Congressional Record, Volume 145 Issue 96 (Thursday, July 1, 1999)

[Congressional Record Volume 145, Number 96 (Thursday, July 1, 1999)]
[House]
[Pages H5196-H5206]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

CONFERENCE REPORT ON H.R. 775, YEAR 2000 READINESS AND RESPONSIBILITY
ACT

Mr. GOODLATTE. Mr. Speaker, pursuant to House Resolution 235, I call
up the conference report on the bill (H.R. 775) to establish certain
procedures for civil actions brought for damages relating to the
failure of any device or system to process or otherwise deal with the
transition from the year 1999 to the year 2000, and for other purposes.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr. LaHood). Pursuant to House Resolution
234, the conference report is considered as having been read.
(For conference report and statement, see proceedings of the House of
June 29, 1999 at page H5066.)
Mr. LaHOOD. The gentleman from Virginia (Mr. Goodlatte) and the
gentleman from Michigan (Mr. Conyers) each will control 30 minutes.
The Chair recognizes the gentleman from Virginia (Mr. Goodlatte).

General Leave

Mr. GOODLATTE. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks and to include extraneous material on the legislation under
consideration.

[[Page H5197]]

The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Virginia?
There was no objection.
Mr. GOODLATTE. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, today is day 182 of 1999, half way through the year.

{time} 1330

Over the past 6 months, Congress has climbed the mountain of Y2K
liability reform legislation, and as we stand at the legislative
summit, ready to pass legislation that Republicans, Democrats and the
White House can support, we can only hope that our work will help those
who are climbing an ever-larger mountain, those who are trying to fix
their Y2K bugs before they hit.
Our job is now done. For the next 6 months, we can only hope that
this legislation, which will greatly reduce the threat of frivolous Y2K
lawsuits, will allow our Nation's businesses to pour their energies
into avoiding Y2K failures instead of planning their Y2K legal
defenses.
Frankly, I did not think that this moment would actually arrive. Just
last week, we stood here facing the wide gulf of a weaker Senate-passed
bill. We faced an even wider gulf with the White House which, up until
last week, was nowhere to be seen in the negotiations and was backing
badly defeated Senate proposals that provided nothing but smoke and
mirrors for addressing the Y2K problem. Fortunately, all parties
eventually realized that compromise is an essential part of successful
legislating. Both the House and the White House moved significantly
from their original positions to reach an agreement closely resembling
the Senate-passed legislation.
The final conference report is a model of compromise. Not only did
the White House get many of the concessions it sought, but the core
pieces of the House-passed legislation remain firmly in place. Caps on
punitive damages, reform of class action lawsuits, proportionate
liability, a 90-day waiting period, and contract preservation all
remain in this legislation.
Mr. Speaker, I want to congratulate all those who have worked hard
over the past week and over the past 6 months to make this bill happen.
I want to commend my colleagues who worked on this, including the
sponsor of the bill, the gentleman from Virginia (Mr. Davis), the
gentleman from California (Mr. Dreier), the gentleman from California
(Mr. Cox), the gentleman from Wisconsin (Mr. Sensenbrenner) and the
Democratic sponsors, the gentleman from Virginia (Mr. Moran), the
gentleman from California (Mr. Dooley) and the gentleman from Alabama
(Mr. Cramer). I also want to thank Senators McCain, Hatch and the other
Senate conferees for working so hard to get a good piece of legislation
that the White House would sign.
Finally, I want to commend the House and Senate personal and
committee staffs on both sides of the aisle who worked so hard to make
this legislation happen. They are to be commended for a job well done.
Mr. Speaker, this conference report is a victory for small businesses
and a victory for consumers. One hundred eighty-two days down and 183
to go, now Americans can begin the homestretch in their efforts to keep
the Y2K problem from becoming a reality.
Mr. Speaker, I reserve the balance of my time.
Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
I want to stand here today to congratulate the gentleman from
Virginia (Mr. Goodlatte) on the committee; the gentleman from Virginia
(Mr. Davis), who has put this bill before us and brought it to our
attention; and all of those in this House and in the other body who
have helped make this a day that a conference report can be brought to
the floor for support. It represents a marked improvement over the
House-passed version of the bill of which I was not able to support in
the House form. The bill was improved first in the Senate at the
insistence of many Democrats and again in conference at the insistence
of the administration.
As has been suggested, a lot of work went into this, including
members of the staff, and I think we now have a bill, though far from
perfect and despite some last-minute drafting glitches, I believe it
will achieve the purpose of allowing high-tech companies to focus on
the fixing of the Y2K problem without trampling on consumer rights.
I am glad the administration met with the conferees over the past
weekend to achieve this compromise. Had we taken up the Senate-passed
bill as some in this body were proposing, we would be facing a
drastically worse bill which would surely have faced a presidential
veto. More importantly, I can support this legislation because it
represents a one-time Federal response to a unique nationwide problem
relating to possible year 2000 computer failures and does not serve in
any way as precedent for broader-ranging changes in our tort laws. In
addition, the bill will have no force or effect with respect to actions
stemming from any harm occurring after January 1, 2003.
In my judgment, the final conference report is far closer in text and
in spirit to the Democratic substitute offered by the gentlewoman from
California (Ms. Lofgren), the gentleman from Virginia (Mr. Boucher) and
myself, which received 190 votes here in the House, than it is to the
more extreme bill that was originally passed by the House.
The conference report improves upon the House-passed bill in a number
of respects. First, it deletes the so-called reasonable defense effort.
Under this defense, of course, a defendant who was grossly negligent
could completely avoid liability as long as he took minimal steps to
fix the problem, even if these efforts did not result in a cure and
caused substantial damages.
It also deletes the ``loser pays'' defense requiring a litigant to
pay the other side's attorneys fees if they rejected a pretrial
settlement and ultimately obtained a less favorable verdict. The
provision would operate as a tremendous disincentive to small
businesses and poor and middle-class victims of Y2K failures because
they have far less financial resources and cannot afford the risk of
paying a large corporation's legal fees based on the outcome of a
trial.
The conference report also significantly narrows the doctrine of
joint and several liability limitation. The House bill, my colleagues
will recall, would have wiped out the doctrine of joint and several
liability. Fortunately, the conference report excludes individual
consumers from this limitation and incorporates several changes
designed to protect innocent plaintiffs and help ensure that ``bad
actors'' are not rewarded.
Finally, the conference report significantly narrows the bill's
punitive damages limitations. The Committee on the Judiciary reported a
bill that would have prevented any plaintiff from ever receiving
punitive damages in a Y2K action. The conference report is far fairer
and caps punitive damages at the lesser of three times the compensatory
damages or $250,000 and only applies caps to small business defendants.
So although the legislation is not perfect, on balance I believe it
will help protect the Nation's high-tech community against frivolous
lawsuits and encourage businesses to remedy their Y2K problems without
unduly infringing on the rights of small business and individual
plaintiffs.
Mr. Speaker, I include for the Record a letter from John Podesta to
myself dated June 30, 1999, as well as a section-by-section description
of the Y2K conference report, as follows:

The White House,

Washington, June 30, 1999.
Re H.R. 775--the Year 2000 Readiness and Responsibility Act.
Hon. John Conyers, Jr.,
House of Representatives,
Washington, DC.
Dear Representative Conyers: The nation faces the
possibility that widespread frivolous litigation will
distract high technology companies and firms throughout the
economy from the important work of preventing--and if
necessary--repairing damage caused by the inability of
systems to process dates in the new millennium. Special,
time-limited legislation to deter unwarranted Y2K lawsuits is
important to our economy.
Over the last few months, the Administration sought to
ensure that, while we deterred frivolous claims, we also
preserved important protections for litigants who suffer bona
fide harm. We believed that the Senate-passed bill failed
this test. The Conference Committee agreed to make a list of
changes that were important to provide necessary protections.
The agreed-upon changes were translated into legislative
language extremely narrowly, threatening the effectiveness of
the negotiated protections. Nonetheless, we have concluded
that, with these changes, the legislation is significantly
improved. Specifically, as modified, the Conference Report:

[[Page H5198]]

ensures that individual consumers can be made whole for harm
suffered, even if a partially responsible party is judgment-
proof; excludes actions brought by investors from most
provisions of the bill and preserves the ability of the SEC
to bring actions to protect investors and the integrity of
the national securities markets; ensures that public health,
safety and the environment are fully protected, even if some
firms are temporarily unable to fully comply with all
regulatory requirements due to Y2K failures; encourages
companies to act responsibly and remediate because those
defendants who act recklessly are liable for a greater share
of a plaintiff's uncollectible damages; and ensures that
unconscionable contracts cannot be enforced against unwary
consumers or small businesses.
As a result, I will recommend to the President that he sign
the bill when it comes to his desk.
In the normal course of business, the Administration would
oppose many of the extraordinary steps taken in this
legislation to alter liability and procedural rules. The Y2K
problem is unique and unprecedented. The Administration's
support for this legislation in no way reflects support for
its provisions in any other context.
Sincerely,
John Podesta.
____

Section by Section Description of Y2K Conference Report

Section 1. Short Title; Table of Sections.--Sets forth the
title and table of contents.
Section 2. Findings and Purposes.--Sets forth a variety of
findings designed to establish a constitutional nexus for the
legislation.
Section 3. Definitions.--Among other definitions, this
section defines a ``Y2K action'' as any civil action in which
the alleged harm arises from or is related to an actual or
potential Y2K failure.
This reflects a change suggested by the White House which
deletes language which would have permitted the bill to apply
to lawsuits which only indirectly involved Y2K actions.
Section 4. Application of Act.--This includes nine separate
subsections. The most important provisions are as follows:
(a) General Rule.--Act only applies to Y2K failures which
occur before January 1, 2003.
This means that the bill represents a one time change in
tort and contract related actions limited to harm caused
during a narrow three year window. This represents a critical
improvement over the House passed bill which had no
termination date.
(c) Claims for Personal Injury or Wrongful Death
Excluded.--Specifies that the bill does not apply to claims
for personal injury or wrongful death.
This reflects an improvement over the House passed bill
which only excluded personal injury claims. The existence of
this important carve out in the bill illustrates that the Y2K
problem presents a unique one time issue, and the legislative
response should not apply to ordinary consumers suffering
personal injuries. In this respect, it cannot be seen as a
precedent for broader tort reforms.
(d) Warranty and Contract Preservation.--Specifies that
contract terms shall be strictly enforced, unless such
enforcement is inconsistent with state statutory law, or the
state common law doctrine of unconscionability, including
adhesion, in effect on January 1, 1999.
This is a variation of a provision originally included in
the House Democratic substitute (offered by Reps. Lofgren,
Boucher, and Conyers). Preserving state laws concerning
unconscionability and adhesion reflects an important change
suggested by the White House.
(g) Application to Actions Brought by a Government
Entity.--This provision provides limited relief from
penalties for Y2K related reporting or monitoring violations.
Because the provision is limited to a defense to penalties,
the government would be allowed to seek injunctive relief to
require compliance and to correct violations. In addition,
the defendant would have to show, among other things, that
the noncompliance was both unavoidable in the face of an
emergency directly related to a Y2K failure and necessary to
prevent the disruption of critical functions or services that
could result in harm to life or property. Other safeguards
further limit the applicability of the defense. For example,
the defendant would not obtain the benefit of the defense if
the reporting or monitoring violations constitute or would
create an imminent threat to public health, safety, or the
environment. The defendant would also be required to
demonstrate that it previously made a reasonable good faith
effort to anticipate, prevent and effectively correct a
potential Y2K failure; that it has notified the agency within
72 hours of the violation; and that it has fixed it within 15
days. The defense does not apply to any reporting or
monitoring violations occurring after June 30, 2000.
Many of the safeguards against misuse of this defense were
added at the insistence of the White House. Absent these
changes, the Senate bill could have provided corporate
polluters and others responsible for health and safety
requirements with complete defenses to these reporting or
monitoring violations.
(h) Consumer Protection From Y2K failures.--Ensures that
homeowners cannot be foreclosed on due to a Y2K failure.
This provision did not appear in the House passed bill or
the House Democratic substitute. The Senate passed language
was modified in conference to limit the provision's
applicability to residential mortgages, to require consumers
to provide notice of the Y2K failure and their inability to
pay, and to limit the applicability to transactions occurring
between December 16, 1999 and March 15, 2000.
(i) Applicability to Securities Litigation.--Specifies
that, other than the bystander liability provisions (section
13(b)), the bill does not apply to securities actions.
Many of the bill's restrictions only make sense in the
context of ordinary tort or contract suits, not securities
actions which Congress has reformed twice in recent years.
This improvement was suggested by the White House.
Section 4 also includes technical subsections specifying
that the bill does not create a new cause of action; only
preempts state law to the extent it establishes a rule that
is inconsistent with state law; and does not supersede
legislation concerning Y2K disclosure passed on a bipartisan
basis last year.
Section 5. Punitive Damage Limitations.--Provides that
defendants shall not be subject to punitive damages unless
such damages are proved by ``clear and convincing evidence.''
Also caps punitive damages against ``small businesses'' at
the lesser of 3 times compensatory damages or $250,000.
``Small business'' is defined as individuals having a net
worth of less than $500,000 and businesses with fewer than 50
employees. The cap does not apply where the defendant
acted with specific intent to injure.
This reflects a significant improvement over the House
passed bill which would have capped punitive damages against
all defendants, regardless of their size; and the House
Judiciary Committee approved bill which would have completely
eliminated the plaintiff's ability to recover any punitive
damages.
Section 6. Proportionate Liability.--Sets forth a general
rule that defendants are liable only for their proportionate
share of liability (in lieu of the common law rule of joint
and several liability applicable in some states). This
general rule does not apply in cases where the defendant
acted with specific intent to injure the plaintiff or
knowingly committed fraud. In addition, if portions of the
plaintiff's damage claim ultimately prove to be
uncollectible, and the plaintiff is an individual with a net
worth of less than $200,000 (a so called ``widow or orphan'')
and damages are greater than 10% of a plaintiff's net worth,
a solvent defendant is responsible for paying an additional
100% share of their liability, or an additional 150% of this
amount if they acted with ``reckless disregard for the
likelihood that its acts would cause injury.'' Also, the
general proportionate liability rule does not apply to suits
by consumers who sue individually rather than as part of a
larger class (brought on behalf of ten or more individuals).
Although the section is one-way preemptive of state law, it
is not intended to allow a defendant to assert that it is
subject to some but not other subsections.
This provision is somewhat similar in operation to a
section included in the House Democratic substitute which
gave the court discretion to avoid joint and several
liability depending on the defendant's overall conduct and
share of liability. The exceptions to the general rule of
proportionate liability reflect changes suggested by the
White House to make sure that ordinary consumers were
protected and so-called ``bad actors'' were not rewarded.
This represents an effort to encourage remediation which, of
course, is unique to the Y2K problem. The final provisions
represent an improvement over the House passed bill which
would have eliminated joint and several liability in
virtually all cases.
Section 7. Prelitigation Notice.--Y2K actions would not be
permitted to proceed to trial until the defendant has had an
opportunity to fix the Y2K failure within 90 days after
receiving notice in writing with the problem described with
particularity. The 90 day period includes an initial 30 day
notice period, and a subsequent 60 day period in which to
remedy the defect.
This provision is substantially identical to the House
Democratic substitute.
Section 8. Pleading Requirements.--Requires greater
specificity in the notice of damages sought in Y2K actions;
the factual basis for the damages claim; a statement of
specific information regarding the manifestations of the
material defect and the facts supporting such material
defect; and a statement of facts showing a strong inference
that defendant acted with a required state of mind.
This provision is substantially identical to the House
Democratic substitute.
Section 9. Duty to Mitigate.--Provides that damages awarded
in Y2K actions exclude compensation for damages the plaintiff
could reasonably have avoided in light of any disclosure or
other information of which the plaintiff was or reasonably
should have been aware. This limitation on damages does not
apply where the defendant has engaged in fraud.
This provision is similar to a provision included in the
House Democratic substitute. It includes a suggestion made by
the White House that the protection not apply to so-called
fraudulent ``bad actors.'' Again, this is an effort to
encourage remediation by all parties, which is a unique issue
to Y2K liability.

[[Page H5199]]

Section 10. Application of Existing Impossibility or
Commercial Impracticability Doctrines.--Freeze state law on
these doctrines as of January 1, 1999.
This provision represents an effort to insure that states
do not alter their laws to take advantage of the Y2K problem
to make it easier to bring suits against ``deep pocket'' Y2K
defendants. This provision is substantially identical to a
provision included in the House Democratic substitute.
Section 11. Damages Limitations by Contract.--Provides
that, in Y2K contract actions, damages are limited to those
provided in the contract, or, if the contract is silent, to
those provided under state law.
This provision was not included in the House passed bill or
the House Democratic substitute.
Section 12. Damages in Tort Claims.--Codifies the so-called
``economic damages'' rule, which prohibits tort plaintiffs
from seeking economic or consequential damages (e.g., lost
profits stemming from a Y2K failure) unless such damages are
permitted by contract. This rule does not apply in cases of
intentional torts arising independent of a contract.
This reflects a variation of a suggestion by the White
House to protect persons who have claims for separately
cognizable torts, such as some forms of fraud. This is
similar to a provision included in the House Democratic
substitute.
Section 13. State of Mind; Bystander Liability; Control.--
Subsection (a) freezes state law concerning the standard of
evidence needed to establish defendant's state of mind in a
tort action (e.g., negligence) as of January 1, 1999.
Subsection (b) provides that Y2K service providers are not
liable to third parties who are not in privity with them
unless the defendant actually knew, or recklessly disregarded
a known and substantial risk, that a Y2K failure would occur.
This would make it more difficult for a customer of business
that was certified to be Y2K compliant to sue the consultant
who so certified. Subsection (c) provides that the fact that
a Y2K failure occurred in an environment within the control
of the defendant shall not be permitted to constitute a sole
basis for the recovery of damages.
Other than bystander liability, these provisions were not
included in the House passed bill or the House Democratic
substitute.
Section 14. Appointment of Special Masters or Magistrate
Judges for Y2K Actions.--Includes a technical change which
would merely authorize federal courts to appoint special
masters to consider Y2K matters.
This provision was not included in either the House passed
bill or the House Democratic substitute.
Section 15. Y2K Actions as Class Actions.--Subsection (a)
only permits class actions involving material product
defects. Subsection (b) requires class members to receive
direct notices of class actions (which shall include
information on the attorney's fee arrangements).
Subsection (a) is substantially identical to a provision
included in the House Democratic Substitute.
Subsection (c) places all Y2K class actions in federal,
rather than state court. The only exceptions are where (1) a
substantial majority of members of the plaintiff class are
citizens of a single state, the primary defendants are
citizens of that state, and the claims asserted will be
governed primarily by the laws of that state; (2) the primary
defendants are states or state officials; (3) the plaintiff
class does not seek an award of punitive damages and the
amount in controversy is less than $10 million; or (4) there
are less than 100 members of the class. The burden is on the
plaintiff to establish that any of these four exceptions
apply.
The idea behind this provision is that Y2K actions are
inherently interstate and the problem is uniquely nationwide
and federal in its source and impact. This provision
incorporates some White House suggestions that safeguards be
built into the rule to allow some class actions which have a
state focus be permitted to be brought in state court.
Section 16. Applicability of State Law.--Specifies that the
bill does not supercede any state law with stricter damage
and liability limitations.
This provision was not included in either the House passed
bill or the House Democratic substitute.
Section 17. Admissible Evidence Ultimate Issue in State
Courts.--Applies Rule 704 of the Federal Rules of Civil
Procedure (concerning the use of expert testimony) to State
courts.
This provision was not included in either the House passed
bill or the House Democratic substitute.
Section 18. Suspension of Penalties for Certain Y2K
Failures by Small Business Concerns.--This section provides
for civil penalty waivers for first-time violations by a
small business (50 employees or fewer) of federally
enforceable rules or requirements that are caused by a Y2K
failure. In order to obtain a waiver, small business must
meet certain strengthened standards, including, among other
things, that it made a reasonable good faith effort to
anticipate, prevent and effectively remediate a potential Y2K
failure; that the first-time violation occurred as a result
of a Y2K failure significantly affecting its ability to
comply and was unavoidable in the face of a Y2K failure; that
the small business initiated reasonable and prompt measures
to correct the violation, notified the agency within 5
business days, and corrected the violation within a month of
notification.
As was the case with section 4(g), the Administration
insisted on developing common sense safeguards so that the
provision would not create new health, and environmental
problems. For example, the Administration obtained changes
that clarified that it is the government that determines
whether a small business meets the standards for a civil
penalty waiver; that an agency may impose a civil penalty if
the noncompliance resulted in actual harm (in addition to
creating an imminent threat to public health, safety, or the
environment); and that the civil penalty waiver does not
apply to any violations occurring after December 31, 2000.
The following anti-consumer provisions were dropped
entirely by the Conference from the Republican bill approved
by the House.

a. reasonable efforts defense for defendants (Section 303 of House
passed bill)

Under the so-called ``reasonable efforts'' defense in the
original House passed bill, the fact that a defendant took
reasonable measures to prevent the Y2K-related failure was a
complete defense to liability. Thus, despite the defendant's
level of fault, if it made reasonable efforts to fix the
problem--even if those efforts did not result in a cure--it
would have had no responsibility for damages suffered by the
plaintiff. Even if a defendant takes only minimal steps to
remedy a Y2K problem, it would have served as a complete
defense against a tort action, thereby undercutting
incentives to prepare for and prevent Y2K errors. The defense
was so broad it would even cover intentional wrongdoing or
fraud, so long as the misconduct was eventually papered over
by some sort of post-hoc reasonable effort.

b. limits the liability of corporate officers and directors (section
305 of house passed bill)

The original House passed bill also capped the personal
liability of corporate directors and officers at the greater
of $100,000 or their past 12-months' compensation. This
provision was unnecessary because under current law the
``business judgment rule'' already insulates officers and
directors from liability for their business decisions as long
as they acted reasonably in governing the affairs of the
corporation. The provision also would have protected
irresponsible and reckless Y2K behavior.

c. loser pays and fee disclosure (title v of house passed bill)

The House passed bill also included a ``loser pays'' (or
``English Rule'') provision requiring a litigant to be liable
to pay the other side's attorneys fees if they rejected a
pre-trial settlement offer and ultimately secured a less
favorable verdict. Because small businesses and individuals
have far less financial resources than large defendant
corporations and cannot afford the risk of paying a large
corporation's legal fees based on the outcome of a trial, the
provision would have operated as a tremendous disincentive to
small businesses and poor and middle class victims of Y2K
failures. The provision was so onerous that it would even
apply to a harmed party that prevails in a Y2K action so long
as they obtained less than a pre-trial settlement--in this
respect it could actually operate as a ``winner pays''
provision. The bill also included a number of procedural
restrictions that would have governed the attorney-client
relationship--such as the requirement that attorneys disclose
to their clients the fee arrangement up-front, and the
requirement that attorneys provide a monthly statement to
clients regarding the hours and fees spent on the case. The
original House Republican bill also would have regulated
attorneys fees for plaintiffs (but not defendants) in Y2K
actions.

Mr. Speaker, I reserve the balance of my time.
Mr. GOODLATTE. Mr. Speaker, I am pleased to yield 1 minute to the
gentleman from California (Mr. Royce).
Mr. ROYCE. Mr. Speaker, as the clocks move forward on December 31,
there is a strong likelihood that some computers will fail to recognize
the year 2000, instead rolling back to January 1, 1900. A Y2K-initiated
computer crash could have disastrous impacts on many aspects of daily
life, ranging from transportation and aviation, data processing, health
care and financial services. Indeed, American society could be
confronted by an extended period of technological and economic duress.
Instead of taking a proactive approach to solving the Y2K problem,
many businesses, large and small, find themselves expending time and
energy on liability issues. This bipartisan legislation, of which I am
an original cosponsor, addresses this concern and creates incentives
for businesses to address the impending Y2K problem by creating a legal
framework by which Y2K-related results will be resolved.
We must not permit a climate to foster in which businesses, paralyzed
by fear of unrestrained lawsuits, fail to take action that would
adequately address this problem.

[[Page H5200]]

Mr. GOODLATTE. Mr. Speaker, I am pleased to yield 5 minutes to the
gentleman from Wisconsin (Mr. Sensenbrenner), a member of the
conference committee and a senior member of the Committee on the
Judiciary.
Mr. SENSENBRENNER. Mr. Speaker, I rise today in support of the
conference report to H.R. 775, the Y2K Act. This bill, while markedly
different from when it was first introduced, has retained several key
core principles: The establishment of uniform legal standards for all
businesses and users of computer-related technologies; the
encouragement of alternative dispute resolution to avoid costly and
time-consuming lawsuits; the lessening of the burden on interstate
commerce by discouraging frivolous lawsuits while preserving the
ability of individuals and businesses who have suffered injury to
obtain relief.
The year 2000 computer problem, commonly referred to as the Y2K bug,
presents grave challenges to both the private and public sectors
throughout the United States. H.R. 775 has had a difficult history in
Congress. Substantial changes were made during every step of the
process, in committees, on the House floor, in the other body, and
finally in conference committee in an effort to deal with this pressing
issue in a way that is fair and equitable to all parties involved, both
potential plaintiffs and defendants in Y2K-related disputes.
The reason we are here today is because of the persistence of the
House and the other body to enact legislation far enough in advance of
the year 2000 to stem the potential litigation explosion over the Y2K
bug, one that has been estimated as costing our economy a potential $1
trillion. Throughout this whole process, the administration has
remained cool to the idea of passing any legislation dealing with Y2K
liability. In addition, the administration was noticeably absent at
every junction of this debate.
The White House was invited to testify before the House Committee on
the Judiciary on this legislation but declined. Instead of active
participation, the administration chose to issue veto threats to even
the amended bipartisan Senate-passed version of the bill with only
general descriptions on which provisions they found to be
objectionable. In all, the administration sent five veto threats, with
the fifth being issued on June 24 by the President's chief of staff
just prior to the conferees meeting on that day.
At the first meeting of the House-Senate conference, the House
conferees accepted the Senate amendments to H.R. 775 and added two
additional amendments. It was at this conference after the train had
already left the station that the White House finally got serious and
requested additional time to work out a compromise. The chairman of the
conference postponed further proceedings until the drop-dead date of
June 28 in a good-faith effort to see this bill enacted without the
potential of a White House veto. Finally, the administration gave
specifics on what they found to be objectionable and suggestions on how
to change these provisions in order for the President to support it.
Fortunately, the administration's differences with Congress were
resolved, which allows the conference report to be brought to the floor
today without the uncertainty of a veto. The conference report has the
support of the broad-based Year 2000 Coalition and the Information
Technology Industry Council.
The conference report includes the following key provisions which
warrant its adoption by the House of Representatives:
It allows class action suits for Y2K claims to be brought into
Federal courts if they involve $10 million in claims or at least 100
plaintiffs. It creates a proportionate liability formula for assessing
blame so companies would be penalized for their share of any Y2K
damage. This formula would make whole individual consumers even if one
of the defendants went bankrupt. It caps punitive damages at $250,000,
or three times the amount of compensatory damages, whichever is less,
for individuals with a net worth of up to $500,000 and for companies
with fewer than 50 employees. And it applies current State standards
for establishing punitive damages instead of creating a new preemptive
Federal standard.
In addition, the conference report requires plaintiffs to mitigate
damages, defines the term ``economic loss,'' but does not place caps on
directors and officers liability.
In summary, while H.R. 775 has been whittled down by the
administration's efforts to accommodate trial lawyers, enough
substantial provisions remain to warrant support by the House of
Representatives.

{time} 1445

Ms. LOFGREN. Mr. Speaker, I yield 4 minutes to the gentlewoman from
Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the distinguished
gentlewoman from California.
Let me just as a manner and focus on the proceedings that we have had
over these past couple of months.
As a Member of the House Committee on Science and the House Committee
on the Judiciary, I have had the privilege of sitting through a number
of hearings, I particularly want to thank the gentlewoman from Maryland
(Mrs. Morella) for carrying on with such informative hearings on the
Y2K matters, bringing forward so many different witnesses from the
business community, the legal community and, of course, a consumer
community.
Through those hearings I think I can articulate today that it has
taken enormous amount of work to bring us to where we are at this
juncture, and I would like to lend my thoughts and appreciation to the
gentlewoman from California (Ms. Lofgren), the gentleman from Michigan
(Mr. Conyers) and the gentleman from Virginia (Mr. Boucher) who did
craft legislation in which the White House was actively engaged and did
support and had all the elements of being able to solve the problems
that so many of us were concerned about.
I am disappointed that we did not prevail on that legislation, but I
thank them for their leadership. I thank the gentleman from Virginia
(Mr. Davis) and the gentleman from Virginia (Mr. Goodlatte) for where
we are today, and I hope that this House will pass this bill because I
oppose the original version of the bill, and I oppose the bill on its
final passage, but it does not mean that we cannot try and improve it.
I was delighted to be able to get a technical amendment passed on the
floor of the House, but it would have been good to have had other
improvements, and I felt the bill could have been made acceptable.
We know there will be a Y2K situation, if my colleagues will, but I
do not know if we can rely upon all the testimony that was presented to
establish it as a precedent for changing all of the tort laws of this
Nation, nor can we isolate Y2K and suggest that it has no limitations
on the legislation that we are making.
In particular, I am very delighted that the legislation we are
bringing forward now has a sunset provision acknowledging the fact that
this is a limited issue and should be isolated to a certain period of
time. It protects the consumers by having in homeowner protection, a
provision that protects homeowners from being evicted because of a Y2K
failure that is imperative.
It also responds to preventive lawsuits. A provision was added to
allow suits before Y2K failures. We heard the testimony of a small
grocer in Michigan who said, ``If I don't have an opportunity for
relief before I collapse, then you've done nothing for me.''
I also want to make it clear that I tried to remain open on the bill
in recognition of the unique problem that it attempts to address. I
understand the plight of many of our software developers and Y2K
solution providers who do not want to take on additional clients
because they fear a costly lawsuit. That is understandable. But as a
member of the Committee on Science who has sat through numerous
hearings on this subject, I do not feel that we need to pass open-ended
legislation that could be used too, used by corporate America to
protect themselves from liability that they have rightfully incurred. I
think it is important to strike a balance.
One of the amendments that I introduced and I truly hoped we would
have a chance to debate on the floor was a sunset amendment, and I am
delighted, as I indicated earlier, that a 3-year sunset provision was
placed in the bill.

[[Page H5201]]

Although I feel that the sunset provision in the bill which is
actually contained in the definition section of H.R. 775 is not as
cleanly implemented as I would have liked, the provision does allay
many of the concerns that I had about the original bill.
But let me not be misleading. There are some concerns, the caps on
punitive damages, and it is interesting that this would be noted in the
context of trial lawyers. I think it is important to note that trial
lawyers do not decide punitive damages, it is courts that do so. I hope
we will be able to find sufficient relief in this legislation that will
allow plaintiffs to be able to secure the relief that they need and to
make themselves whole.
The bill also contains modifications to the longstanding, well-
accepted court doctrine of joint and several liability. The doctrine
was established in order to keep plaintiffs who have been wronged by
multiple parties from having to enter into lawsuit after lawsuit
against different defendants in order to make them whole.
We should consider these issues as we monitor this legislation, but
thankfully, however, the version that has come back to us from the
conference committee contains a more narrow set of joint and several
liability modifications. Included in the new version is a clause which
protects consumers who are innocently victimized by Y2K solution
providers who act in bad faith.
It is my hope that the definitional structure of what will constitute
a Y2K action for the purpose of these lawsuits, along with the sunset
provision, will help balance between the consumer and, of course, our
providers.
I urge my colleagues to vote for this conference report. I want to
thank all those who brought us to the table of resolution, and I want
to acknowledge the White House was intimately and actively involved.
They just wanted to come down, as we all did, on the side of a very
good bill. I am watching and monitoring as well, as I indicate as we
all are, for the Y2K event, but I hope that we will watch it together
being reflective of the fact that we voted today for a solution that
would help us move into the 21st century with the minimum amount of
concern.
Mr. Speaker, I rise to speak in support of this Conference Report,
but first I would like to thank the Conferees who worked very hard to
find a compromise on certain key issues raised in this bill.
At the outset, let me say that I opposed the version of this bill
that was introduced in the House. I opposed the version that came out
of the Judiciary Committee. And I opposed the bill on final passage.
But that does not mean that I did not try to improve the bill at every
stage. I was able to pass a technical amendment on the floor of the
House, but there were other improvements that I would have preferred to
have made--that I felt would make the bill much more acceptable.
I also want to make clear that I tried to remain open this bill--in
recognition of the unique problem that it attempts to address. I
understand the plight of many of our software developers, and Y2K
solution providers who do not want to take on additional clients
because they fear a costly lawsuit. That is understandable. But as a
Member of the Committee on Science who has sat through numerous
hearings on this subject, I do not feel that we needed to pass open-
ended legislation that could be used by corporate America to protect
themselves from liability that they have rightfully incurred.
One of the amendments that I introduced, and that I truly hoped we
would have a chance to debate on the floor, was a sunset amendment. I
am happy to hear that a three-year sunset provision was placed in this
bill in conference. Although I feel that the sunset provision in the
bill, which is actually contained in the definitions section of H.R.
775, is not as cleanly implemented as I would like, the provision does
allay many of the concerns I have about the original bill.
But let me not be misleading--the bill still contains dangerous
measures. It still retains caps on punitive damages, but the caps only
protect small business whose net worth is less than $500,000. Large Y2K
solution providers do not need this sort of protection--they have the
resources to responsibly remediate Y2K problems that manifest
themselves. This bill allows plaintiffs to hold them fully responsible,
should they choose to behave in a manner befitting of punitive damages.
The bill also contains modifications to the long-standing and well-
accepted court doctrine of joint and several liability. The doctrine
was established in order to keep plaintiffs, who have been wronged by
multiple parties, from having to enter into lawsuit after lawsuit,
against different defendants, in order to be made whole. In the
original version of the bill, joint and several liability was basically
eliminated. Thankfully, however, the version that has come back to us
from the Conference Committee contains a narrowed set of joint and
several liability modifications. Included in the new version is a
clause which protects consumers who are innocently victimized by Y2K
solution providers who act in bad faith.
It is my hope, that the definitional structure of what will
constitute a Y2K action for the purposes of these lawsuits, along with
the sunset provision, will contain the anti-consumer provisions
contained in this bill. I also hope that the changes that have been
made to the punitive damages and proportional liability sections in the
bill keep this from becoming the bloated tort-reform bill we all feared
when it was originally introduced.
With that, I urge my colleagues to vote for this Conference Report,
and to continue to work together to protect our constituents from
discomfort stemming from the Y2K bug.
Mr. GOODLATTE. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Maryland (Mrs. Morella).
Mrs. MORELLA. Mr. Speaker, I thank the gentleman for yielding this
time to me. I rise in strong support of the conference support on the
Y2K Act. I also want to take a moment to congratulate the gentleman
from Virginia (Mr. Goodlatte), the gentleman from Virginia (Mr. Davis),
the gentleman from Wisconsin (Mr. Sensenbrenner), the conferees and
those who worked so hard on this piece of legislation. I am honored to
be one of the cosponsors of the bill, and I am glad the conference
committee has reached an accord with this issue.
As my colleagues know, it was over 3 years ago that we started with
my Committee on Science's Subcommittee on Technology and the Committee
on Government Reform and Oversight's Subcommittee on Government
Management, Information and Technology chaired by the gentleman from
California (Mr. Horn) to have a complete review of the Y2K problem, and
in the course of these hearings it became undeniably clear that the
prevalence of potential Y2K litigation could adversely impact our
Nation's currently robust economy and tie up our legal system long
after the problem has been fixed in the computers, and that is why I am
very pleased that a compromise was able to be crafted that satisfies
the concerns of both congressional chambers and the White House to
address the millennium bug and its legal after effects.
The conference report reflects the changes of the High Technology
Association's industry the Chamber of Commerce believe are necessary to
close the floodgates of frivolous litigation and protect companies that
have engaged in good faith remedial efforts, and it does so without
taking away an aggrieved party's right to bring a legitimate lawsuit
for negligent Y2K failures. This is a legislative solution that will
ensure that the year 2000 problem does not extend well into the new
millennium.
I urge all of my colleagues to support the conference report. This
will greatly assist us to be Y2K okay.
Ms. LOFGREN. Mr. Speaker, I yield such time as she may consume to the
gentlewoman from California (Ms. Eshoo), my colleague from Silicon
Valley.
Ms. ESHOO. Mr. Speaker, I thank my colleague and wonderful leader on
this issue and so many others from the Committee on the Judiciary, the
gentlewoman from California (Ms. Lofgren). I rise in support of the
conference report, and I first of all want to salute everyone that has
worked on bringing this resolution forward. I think it is a much
improved version of the House bill. I did not support the House bill,
and I was reluctant in doing that, and I think many people were
surprised that I rose in opposition to it, especially because I
represent so much of the high technology industry. I thought it was an
effort that could be improved upon, and we have that here today,
because after all, with the year 2000 Y2K problem, which has now become
part of our day-to-day language across America, we wanted legislation
that would help American business spend its time and its resources
repairing the problem and not moving over into their legal departments
to continually litigate it.
This legislation provides limits on the lawsuits while providing
redress for

[[Page H5202]]

real damages, which is what the American people want and need. It
encourages remediation and alternative dispute resolution over
litigation, which I think is really fairly enlightened in an area that
we need to build upon and do more and more with. It provides
protections to companies that have acted in good faith while ensuring
that bad actors will be liable for the damage they have caused.
I want to take just a brief moment to salute my colleague in the
other body, Senator Dodd, who has been a real leader on this issue and
has worked on a bipartisan basis in the other body coupled with the
hard work done, of course, with those that I have mentioned here in the
House and finally in the White House. I am very pleased that the
President has signaled that he will sign this legislation into law. It
would not be effective if it were passed in the year 2001.
So now is the moment, and I am proud to support the conference
report.
Mr. GOODLATTE. Mr. Speaker, I yield 6 minutes to the gentleman from
Virginia (Mr. Davis) the chief sponsor of the legislation.
Mr. DAVIS of Virginia. I thank my friend for yielding the time.
Mr. Speaker, obviously if we had a different President and Vice
President, we would have a stronger bill here today, but I think it
shows the willingness of our side of the aisle to try to get some kind
of bill and some kind of protections for American industry,
particularly the high technology industries that are so at risk with
the Y2K bug that we are here today with the bill that the President can
sign, and now that he has indicated he will sign it, he has given
permission to Democrats who opposed this to vote for it.
I think, as I look at this, going back to what was originally offered
on the House side, their original bill, this is a much stronger bill in
final than was offered on the other side of the aisle in their
substitute originally. I just want to highlight some of those.
The conference report, for example, grants benefits in consumer and
business. They excluded consumer exceptions, cases from the protections
of this bill. The original bill on the Democratic side, their
substitute that they tendered, liability of defendants is joint and
several subject to the court's discretion in that it should be
proportional for a defendant of minimal responsibility.
This mandates proportional liability unless there are insolvent
defendants, in which case the injured party is made whole. This is a
far more complete protection to companies than was originally offered
on the other side. Had we gone in with their entry, we would not be
here where we are today with the strengths of this bill. The
administration was willing to come further than their colleagues were
on the other side of the aisle.
Or this bill has a limitation on punitive damages for small
businesses and no punitive damage awards available against governmental
entities. Their original provision offered no protections at all in
this area, at all. So we have that as well. We were able to work with
the administration.
We have Federal jurisdiction over class actions now Federalizing
class actions with over 100 plaintiffs who are claiming more than $10
million with special notice requirements to class members. There was
nothing offered on the other side when this was offered as their
substitute.
And we also offer in this legislation regulatory relief for small
businesses, protection for individuals who cannot make their mortgage
payments because of a Y2K problem. Nothing was offered in the original
tender from the other side on this issue, so I am grateful for the
support that we have received from the 236 Members of this body, from
both sides of the aisle, who were willing to start out and support this
legislation and not support the fig leaf that was offered up on the
other side in the original legislation.
I also want to thank the U.S. Chamber of Commerce, Tom Donohue and
Lonnie Taylor, in particular, who worked very hard on this, National
Association of Manufacturers and Jerry Jasinowski and their group, the
Information Technology Industry Counsel and all of my companies out in
northern Virginia, dozens of them, who supported this legislation and
felt that this is an appropriate, common sense route even in its
weakened state as we move forward.
And I want to thank the administration for coming and meeting us
halfway on this and moving on a number of issues where they appeared
intransigent just 2 or 3 months ago. It takes two to tango, and at the
end of the day I am glad that we are all singing from the same sheet of
music.
As the lead sponsor of H.R. 775, the year 2000 Readiness and
Responsibility Act, I am pleased to voice my strong support for this
conference report. I want to congratulate my colleagues who serve on
the Committee on the Judiciary and their staffs for the long hours and
late nights that they invested over the last few days and bringing the
White House around to making real and significant compromises that will
allow this critical legislation to become law in the very near future.
And I want to thank Amy Heerink, Trey Hardin from my staff who worked
very hard on this as well.

More than 6 weeks ago this body passed a strong and balanced
bipartisan legislation that will encourage businesses across the Nation
to pursue Y2K repair and remediation efforts without fear of frivolous
litigation that would otherwise threaten the competitiveness of the
fastest growing segments of the U.S. economy. The President said he
would veto the House bill. Following passage on May 12, the weaker
bipartisan compromise crafted in the Senate faced a veto after two
failed cloture votes before garnering the votes of 12 courageous
Democratic senators and passed 62-37.
During that time, the Senate debated and rejected an offer by Senator
Kerry from Massachusetts that had the support of the President, but I
liken it to the House substitute offered up on the other side. It
failed to win a support of even the majority of the Senate by a fairly
substantial margin. I would also note that the Kerry proposal, like the
substitute offered here, was soundly rejected by the year 2000
Coalition who supported the original legislation including the vast
remnants of the high technology industry.

{time} 1400

Despite modifications made to the Y2K Act by the bipartisan
cosponsors in the other body responding to nearly all of the
President's objections, the White House still insisted the President
would veto the Senate measure. The President's statement of
administration policy is that he would accept the modified version of
proportionate liability in the Senate bill. He opposed liability caps
on directors and officers. Those were eliminated.
The punitive damage caps were severely modified to only apply to
small businesses with fewer than 50 employees and individuals with a
net worth of less than half a million dollars; and when the defendant
is found to have intentionally injured a plaintiff, by the jury, the
sky is the limit.
In recognizing the need to have a bill enacted into law as soon as
possible, the House conferees accepted the Senate amendments to the
House bill and adopted the Y2K Act with two technical amendments. But
due to the White House's failure up to that point to come forward with
any substantive suggestions for a compromise, we in the House urged
them to come to our conferees in good faith and provide us with
specific language that we would consider in order to get a bill passed
and working to encourage businesses to spend their dollars on fixing
the Y2K problem, not in frivolous litigation.
Understanding that, the House and Senate conferees were moving
quickly to produce the conference report in this legislation. We wanted
to get it passed and through before the July 4 recess; and I want to
congratulate the White House on recognizing the necessity for this
legislation, for a vast turnaround from their earlier testimony before
one of our committees where they said no such problem exists.
I urge all of my colleagues to vote yes on the conference report for
H.R. 775, the Y2K Act.
Finally, I want to thank my colleague, the gentleman from Virginia
(Mr. Goodlatte), who steered this through the Committee on the
Judiciary and the House. Without the gentleman from Virginia (Mr.
Goodlatte), this would not be here; and I appreciate his good work.

[[Page H5203]]

Ms. LOFGREN. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman
from Virginia (Mr. Moran).
Mr. MORAN of Virginia. Mr. Speaker, as one of the lead Democratic
sponsors of the Year 2000 Readiness and Responsibility Act, I rise
today in strong support of this legislation. Anybody that has followed
this legislation knows that the debate surrounding it on both sides of
the aisle has at times been driven more by political maneuvering than
substantive policy concerns. That is why we are so pleased that this
truly bipartisan compromise conference report has been worked out with
both Chambers and the White House.
It was done because all involved decided it was more important to our
Nation and our economy to pass Y2K litigation reform than to play
politics as usual.
Currently, American businesses, governments and other organizations
are tirelessly working to correct potential Y2K failures. It involves
reviewing, testing and correcting billions of lines of computer code.
American businesses will spend an estimated $50 billion to reprogram
their computers, but despite these efforts many of the Y2K computer
failures will occur because of the interdependency of the United States
and world economies.
In contrast to other problems that affect some businesses or even
entire industries engaged in damaging activity, the Y2K problem will
affect all aspects of our economy, especially the most productive high-
tech industries.
As the Progressive Policy Institute said, this is a unique, one-time
event, best understood as an incomparable societal problem rooted in
the early stages of our Nation's transformation to the digital economy.
That is why it is so important that we do the right thing on this
legislation.
Without this legislation, it has been estimated by legal experts that
the litigation surrounding the Year 2000 could be in excess of $1
trillion. If this bill does not prevent economic damage recoveries,
injured plaintiffs will still be able to recover all of their damages
and defendant companies will still be held liable for the entire amount
of economic damages that they cause.
Additionally, all personal injury claims are exempt from this
legislation.
This is the time for Congress to act to protect American jobs and
industry, and that is what this bill does.
The goal of Congress should be to encourage economic growth and
innovation, not to foster predatory legal tactics that will only
compound the damage of this one-time national crisis. Congress owes it
to the American people to do everything we can to lessen the economic
impact of the worldwide Y2K problem and not let it unnecessarily become
a litigation bonanza.
In summary, in the State of the Union address, President Clinton
urged Congress to find solutions that would make the Year 2000 computer
problem the last headache of the 20th century rather than the first
crisis of the 21st.
This legislation accomplishes that objective. It is good legislation.
We should get a unanimous vote for it.
Mr. GOODLATTE. Mr. Speaker, I yield 1 minute to the gentleman from
Iowa (Mr. Leach), the chairman of the House Committee on Banking and
Financial Services.
(Mr. LEACH asked and was given permission to revise and extend his
remarks.)
Mr. LEACH. Mr. Speaker, I thank my distinguished friend, the
gentleman from Virginia (Mr. Goodlatte), for yielding me this time.
Mr. Speaker, let me just stress that no one knows at this time either
in America or worldwide if this is not the most exaggerated or the most
understated issue in the history of the American or world economy.
On the other hand, what this bill does is move in the direction of
trying to deal with some potential problems which may arise, and in
this regard, I would like to express particular thanks to the
extraordinary leadership of the gentleman from Virginia (Mr. Davis) and
the gentleman from Virginia (Mr. Goodlatte) and the constructive
involvement of my good friend, the gentleman from Virginia (Mr. Moran).
Mr. Speaker, I would like to submit additional comments on one very
subtle aspect of this particular bill.
These comments relate to Section 4(h) of the Senate amendment.
A June 23, 1999, letter from four federal financial regulatory
agencies--the Federal Reserve Board, the Federal Deposit Insurance
Corporation (FDIC), the Office of the Comptroller of the Currency
(OCC), and the Office of Thrift Supervision (OTS)--warned that in their
view, Section 4(h) was ``drafted so broadly that it could lead to
significant unintended consequences having the potential to adversely
affect the safety and soundness of the banking system and the national
economy.'' In fact, the letter went so far as to assert that, ``. . .
it is difficult to overstate the disruptions that a broad reading of
this amendment could cause.''
Given that assessment, we worked closely with House and Senate
Judiciary committees and with the federal regulatory agencies to
develop compromise language which the conferees have adopted. The new
language focuses narrowly on consumer mortgages and prohibits any party
from taking action to foreclose on residential property if an actual
Y2K failure early next year interferes with timely and accurate
mortgage payments. A consumer who becomes aware that a Y2K failure has
occurred, and that his or her mortgage payment was lost or delayed as
result of that failure, will have seven business days to notify the
mortgage service company in writing. The parties to the transaction
will then have four weeks to work out a solution. This amendment in no
way excuses anyone from fulfilling their legal and financial
obligations but will allow for extra time to resolve what may be a
once-in-a-lifetime problem.
The bottom line is that this language accommodates potential
homeowner concerns without having disruptive implications for how
financial services are delivered or posing a litigative nightmare. I
urge adoption of the conference report.
Before concluding, I might add that yesterday, June 30, 1999, was a
bellwether day in the banking industry's Y2K readiness program. Bank
regulators had told financial institutions across the country that they
were expected to finish fixing their mission critical systems and
testing them for Y2K bugs by that date. The Committee expects to have
data by Monday, July 26, on the numbers of institutions which met the
deadline. I am hopeful that the regulatory agencies and the banking and
financial services industry will prove to be sufficiently prepared that
no homeowner will find it necessary to avail themselves of the relief
in this bill.
Ms. LOFGREN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I am happy that we are here today and about to approve
this conference report with what I'm certain will be a very wide margin
of votes in support. Just a week ago, I was not at all confident that
we could achieve what we are about to achieve here today. People had
dug in and compromise seemed unlikely.
I was actually a member of the conference committee, as the Speaker
well knows. It was the first conference committee I had ever been a
member of, and I could easily observe at our first and only meeting
that there was a great deal of anger in the room. People were fed up
with the process that brought them there, to that meeting. Without
going into who did what to whom, and how it could have been improved,
we got past that anger.
Many have been mentioned for their contributions to this process. I
want to give special thanks to my colleague and my leader on the
Committee on the Judiciary, the gentleman from Michigan (Mr. Conyers),
the ranking member, whom I think, showed great serenity and leadership
as he tried to sort through the many complex issues that comprise Y2K.
I also want to mention someone who has not been praised by anyone
else today, and that is Senator Hatch. His cool voice of reason and
comity suggested that the White House should be invited to sort through
these issues with the conference staff last Friday and through the
weekend and all through Monday night. Senator Hatch was therefore
enormously helpful in getting people together.
I also want to thank the staff. As I just said, the White House
lawyers and staff were up all Monday night working on this settlement,
and I think the Committee on the Judiciary staff put in similar hours,
and this is true on both sides of the aisle. I appreciate the effort
that they put into this.
I also want to mention my own special counsel, John Flannery, who put
in extraordinary efforts trying to keep people working together on
this.
This conference report, as I said earlier this morning when we were
discussing the rule, could have been approached in a variety of ways. I
am

[[Page H5204]]

happy to support this one. I think this bill is narrowly crafted to
deal with this Y2K event, only months away. As the chairman of the
Committee on Banking and Financial Services just said, we do not know
what is going to happen when the Year 2000 arrives, or strikes, as the
case maybe. There are many people in Silicon Valley, many CEOs, who do
not believe anything much is going to happen when the Year 2000
strikes. Then there are others who believe a lot may happen. None of us
will know--until the event occurs.
It is because of the latter possibility, what could go really wrong
that makes it so very important we take this step to prepare for the
possible litigation that may accompany this worst-case possible
scenario.
I want to underscore, however, the fact that the parties have come
together on this issue at this time does not mean there will be
agreement on a wide diversion of seemingly related issues. Pending in
the Committee on the Judiciary are a variety of measures that would
change tort law, change civil law in America dramatically. Some of the
people who are going to vote for this conference report will not, in
fact, support a wholesale change of American civil law.
Let me explain why. When I was thinking about this conference report
and the underlying bill, I was reminded of President Abraham Lincoln.
In the Civil War, President Lincoln suspended habeas corpus because the
threat to the Union was so severe that the President believed he had to
resort to this extraordinary remedy. That does not mean that we held
the habeas clause any less dear as a guarantor of our liberty, but we
had a crisis that prompted this action.
If bubonic plague were to break out, the health officers would not
need to get a search warrant when, in pursuit of the plague, they had
to gain entry. That would not mean we had any less affinity or
affection for the fourth amendment, which helps keep our country free.
In this sense, the Y2K event is similar. Although none of us will be
around at the next millennium, after the Year 2000 this will hopefully
not be an issue. If it is, we can say here and now, that at least once
a millennium, we will make a special exception to deal with this kind
of crisis.
I appreciate the fact that the White House has sorted through these
same policy issues and said as much.
I think that what we have before us is a fair and reasoned response
that will provide useful benefit to the high-tech community and to our
economy, because the real underlying issue is, if we do experience the
worst-case scenario, the hit on our economy would be so enormous, that
it would require the remedy and relief provided for in this bill.
I am proud to say that this conference report has the support not
only of myself but of the ranking member, the gentleman from Michigan
(Mr. Conyers), and many, many others, including our friends across the
aisle and on this side of the aisle. I think it is something that we
can be proud of and I sincerely hope and expect it shall in the near
future serve as a model for additional legislative collaboration.
Mr. Speaker, I yield back the balance of my time.
Mr. GOODLATTE. Mr. Speaker, I yield 2 additional minutes to the
gentleman from Virginia (Mr. Davis).
Mr. DAVIS of Virginia. Mr. Speaker, let me just say when this came
up, we sent the conferees last week, the gentlewoman from California
(Ms. Lofgren) and others had said, please work with us. I know there
was skepticism, but at the end of the day I think we recognized that
this legislation is far better than the current status quo in terms of
the protection it gives to companies and people who have acted
innocently and in good faith to try to fix the Y2K problem.
So we took their suggestions. They have come over and have met us
halfway. I think we have the final product.
I would like to rehash this because I think it is important for
American industry to know where the people come from as they try to
decide these things, and I went through it in that manner. But we are
here today because we recognize that there is a need and because they
were ready to meet us halfway on that issue. So I am glad we have this
final product.
I am proud to stand up here as the chief sponsor of the legislation
and say we have a product that I think does, in large part, what we
intended for it to do when we started out. It does not do everything we
wanted, for the reasons I outlined before, but again I want to urge all
of my colleagues to vote yes on this.
Mr. GOODLATTE. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, first I would like to commend the gentleman from
Virginia (Mr. Davis) for his leadership on this issue from start to
finish. Sometimes individuals introduce legislation and it goes to a
committee that they are not a member of and it goes through the process
and they are not involved too much. The gentleman from Virginia (Mr.
Davis) has been involved in this process, he and his staff, from start
to finish, and I want to commend him for shepherding this legislation.
He has done an outstanding job in that regard, making sure that the
needs of the high-tech community not only in his district in Northern
Virginia but all across the country are met, along with the needs of
the broader business community who buys this equipment and needs to
make sure that it operates effectively and have good working systems on
January 1 of next year, not a good lawsuit on January 1 of next year.
That is what this legislation accomplishes.
In addition, this legislation is very, very sensitive to the needs of
America's consumers, those folks who not only rely on businesses to
provide them with the goods and services they need but who have
consumer products in their homes. Whether they be microwave ovens or
personal computers or automobiles, whatever the case might be, we want
to make sure that they have the problems that are associated with Y2K
solved; and if they are not solved, that they have still their good
legal remedies.
Under this legislation, they do. If there is a personal injury
involved, for example, this legislation does not affect their rights to
bring a cause of action for injury in any way, shape or form.

{time} 1415

There is a carve-out for consumers with regard to consumer goods that
assures them that they can recover the full amount of their loss if
they experience one.
But the main intent of this legislation is to not see those losses
occur at all. That is why I am so proud of this legislation, and have
had the opportunity to move it through the Committee on the Judiciary,
through the House, and through the conference to a good, solid bill
that adheres to the original principles contained in the original
legislation of the gentleman from Virginia (Mr. Davis).
While we have compromised, while we have made a number of changes
with regard to the details of the bill, the core of the bill in terms
of putting caps on punitive damages, in this case for small businesses
of fewer than 50 employees, to make sure that we do not have a strong
discouragement of solving this problem, that is in the bill.
To move to the standard of proportional liability, so somebody who
may be 1 percent responsible for a Y2K problem does not get stuck with
100 percent of the bill, that is in this legislation. They will only
pay their respective percentage of the problem, except under certain
details, in which case it can be a little bit higher. But nonetheless,
they are not going to be, in most circumstances, faced with the entire
tab if they only caused a small percentage of the problem.
Class action reform, something that I am vitally interested in
because I have introduced legislation on this in a broader sense to
apply to all class actions, we have that reform in this legislation.
It makes sense for our Federal courts to handle Y2K class actions
when they go beyond the scope of a single State. When they have
plaintiffs or defendents from a multitude of States, this legislation
will allow us in most instances to remove that legislation to the
Federal courts, where they can consolidate actions from different
States and they can apply a more consistent standard, and they can
avoid the kind of forum shopping that takes place sometimes now.
In addition, the legislation contains conditions that if the
plaintiffs seek

[[Page H5205]]

punitive damages in their class action suit the case can be removed to
Federal court, regardless of the amount in controversy. So these
reforms are vital.
In addition, there are reforms that encourage folks to settle their
differences outside of the courtroom: A 90-day cooling off period that
is so important to allow a defendant who is made aware of a problem
that somebody has in their computer system, in the machinery that is
operating the manufacture of their products, whatever the case might
be, they need to be given notice that the problem exists and then an
ample amount of time to correct the problem. This bill does that.
The thing that pleases me the most is that because of the bipartisan
compromise that we have reached with I think we are going to see soon
an overwhelming majority of Members of both sides of the aisle voting
for this, and with the support of the White House indicated in several
letters that have now been received, because of this cooperation we are
getting this bill done in very short order, and that means that we will
have about 6 months for everybody who is facing this problem to go at
solving the problem without fear of entangling themselves in a
litigation morass, and that is going to do more than anything else to
make sure that when that clock ticks to 12:01 on January 1 of the year
2000, computers across the country will know that indeed it is the new
millenium and that we have not gone back to the horse and carriage era
of 1900.
That, to me, will spell a continuation of the success we have had in
this country with a booming economy as a result of the high-tech
industry that is fueling our leadership around the world, our growth in
our economy compared to other countries around the world, and the
fantastic job creation that has taken place of good, high-paying jobs.
This industry needs to have this incentive to move forward, rather
than the hindrance to be set back with a major problem in the year
2000. We are going to accomplish that here with passage of this
legislation today, send it to the Senate, and then send it to the
President, and get on with the business of getting ready for the new
millennium.
Mr. COX. Mr. Speaker, I am pleased today to support the conference
report on H.R. 775, the Y2K Act of 1999. This bill seeks to promote Y2K
preparedness and prevent a crushing, $1 trillion lawsuit tax on
American workers and families--the cost of litigation predicted to
result from the Y2K bug.
The 1st Y2K lawsuits were filed in mid-1997, two and half years
before the millennium. Some unethical lawyers are now holding workshops
on how to start Y2K class actions. They are planning for abusive class
actions on an unprecedented scale, which will--unless Congress acts--
injure virtually every sector of the economy.
This bill will prevent extortion suits against deep-pockets
defendants. It will protect consumers with meritorious claims by
requiring lawyers to act for their clients' benefit rather than their
own. It will guard against unethical lawyers raking off hundreds of
millions, and even billions of dollars in fees that should go to
redress real injuries.
Far too long, the fear of litigation has seriously impeded
remediation of Y2K problems. Small and large businesses are too often
limiting their own internal reviews, and their external disclosure and
cooperation, so that they can avoid being accused of making inaccurate
statements about their Y2K readiness, or of ``misconduct'' or
``negligence'' when they are actually trying to fix the problems that
someone else created.
This bill will ensure that America does everything possible to fix
Y2K problems before January 1, 2000. Inevitably, some Y2K failures will
occur; and when they do, the innovative procedural reforms in this bill
will encouraged alternatives to unnecessary litigation. And the bill's
pro-consumer class-action reforms will ensure fair treatment of every
individual, even in enormous, nationwide Y2K cases.
As an original cosponsor of this important, common-sense reform
legislation, I am pleased to join in this effort to help consumers and
preserve our country's high-tech edge in the global economy.
Mr. GOODLATTE. Mr. Speaker, I urge every Member of the House to vote
for this conference report, and I yield back the balance of my time.
The SPEAKER pro tempore (Mr. LaHood). Without objection, the previous
question is ordered on the conference report.
There was no objection.
The SPEAKER pro tempore. The question is on the conference report.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Ms. LOFGREN. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
The vote was taken by electronic device, and there were--yeas 404,
nays 24, not voting 7, as follows:

[Roll No. 265]

YEAS--404

Abercrombie
Ackerman
Aderholt
Allen
Andrews
Archer
Armey
Bachus
Baird
Baker
Baldacci
Baldwin
Ballenger
Barcia
Barr
Barrett (NE)
Barrett (WI)
Bartlett
Barton
Bass
Bateman
Becerra
Bentsen
Bereuter
Berkley
Berman
Berry
Biggert
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bono
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brady (TX)
Brown (FL)
Brown (OH)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Capps
Cardin
Carson
Castle
Chabot
Chambliss
Chenoweth
Clay
Clayton
Clement
Clyburn
Coble
Coburn
Collins
Combest
Condit
Conyers
Cook
Cooksey
Costello
Cox
Coyne
Cramer
Crane
Cubin
Cummings
Cunningham
Danner
Davis (FL)
Davis (IL)
Davis (VA)
Deal
DeFazio
DeGette
DeLauro
DeLay
DeMint
Deutsch
Diaz-Balart
Dickey
Dicks
Dixon
Doggett
Dooley
Doolittle
Doyle
Dreier
Dunn
Edwards
Ehlers
Ehrlich
Emerson
Engel
English
Eshoo
Etheridge
Evans
Everett
Ewing
Farr
Fattah
Fletcher
Foley
Forbes
Ford
Fowler
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gejdenson
Gekas
Gephardt
Gibbons
Gilchrest
Gillmor
Gilman
Gonzalez
Goode
Goodlatte
Gordon
Goss
Graham
Granger
Green (WI)
Greenwood
Gutierrez
Gutknecht
Hall (TX)
Hansen
Hastert
Hastings (FL)
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (IN)
Hill (MT)
Hilleary
Hilliard
Hinojosa
Hobson
Hoeffel
Hoekstra
Holden
Holt
Hooley
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Inslee
Isakson
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Jenkins
John
Johnson (CT)
Johnson, E.B.
Johnson, Sam
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Kasich
Kelly
Kildee
Kilpatrick
Kind (WI)
King (NY)
Kingston
Kleczka
Klink
Knollenberg
Kolbe
Kuykendall
LaFalce
LaHood
Lampson
Lantos
Largent
Larson
Latham
LaTourette
Lazio
Leach
Levin
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lofgren
Lowey
Lucas (KY)
Lucas (OK)
Luther
Maloney (CT)
Maloney (NY)
Manzullo
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McCrery
McDermott
McGovern
McHugh
McInnis
McIntosh
McIntyre
McKeon
McNulty
Meehan
Meek (FL)
Menendez
Metcalf
Mica
Millender-McDonald
Miller (FL)
Miller, Gary
Miller, George
Minge
Mink
Moakley
Mollohan
Moore
Moran (KS)
Moran (VA)
Morella
Murtha
Myrick
Nadler
Napolitano
Neal
Nethercutt
Ney
Northup
Norwood
Nussle
Oberstar
Obey
Olver
Ortiz
Ose
Owens
Oxley
Packard
Pallone
Pascrell
Pastor
Payne
Pease
Pelosi
Peterson (MN)
Peterson (PA)
Petri
Phelps
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Quinn
Radanovich
Ramstad
Rangel
Regula
Reyes
Reynolds
Riley
Rivers
Rodriguez
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Roukema
Roybal-Allard
Royce
Rush
Ryan (WI)
Ryun (KS)
Sabo
Salmon
Sanchez
Sandlin
Sanford
Sawyer
Saxton
Scarborough
Schaffer
Sensenbrenner
Serrano
Sessions
Shadegg
Shaw
Shays
Sherman
Sherwood
Shimkus
Shows
Shuster
Simpson
Sisisky
Skeen
Skelton
Slaughter
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Souder
Spence
Spratt
Stabenow
Stearns
Stenholm
Strickland
Stump
Stupak
Sununu
Sweeney
Talent
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)

[[Page H5206]]

Thompson (MS)
Thornberry
Thune
Thurman
Tiahrt
Toomey
Towns
Traficant
Turner
Udall (CO)
Udall (NM)
Upton
Velazquez
Vento
Visclosky
Vitter
Walden
Walsh
Wamp
Waters
Watkins
Watt (NC)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Wexler
Whitfield
Wicker
Wilson
Wise
Wolf
Woolsey
Wu
Wynn
Young (AK)
Young (FL)

NAYS--24

Bonior
Capuano
Crowley
Delahunt
Duncan
Filner
Hinchey
Kennedy
Kucinich
Lee
Lewis (GA)
McKinney
Meeks (NY)
Paul
Rahall
Rothman
Sanders
Schakowsky
Scott
Stark
Tierney
Waxman
Weiner
Weygand

NOT VOTING--7

Brown (CA)
Dingell
Fossella
Goodling
Green (TX)
Hall (OH)
Lipinski

{time} 1442

Messrs. TIERNEY, CAPUANO, KENNEDY of Rhode Island and MEEKS of New
York changed their vote from ``yea'' to ``nay.''
Mr. BURTON of Indiana changed his vote from ``nay'' to ``yea.''
So the conference report was agreed to.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.

____________________