. 
This bill says: Wait a minute, special class of Americans here. 
American corporations that make computers and software shall not be 
held liable, or at least if they are going to be held liable, under 
limited circumstances. So the losers in this process are not trial 
lawyers. The losers are other businesses that say, January 2, wait a 
minute, this computer is not working. I can't make a profit. I have 
hundreds of employees who counted on this, and now what am I supposed 
to do?

  I say to the Senator from California, thank you for this amendment.
  A couple questions. You make a point here that if we are going to 
generalize and say, well, there may be some bad actors in this industry 
that sold defective products, that we are going to, in fact, absolve 
all manufacturers, it is a disservice to the companies which in good 
faith have been doing everything in their power to bring everything up 
to speed. Just to make this point, is it the Senator's point that we do 
not want to favor those bad actors at the expense of so many good 
actors from Silicon Valley and across the world?
  Mrs. BOXER. Absolutely. I think this argument has not been made 
before. Something was troubling me, as I listened to the debate, 
because it seemed to me that the implied sense around here is that 
somehow this wonderful industry can't stand up to this test. This is an 
industry that has performed miracles for the people of this country, 
changing the nature of the way we do business, the way we live, the 
incredible communications revolution. I think they can meet this 
challenge. I do not think they need to have, as my friend puts it, this 
special carve-out, because I think in a way it is insulting to them.
  Mr. DURBIN. If the Senator will continue to yield, I can only think 
of two other groups in America that enjoy this special privilege from 
being sued: foreign diplomats----
  Mrs. BOXER. Yes.
  Mr. DURBIN. --and health insurance companies, which happen to fall 
under the provision in Federal law which says--we are debating this, 
incidentally, on the Patients' Bill of Rights--if they denied coverage 
to you, they only have to pay for the cost of the procedure, as opposed 
to all the terrible things that might have happened to them. As I 
understand this bill, from the amendment by the Senator from North 
Carolina, there are strict limitations here on what a person whose 
business is damaged can recover.
  Mrs. BOXER. Correct.
  Mr. DURBIN. I also ask the Senator, as I take a look at her 
amendment, she is suggesting, if I am not mistaken, that if you bought 
your computer back 10 years ago, which was light-years ago in terms of 
computer technology, for a 5-year period of time, 1990 to 1995, is that 
correct----
  Mrs. BOXER. That is correct.
  Mr. DURBIN. --if you bought it during that period of time and there 
is a problem, then the company, of course, can charge you for the cost 
of bringing your computer up to speed, making sure it works?
  Mrs. BOXER. Yes.
  Mr. DURBIN. But after 1995, the Senator is arguing, the industry knew 
what was going on. They knew what the challenge was. If they continued 
to sell computers they knew were going to crash or did not take the 
time to fix, then she is saying the customers, the businesses, the 
doctors and engineers that bought the computers shouldn't be left 
holding the bag; it should be the expense of the computer company to 
fix it. Is that the Senator's amendment?
  Mrs. BOXER. Exactly right. Under the underlying bill, if you bought a 
computer in 1999, and it fails you a few days later, you get nothing in 
terms of a fix. You get a letter. We hope the letter says we are going 
to fix it. But you do not have any commitment that it would be for 
free. You could get charged thousands of dollars. Our friend, Senator 
Hollings, who has been so articulate in the opening moments of the 
debate, talked about these doctors where the company said in order for 
them to get a fix, it costs them more than the original system. Am I 
right, I say to the Senator?
  Mr. HOLLINGS. Exactly. He bought an upgrade just the year before, 
guaranteed for at least 10 years, for $13,000. In order to fix it, the 
charge was $25,000. That is the testimony before a committee of the 
Congress. He had really not only written a letter and everything else, 
no response, he finally got a lawyer, but even that did not work. The 
lawyer was clever enough to put it on the Internet and, bam, there were 
20,000 similarly situated. Wonderful Internet. Immediately the company 
said: We will not only fix it, we will pay the lawyers' fees and 
everything. That is all he wanted. He wanted a fix. Otherwise, he was 
out of business.
  People don't rush to the courthouse. They have to do business. If I 
filed a claim for Senator Boxer this afternoon in the courts of 
California or South Carolina, I would be lucky to get into the 
courthouse before the year 2000. I mean, the dockets are backed up that 
way. We live in the real world.
  We are not looking for lawsuits. We are looking for results.
  Mrs. BOXER. I say to my friends, that is so true. If you look at the 
number of lawsuits that are out there, the big explosion, and there has 
been one, has been business suing business. It is not the individual, 
and it is not the small guy, because it is cumbersome, and it is 
expensive. You don't get your problem fixed really.
  Mr. DURBIN. If the Senator will yield, I am curious. I ask the 
Senator for her reaction on this. What if we said, instead of 
computers, we are going to deal with airplanes this way. If we said we 
do not want people who make airplanes to be held liable if they fall 
out of the sky, America would say that is crazy, that is ridiculous. 
We, of course, want to hold the manufacturers of products where we have 
a lot at stake to a standard of care.
  If you were going to absolve them, insulate them, then, frankly, as a 
consumer I am going to have second thoughts about getting on the 
airplane.
  I think what the Senator is saying with her amendment is those 
companies that have done the right thing,

[[Page S6833]]

have established their reputation for integrity by stepping forward and 
saying we are solving the Y2K problem, certified, as the gentleman from 
Dell Computer did with the SEC, these companies that have gone that 
extra mile and want to stand behind that reputation will actually be 
penalized by this bill, because, frankly, all their hard work is not 
only being ignored, it is being defied.
  They are saying: We have to carve out a special treatment here for 
those who didn't do a good job as businesspeople.
  Coming back to the point I made earlier, the victims here are not 
trial lawyers. The victims are businesses, small businesses as well as 
medium-size businesses, trying to keep their employees at work, 
worrying that January 2 of the year 2000, they are going to have to 
close down and send people home without a paycheck. Those are the folks 
disadvantaged by the broad sweep of this bill.

  I think the Senator from California is on the right track. The good 
actors, the ones that have worked hard to make this work, should be 
rewarded. Those that have not should not be protected by the National 
Association of Manufacturers, the U.S. Chamber of Commerce, and all of 
the interests that have come in here and said, let us provide special 
treatment for those that have not met their responsibility.
  Mrs. BOXER. I thank my friends for their comments, because as I 
listened to them, I become more and more convinced of the importance of 
this amendment. It levels the playing field between the good actors and 
the bad ones.
  Right now, if this bill passes without this amendment, nobody has to 
do anything. The people who already have taken the move to fix the 
problem are definitely at a disadvantage. Why? They spent money to do 
it. They worked hard to do it. Yet, we are protecting those who are 
sitting back and saying, wow, I can't believe this deal I am getting.
  They are changing the law. It is only for 3 years, but it is enough 
time. How many people are going to sit around and wait to get their 
computers fixed? They will throw them out, and that is hard for a lot 
of consumers. That is why the Consumers Union is so strongly behind 
this and Public Citizen is so strongly behind this.
  Mr. HOLLINGS. Will the Senator yield?
  Mrs. BOXER. I am happy to yield.
  Mr. HOLLINGS. I hold in my hand an Institutional Investor. This is 
the real official document, the investment industry. They had a survey 
of the Congressional Financial Officers Forum of all the large 
corporations in the country. To the question, Do you feel your 
company's internal computer systems are prepared to make the year 2000 
transition without problems, do you realize that 88.1 percent said yes, 
and only 6 percent said no? So that is 6 percent that have another 6 
months to take care of it. With respect to actually getting and working 
out with their suppliers, do you realize that 95.2 percent said they 
have worked with their suppliers and are ironing out all the problems?
  It really verifies exactly the astute nature of the computer 
industry, as described by the Senator from California. You are right on 
target, and it hasn't been said on the floor as you are saying it, with 
authority, too. I commend the Senator.
  Mrs. BOXER. I thank the Senator. I can't be more proud of the Silicon 
Valley. I can't be more proud of the high-tech industry that I see 
blossoming all throughout my State. I can't be more proud of them.
  The facts the Senator put into the Record make me even more proud, 
because what he is saying is the vast majority are good actors. The 
vast majority understand their good practice of fixing the Y2K problem 
will redound to their benefit as well as to the benefit of consumers. 
They have a business conscience. They are good corporate actors. They 
have a social conscience. They understand it.
  In many ways, when you talk to some of these executives, they are 
very democratic. And I don't mean in terms of their party affiliation; 
I mean democratic with a small ``d.'' They want to spread democracy. 
They want each individual, through the power of the Internet and the 
power of their computer, to have the information, to have the 
knowledge. That is what excites them.

  So they are good people making a wonderful product. They don't want 
it to fail. Yet, we have a bill here that essentially says to those who 
haven't moved aggressively on this problem--and by the way, this is 
taken from the Apple web site, I say to my friend. There is a great 
quote by Douglas Adams about the year 2000 readiness. His quote is:

       We may not have gotten everything right, but at least we 
     knew the century was going to end.

  Good point. They knew the century was going to end. They knew there 
might be some problems.
  So to sum up the argument I am making for this important amendment, 
it is the one amendment that I know of where the attorneys and the 
Silicon Valley were not even entered into the discussion. It is a hard, 
straightforward, consumer rights amendment, brought to you by the 
consumer groups, the people who really care about the individual 
business and the individual. It was originally found in the Cox-Dreier 
legislation, which was introduced in 1998. We practically take it word 
for word. What does it require? It says in that remediation period, 
after you have notified the company of your problems, if they determine 
they have a fix to your problem, they have to fix it. It is as simple 
as that. Who decides if there is a fix? They decide. We are not having 
anybody come and look over their shoulder. If the company says we have 
a fix, they fix it.
  Guess what happens. Everybody is happy. The consumer is happy. They 
can go back to work on their computers. The company is going to be 
happy because they are going to have to satisfy the consumer. There 
will be no lawsuit. Why? We fixed the problem.
  In some very interesting way, the underlying bill, because it doesn't 
require any fix at all, even if your computer was bought 3 days before 
the millennium, encourages companies not to do it. I just hope there 
will be a unanimous vote for this amendment, and if there isn't, if we 
don't win this amendment, it says to me the consumer isn't important in 
this debate.
  I can't imagine we are being so fair--if it is a really old computer, 
before 1990, the company could charge anything they want because we 
admit maybe it is worthless. But if it is between 1990 and 1995, they 
can charge you the cost. If it costs them $500 to fix the problem, you 
will pay $500. If it is a newer computer, between 1995 and the year 
2000, they ought to do it for free because, as the Apple people said, 
``We may not have gotten everything right, but we knew the century was 
going to end.''
  I have to tell you that by 1995, 1996, 1997, 1998, 1999, if people 
didn't know this was a problem, they had to be sleeping, because 
everybody knew this was a problem in the 1990s.
  I am very hopeful to get the support of the Senator from Oregon and 
to get the support of the Senator from Arizona. I think this will be 
something that would make this bill more consumer friendly, despite the 
other problems.
  I yield the floor at this time.
  Mr. WYDEN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. WYDEN. Mr. President, I came over to the floor because I am in 
sympathy with what the Senator from California is trying to do. But 
this bill has taken such a pasting in the last 15 or 20 minutes that I 
am going to take a couple of minutes to correct the Record before we 
actually get into the merits of what my colleague is trying to do.
  For example, I have heard repeatedly that if you pass this bipartisan 
legislation put together by the Senator from Arizona and the Democratic 
leader on technology issues, Senator Dodd, and myself, well, these 
companies won't have to do anything; they won't have to do anything at 
all.
  Well, if they don't do anything at all, they are going to get sued. 
That is what is going to happen to them. Then we heard that if they 
were big and bad, they were going to get a free ride. I heard that 
several times here on the floor of the Senate in the last 15 or 20 
minutes. If you are big and bad, you are going to get a free ride if we 
pass this bill. I will tell you what happens if

[[Page S6834]]

you are big and if you engage in egregious activity, if you rip people 
off; what happens is you get stuck for punitive damages because there 
is absolutely no cap on those, and joint and several liability applies 
to those people as well. That is what happens to the people who are big 
and bad under our legislation.
  I think it is just as important that the Record be corrected. I also 
heard that businesses were going to be the victims and the like. Well, 
if that is the case, it is sort of hard to understand why hundreds and 
hundreds of business organizations are supporting this bill. I would be 
very interested in somebody showing me a list of some business groups 
that aren't supporting the bill because I would sure want to be 
responsive to those folks.
  Let me, if I might, talk specifically about the Boxer amendment. By 
the way, apart from the last 15 or 20 minutes of discussion, my friend 
from California has been very helpful on a lot of technology issues 
that this Senator has been involved in. I remember the Internet Tax 
Freedom Act that we worked on in the last session of the Congress, 
where the Senator from California was very helpful. I very much 
appreciated that.
  The question that I have--and maybe I can engage in a discussion with 
the Senator from California on this and try to see if I can get fixed 
in my mind how to make what the Senator from California is talking 
about workable, because I think the Senator from California wants to do 
what is right. I am now just going to focus on her amendment and sort 
of put aside some of these other comments that I have heard in the last 
15, 20 minutes, which I so vehemently take exception to, and see if I 
can figure out with the Senator from California how we can make this 
workable. I want to tell her exactly what my concerns are. I come from 
a consumer movement, and she comes from that movement, and I know what 
she is trying to do is the right thing.
  Let us say that you have a system where one chip out of thousands is 
out of whack. My colleague says it ought to be repaired or replaced, 
and the question that we have heard as we have tried to talk to people 
is: Does this mean replacing just a chip? Does it mean replacing the 
operating system? Who is responsible for the fix? Is it Circuit City, 
where you bought it? Is it Compaq Computer? Is it the chip maker?
  What we have found in our discussions with people is that it wasn't 
just chips, but it was the software situation as well. Is it going to 
be Lotus or Novell or the retired computer programmer who put the code 
together a few years ago? As far as I can tell, the responsible 
companies--and I think the Senator from California has been absolutely 
right in making the point that there are an awful lot of responsible 
people out there. We are trying to do the right thing. The responsible 
people seem to want to do the kinds of things that the Senator from 
California is talking about. I know I saw an EDS advertisement 
essentially in support of our bill that talked about how they have a 
system to try to do this.
  If we can figure out a way, with the Senator from California, to do 
the kinds of things she is talking about so as to not again produce 
more litigation at a time when we are trying to constrict litigation, I 
want to do it.
  I have already had my staff put a lot of time into this. We are 
willing to spend a lot more time, because I think the motivations of 
the Senator from California are absolutely right. The question is how 
to deal with the kinds of bits, bytes, and chips, and all of the 
various technological aspects that go into this.
  I would be happy to yield to my colleague and hear her thoughts on 
it.
  Mrs. BOXER. Mr. President, first of all, I thank my friend. I know it 
is hard, when you put so much work into the bill, when there is a 
disagreement. I just want to say to my friend, in terms of my 
particular bill, it focuses on that so-called remediation period. That 
is what I am focusing on, because, in my opinion, there is nothing that 
requires any action to fix in that period. It requires communication 
back and forth. That was my only point.
  This amendment--I am happy my friend is sympathetic to it, and I hope 
we can work out our differences on it--actually says to the 
manufacturer--the retailer is not involved in this. I say to my friend, 
if he reads my amendment, it just says if the manufacturer determines 
that there is a fix, then they must make the fix.
  In that 10-year period, we prescribe that if it is a newer part and a 
newer system, he does it for nothing, because in 1995 he should have 
known it, and prior to 1995, 1990 to 1995, we say at cost.
  Again, I want to make sure my friend knows, we do not change one 
piece of the underlying bill in terms of the rest of the bill. The rest 
of the bill stands. We don't add any other court suits. We don't change 
any damages. All we say is fix it if you can. And if you cannot, the 
underlying bill will apply. That is really all we are doing.
  I think this sends a clear message to those manufacturers that have 
been lax to follow the lead of the good manufacturers that have been 
wonderful. And those are the ones I know and love from my State who 
have said we are going to make the consumer whole, we are going to make 
the consumer happy.
  I want my friend to know that we add no new cause of action--nothing. 
In the underlying bill, we just say remediation, period, instead of 
just saying it is a time for people to write bureaucratic lawyers a 
letter to each other, which is better than nothing. It is a cooling-off 
period. We say if you have a fix, make it work, because under the 
underlying bill there is no such requirement. You could charge people 
more than they even pay for the machine, et cetera, even if they got 
the machine 3 days before the millennium.
  I am happy to work with my friend. If she wants to put a quorum call 
in, perhaps, and sit down together to see if we can come up with 
something, Senator McCain said to me through staff that he thought we 
could do this as a policy.
  Frankly, we are writing legislation, and I think it is deserving of 
being included. But I would be delighted to work with my friend.
  Mr. WYDEN. My colleague is constructive, as always. Here is the kind 
of concern I think the high-technology sector would have to focus on 
the manufacturer. That deals with this issue of interoperability where, 
in effect, if you have one system or product that is Y2K compliant but, 
as a result of it being installed in a system that isn't already Y2K 
ready, you may have in fact failures, or bugs, or defects, the Y2K-
ready product may get infected and not properly function. Then the 
question is, Who is responsible? Can you, in effect, have somebody take 
responsibility for fixing a problem that isn't under their control?
  If the Senator from California would like to put in a quorum call and 
get into the issue of interoperability and how to deal with these 
various issues, and sort of have all of the people talking at once, I 
think that is very constructive. I am anxious to do it.
  I think this is a discrete and important concept. Again, without 
going back to all the things that were said in the last 20 or 25 
minutes, if you are a consumer, or a business, and you are getting 
stiffed, you can go out and sue immediately. You can go out and sue and 
get an injunction immediately. You don't have to wait 30 or 60 days, or 
whatever. You can go immediately.
  I would like to spend the time during the quorum call to try to focus 
on what I think is a very sincere effort of the Senator from California 
to try to do something to help people who need a remedy, and need it 
quickly. We are going to have to get into some of these 
interoperability questions and some of the questions of what happens 
when you have a problem that essentially gets into your system after it 
leaves your hands. I am anxious to try to do it. We can put it in the 
context of the kind of discrete, specific idea that the Senator from 
California was talking about rather than what I heard during the last 
20 or 25 minutes about how big and bad actors are going to get a free 
ride, when in fact on page 13 of the bill it says that you are liable 
for the problem that you cause. That is what is on page 13 of the bill. 
Proportionate liability--you are liable for the portion of the problem 
you caused. If you engage in intentional misconduct, if you rip people 
off, you are going to be stuck for the whole thing--joint and several, 
punitive damages, the works.
  I would prefer to do what the Senator from California is now 
suggesting,

[[Page S6835]]

which is to put in a quorum call, bring the good people from Chairman 
McCain's office and from the office of the Senator from California and 
myself, along with Senator Dodd's, into a discussion to see if we can 
figure out a way to make this workable.
  I am happy to yield the floor.
  Mrs. BOXER. I want to engage with my friend. I thank him for his 
usual willingness.
  I want to make a point that I want my friend to understand. This is a 
very business-friendly amendment, because this amendment says the 
manufacturer has to determine if a fix is available.
  In all the issues my friend raises--well, there is a part over here 
from that company, and a part over there--the question is, it has 
nothing to do with liability; it has to do with a fix available for the 
consumer. If the manufacturer determines there is no fix, because there 
is little product in inside, and a company is out of business and they 
can't replace the part, the manufacturer simply says there is no fix 
available, and then the rest of the bill applies.
  Again, I say to my friend, as he said, as he described the fact, of 
course, the bad actors will be called into court later. We want to 
avoid that--both my friend and I.
  I believe we have so many good actors out there, and my friend cited 
one of the companies that has really taken care of this problem. I 
think that is what the Senator from Oregon was talking to me about 
before when he said you know some of these companies are doing this. 
Absolutely, they are. We ought to make that the model. We ought to say 
that is wonderful, you take care of it, and everybody is happy, and 
there is no lawsuit.
  I am hopeful, because I don't see this as complicated. We worked very 
hard to make it simple. We didn't want to tell the manufacturer, ``You 
can make the fix,'' if in fact they can't. If they in good faith say, 
``There is a part inside this mother board, and we can't fix it,'' then 
they simply say, ``I am sorry, there is no fix available in this 
circumstance,'' and then the underlying bill applies.
  But we think the leadership by the really good people in this high-
tech community ought to be followed. We believe if we don't put this 
amendment in the bill that those who already have acted in such good 
faith, in such good business behavior, and such good corporate 
responsibility to fix the problem and are seriously at a disadvantage, 
because they scratch their head and say, ``You know, I should have 
waited, maybe I didn't have to do all of this, and people would have 
decided it is too much of a hassle, I will just throw out my computer 
and get a new one,'' I can tell my friend, I bet a lot of people will 
wind up doing that. That would be unfortunate, if a fix is available.
  Whenever the Senator wishes to put in a quorum call, actually our 
friend from Delaware has been waiting to speak on another very 
important topic.
  Mr. WYDEN. I believe I have the time. I am going to wrap up in 2 
minutes, maximum.
  Mrs. BOXER. When the Senator yields the floor, the Senator from 
Delaware will take over, and the Senator from Oregon, Senator McCain, 
Senator Dodd, and I can meet.
  Mr. WYDEN. We are going to have to look at some of these.
  The question is, Is a fix available? If we are not careful, that 
could be a lawyer's full employment program.
  My colleague is absolutely right. In Oregon and California, we have 
access to some of the best minds and most dedicated and thoughtful 
people on the planet in this area. We should spend some time making 
sure we can get at this concept the Senator from California wishes to 
address in a workable way so we don't have more litigation, rather than 
less. I know the Senator from California shares that goal.
  I yield the floor.
  Mr. BIDEN. I ask unanimous consent to proceed in morning business for 
15 minutes.
  The PRESIDING OFFICER (Mr. Voinovich). Without objection, it is so 
ordered.

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