[Congressional Record Volume 145, Number 96 (Thursday, July 1, 1999)]
[Senate]
[Pages S8017-S8035]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
[[Page S8017]]
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Senate
Y2K ACT--CONFERENCE REPORT
Mr. McCAIN. Mr. President, I ask unanimous consent to lay aside the
pending business and turn to the conference report to accompany H.R.
775.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The assistant legislative clerk read as follows:
The committee on conference on the disagreeing votes of the
two Houses on the amendment of the Senate to 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,
having met, after full and free conference, have agreed to
recommend and do recommend to their respective Houses this
report, signed by a majority of the conferees.
The PRESIDING OFFICER. Without objection, the Senate will proceed to
the consideration of the conference report.
(The conference report is printed in the House proceedings of the
Record of June 29, 1999.)
The PRESIDING OFFICER. Under the previous order, debate on the
conference report is limited in the following manner:
The Senator from Arizona, Mr. McCain, 20 minutes;
The Senator from Connecticut, Mr. Dodd, 15 minutes;
The Senator from Oregon, Mr. Wyden, 15 minutes;
The Senator from Vermont, Mr. Leahy, 10 minutes;
The Senator from South Carolina, Mr. Hollings, 50 minutes.
Immediately following that debate, the Senate will proceed to a vote
on the adoption of the conference report with no other intervening
action or debate.
The Senator from Arizona.
Mr. McCAIN. Mr. President, I don't intend to use all of my time. I
intend to yield 5 minutes to the Senator from Washington. I have talked
to other Members who have time under this agreement. For the benefit of
my colleagues, I think we will not use all of the time as outlined in
the unanimous-consent agreement.
I am pleased to urge the final passage of the conference report on
H.R. 775. This has been a long and arduous process. While there have
been times when the bill appeared to be moving slowly, or even dying, I
was always confident we would do the right thing and pass this final
bill.
We are now ready to enact this critical legislation. For the benefit
of my colleagues, the House has just passed the conference report by a
vote of 404-24. This is a victory for the Nation and for the continued
prosperity of our economy as we enter the new millennium.
This is a critical piece of legislation. It allows all of our
businesses and industries, large and small, hitech and non-hitech, to
concentrate their efforts for the next 6 months on preventing Y2K
problems from happening, and planning remediation measures. Rather than
spending time, resources and money planning litigation defenses, we can
be focusing on the means for fixing the problems.
This legislation strikes a very fair and practical balance in
protecting the economy and protecting the rights of consumers. And very
importantly, I want to note, it addresses needs and problems of small
businesses, as well as large.
I would like to dispel any misconceptions or misinformation that
there was any underhandedness in the final negotiation and drafting of
revisions to this bill. Despite attempts to address Administration
concerns last week with revisions and compromises that were made
Friday, over the weekend, and on Monday, final negotiations and
proposals by the White House were made on Tuesday morning, as we
pressed against the deadline for completion of the conference report.
Final revisions and drafting were made with every effort and good faith
intention to respond to the generalized requests of the White House.
Challenges to the integrity, professionalism and honor of the conferees
and staff are unwarranted. This is a fair bill that reflects a
bipartisan compromise.
Perhaps the recent vote just a few minutes ago in the House might
indicate that is an overwhelming view in the other body. I am sure the
vote in the Senate will also indicate overwhelming support for this
legislation.
During the conference, the Senate and the House proponents of the
legislation agreed to at least 10 substantive changes to the bill.
These significant compromises were in addition to 10 or more major
concessions made in the Senate from the time it was passed by the
committee until its passage on the floor. These revisions and
compromises have resulted in a more narrowly tailored piece of
legislation but one that will still accomplish everything we set out to
accomplish when the bill was introduced in January.
We know the provisions of the bill:
The 30-day notice and 60-day remediation period allows prompt
resolution of problems without time-consuming and expensive litigation
It provides that defendants are responsible for the share of harm
they cause, with some exceptions to ensure that consumers are made
whole.
It requires plaintiffs to mitigate damages.
It penalizes defendants who intentionally defraud or injure
plaintiffs; or who are bad actors.
It provides liability protection for those not directly involved in a
Y2K failure.
It assures that someone will not lose his house if a mortgage payment
cannot be made or processed because of a Y2K failure.
It sunsets in three years.
It does not deny the right of anyone to redress legitimate
grievances.
[[Page S8018]]
This legislation will encourage an atmosphere of cooperation in
solving problems, rather than rushing to the courthouse. Emphasizing
the need to talk out and resolve differences rather than litigating
them will be helpful not only in the Y2K situation, but I hope will
move us away from the litigious nature of our country today.
I am especially pleased at the level of bipartisan and bicameral
cooperation in bringing this legislation to fruition. This legislation
demonstrated the true ability of both parties and both bodies of
Congress to work together for the good of the country. The efforts on
both sides of the aisle and both sides of the Capitol to achieve
consensus have been tireless. This conference has truly been a civics
class example of how Congress can rise above special interest demands
to do the right thing in the public interest
Mr. President, there are many who have contributed to this effort,
particularly during the conference with the House. I want to especially
mention the steadfast support and efforts of both Senator Dodd and
Wyden. They worked late into the night this week to negotiate with the
White House and assure the President's support.
I thank my two colleagues, Senator Dodd and Senator Wyden. This bill
passed the Commerce Committee 11-9 on a strict partisan vote. Thanks to
the efforts of those two individuals, who have been tireless, we were
able to not only work with the other side of the Capitol, but the White
House. Senator Wyden and Senator Dodd have better relations with the
White House than I do. That is no secret to anyone around here. The
fact that they were able to work more closely with the White House than
I ever could have was a significant and, frankly, critical part of this
agreement that we made. I again extend my deep appreciation to them.
It did not win them the ``Miss Congeniality'' award in their own
caucus--something I am familiar with on this side of the aisle.
My appreciation, as well as a certain amount of sympathy, goes out to
them. In all seriousness, without their efforts we would not be here.
I also think they would join me in expressing appreciation to
Congressman Goodlatte and Congressman Davis on the other side.
Congressman Goodlatte and Congressman Davis started with a piece of
legislation far more ``restrictive''--if that is the right word--in the
opinion of some, a lot better.
The fact is, they were willing to agree to the movement in the
compromises that were made. They clearly could have held their ground
and we couldn't have moved forward.
By the way, Congressmen Goodlatte, Davis, and Sensenbrenner were the
originators of this legislation.
I also thank Senator Gorton, Senator Feinstein, Senator Hatch, and
Senator Bennett.
It reminds me of the old line of Jack Kennedy after the Bay of Pigs:
Victory has 1,000 fathers and defeat has 1 poor lonely orphan.
Along with that philosophy, I thank the staff members on both sides
of the aisle and both sides of the Capitol: Carol Grunberg of Senator
Wyden's staff; Shawn Maher of Senator Dodd's staff; Jeanne Bumpus of
Senator Gorton's staff; Larry Block with Senator Hatch; Steven Wall on
Senator Lott's staff; Laurie Rubenstein with Senator Lieberman; Tania
Calhoun of the Y2K Committee; Diana Schacht of the House Judiciary
Committee; Phil Kiko, of Congressman Sensenbrenner's staff; Amy
Herrink, of Congressman Davis staff; and Ben Kline of Congressman
Goodlatte's staff.
Finally, I thank the coalition that got behind this legislation.
Their help was as broad as any coalition of businesses--large, small,
and medium sized--I have seen in my experience here in the Senate.
I thank the National Association of Manufacturers, the Chambers of
Commerce, and hi-tech groups, including ITAA, ITI, and BSA.
I ask unanimous consent a list of the year 2000 coalition members be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Year 2000 Coalition Members List
Aerospace Industries Association.
Airconditioning & Refrigeration Institute.
Alaska High-Tech Business Council.
Alliance of American Insurers.
American Bankers Association.
American Bearing Manufacturers Association.
American Boiler Manufacturers Association.
American Council of Life Insurance.
American Electronics Association.
American Entrepreneurs for Economic Growth.
American Gas Association.
American Institute of Certified Public Accountants.
American Insurance Association.
American Iron & Steel Institute.
American Paper Machinery Association.
American Society of Employers.
American Textile Machinery Association.
American Tort Reform Association.
America's Community Bankers.
Arizona Association of Industries.
Arizona Software Association.
Associated Employers.
Associated Industries of Missouri.
Associated Oregon Industries, Inc.
Association of Manufacturing Technology.
Association of Management Consulting Firms.
BIFMA International.
Business and Industry Trade Association.
Business Council of Alabama.
Business Software Alliance.
Chemical Manufacturers Association.
Chemical Specialties Manufacturers Association.
Colorado Association of Commerce and Industry.
Colorado Software Association.
Compressed Gas Association.
Computing Technology Industry Association.
Connecticut Business & Industry Association, Inc.
Connecticut Technology Association.
Construction Industry Manufacturers Association.
Conveyor Equipment Manufacturers Association.
Copper & Brass Fabricators Council.
Copper Development Association, Inc.
Council of Industrial Boiler Owners.
Edison Electric Institute.
Employers Group.
Farm Equipment Manufacturers Association.
Flexible Packaging Association.
Food Distributors International.
Grocery Manufacturers of America.
Gypsum Association.
Health Industry Manufacturers Association.
Independent Community Bankers Association.
Indiana Information Technology Association.
Indiana Manufacturers Association, Inc.
Industrial Management Council.
Information Technology Association of America.
Information Technology Industry Council.
International Mass Retail Association.
International Sleep Products Association.
Interstate Natural Gas Association of America.
Investment Company Institute.
Iowa Association of Business & Industry.
Manufacturers Association of Mid-Eastern PA.
Manufacturer's Association of Northwest Pennsylvania.
Manufacturing Alliance of Connecticut, Inc.
Metal Treating Institute.
Mississippi Manufacturers Association.
Motor & Equipment Manufacturers Association.
National Association of Computer Consultant Business.
National Association of Convenience Stores.
National Association of Hosiery Manufacturers.
National Association of Independent Insurers.
National Association of Manufacturers.
National Association of Mutual Insurance Companies.
National Association of Wholesaler-Distributors.
National Electrical Manufacturers Association.
National Federation of Independent Business.
National Food Processors Association.
National Housewares Manufacturers Association.
National Marine Manufacturers Association.
National Retail Federation.
National Venture Capital Association.
North Carolina Electronic and Information Technology
Association.
Technology New Jersey.
NPES, The Association of Suppliers of Printing, Publishing,
and Converting Technologies.
Optical Industry Association.
Printing Industry of Illinois-Indiana Association.
Power Transmission Distributors Association.
Process Equipment Manufacturers Association.
Recreation Vehicle Industry Association.
Reinsurance Association of America.
Securities Industry Association.
Semiconductor Equipment and Materials International.
Semiconductor Industry Association.
Small Motors and Motion Association.
Software Association of Oregon.
Software & Information Industry Association.
South Carolina Chamber of Commerce.
[[Page S8019]]
Steel Manufacturers Association.
Telecommunications Industry Association.
The Chlorine Institute, Inc.
The Financial Services Roundtable.
The ServiceMaster Company.
Toy Manufacturers of America, Inc.
United States Chamber of Commerce.
Upstate New York Roundtable on Manufacturing.
Utah Information Technology Association.
Valve Manufacturers Association.
Washington Software Association.
West Virginia Manufactures Association.
Wisconsin Manufacturers & Commerce.
Mr. McCAIN. We could not have succeeded without them.
I do not intend to make further remarks except to reserve about 5
minutes of my time for the Senator from Washington. I reserve the
remainder of my time.
The PRESIDING OFFICER. Who yields time? The Senator from Oregon.
Mr. WYDEN. Mr. President, it is a great honor to be on the floor
today to express my special appreciation at being able to work with
Senator McCain, Senator Dodd, and so many of our colleagues on both
sides of the aisle on this important legislation.
This bill is designed with one point and that is to make sure that
America's prosperity does not screech to a halt when the calendar pages
flip over to start a new millennium. I am of the view that with this
bill, millions of consumers and businesses are more likely to be on
line at the turn of the century than waiting in line for a courtroom
date.
I am especially pleased at the bipartisan efforts to make sure the
individual consumer was protected in this legislation. This legislation
allows consumers to get punitive damages against the bad actors. It
makes sure consumers cannot be ripped off with fraudulent
misrepresentations. It greatly expands the opportunity for consumers to
bring cases in State rather than Federal court. And the conference
report ensures that the individual consumer doesn't get the shaft
because they are going to be in a position to be made whole when you
take the entire package of remedies that would be available to them.
I am going to focus for just a moment on the 20 major changes that
were made in this legislation after it left the Senate Commerce
Committee; seven of them Chairman McCain and I agreed on and one of
them was a bottom-line proposition for me. The Senator from South
Carolina, who is so eloquent with respect to the rights of plaintiffs
in our country, was concerned, legitimately, about the long-term
ramifications of this legislation. At my insistence, after the Senate
Commerce Committee completed its work, Chairman McCain added a 3-year
sunset provision to this legislation. So this is going to be a bill to
deal with a finite, discrete problem, not something that is going to
linger for decades and decades.
We also eliminated the vague Federal defenses that were involved
early on. We dropped the preemptive standards for punitive damages. We
made sure that bad actors were not going to get a free ride. We
restored joint liability for defendants who knowingly committed fraud.
There were extra damages for plaintiffs facing insolvent defendants and
we restored limited liability for directors and officers. That is what
we began with after it left the Senate Commerce Committee and why I was
pleased to join with Chairman McCain.
Then Senator Dodd, who is the Democrats' leader on these technology
issues and who has given me, as a junior Member of this body, so much
counsel, came along and made an additional set of important changes so
as to particularly protect small businesses. We also went further with
respect to officers and directors, and we made sure that plaintiffs
were not going to face tougher evidentiary standards because of the
good work done by the Senator from Connecticut.
Then we went to the conference committee and there were 10 major
changes made to address concerns of the White House. In the area of
proportionate liability, we doubled the orphan share for the solvent
defendants, we tripled the orphan share for defendants when the
plaintiffs were bad actors, and we assured that individual consumers
facing insolvent defendants were made whole.
We made a number of changes in the class action area. We boosted the
monetary threshold. In committee, when we began it was at $1 million.
Now it is at $10 million. We boosted the class size from 50 to 100
plaintiffs. We also added provisions to make sure cases could be dealt
with under remand provisions to assist the consumer.
Finally, there were changes in securities law to exempt private
securities claims under this act, strong provisions with respect to
contract enforcement. And to address a number of the important issues
that our colleague from North Carolina has raised with respect to
economic loss, we stipulated the economic loss rules would apply in a
number of instances so as to give the consumer yet another tier of
protection.
Our Nation needs a game plan for Y2K. This legislation is not going
to solve all of the Y2K problems that crop up early in the next
century. But what we will do by passing this legislation is ensure that
we do not compound the problems we know are going to occur. We are
doing it in a way that is going to ensure consumers are made whole,
that bad actors face the stiffest of penalties, and at the same time we
do not encourage mindless litigation that does nothing other than drain
the vitality out of our economic prosperity.
I have believed for a long time that failure to pass legislation in
this area would be similar to lobbing a monkey wrench into the Nation's
technology engine which is driving our prosperity. This legislation
gives us the opportunity to keep that prosperity going. I am very
honored to have had the opportunity to be part of this effort.
I pay special thanks, in wrapping up my remarks, to my colleague,
Senator Dodd, the Democratic leader on these technology issues. A
little bit after midnight on Monday--I guess that would be early
Tuesday morning--this relatively young Senator was getting a little
pooped and beginning to wonder how much longer I could keep going. The
distinguished Senator from Connecticut said: This is not an option. We
are going to stay at it until this legislation gets done. I say to my
pal from Oregon, I am going to be talking to the President of the
United States tonight.
I looked at my watch and I thought: Well, it is quarter to 1. This is
going to be interesting, to learn a little bit more about this call.
But in fact, as a result of the efforts of Senator Dodd, the work that
was done by Chairman McCain and his staff and a variety of colleagues
on both sides of the aisle in those early morning hours, on Tuesday we
consummated the 20 major changes that were made in this legislation to
ensure we had a bipartisan bill. So I have to tell you, this
legislation, which was on the ropes early Tuesday morning with a lot of
us thinking that it was going down for the count, now is a bill that
our body can be proud of. It is a genuine compromise. I am not going to
continue further because I know there are a number of colleagues who
wish to speak as well. But I do want to pay tribute to a number of our
staff who put in these extraordinary hours.
I see Marti Allbright and Mark Buse over there, with Chairman McCain;
Senator Dodd's staff as well. Carol Grunberg, who is here with me, is
sort of the Senate's Bionic Woman. She just kept going when it was so
important to keep the parties together.
I am proud to be part of this effort. I look forward to what I hope
will be a resounding vote in the Senate before too long. I yield the
floor.
The PRESIDING OFFICER. Who yields time? The Senator from Vermont.
Mr. LEAHY. Mr. President, how much time is reserved under the
unanimous consent agreement for the Senator from Vermont?
The PRESIDING OFFICER. The Senator has 10 minutes.
Mr. LEAHY. Mr. President, this conference report on the Y2K liability
protection bill is being roundly praised, but not universally. Not
universally. And it should not be. This bill is worse than the bill the
Senate passed only a few weeks ago. The conference report provides
expanded legal protections, especially at the expense of consumers, and
I believe it raises serious constitutional questions. I do not support
it because it is an unjustified wish list for special interests that
are or might become involved in Y2K litigation.
The conference report greatly expands the scope of the Senate-passed
bill by amending this act to apply to a potential Y2K failure. In fact,
section 4
[[Page S8020]]
of the bill was amended during the conference to apply to the act's
legal restrictions for a potential Y2K failure that could occur or has
allegedly caused harm or injury before January 1, 2003. Let me ask,
what is a potential Y2K failure? Nobody knows. I tell you this, over
the next 4 years almost every lawsuit involving any technology issue
could trigger the bill's special legal protections under this sweeping
definition.
Once again, the majority is manipulating a key phrase to suit the
wants of a special interest. The business lobby has inserted its own
expanded definition of a Y2K action to broaden the scope of this bill.
A House conferee observed when this expanded definition was first
proposed last Thursday that it was an expansive definition that had
been expressly rejected during House Judiciary Committee proceedings.
It certainly was not accepted here. Lo and behold, like the ``Lady of
the Lake'' rising, we find this comes out of the ether during the
conference.
Not really even during the conference. In fact, that may be one
reason the conference was never called to meet for a second time to go
over the proposed conference report or to even vote on these matters,
because it was easier to have matters not considered by the House or
the Senate or the conference or voted on, but those that came from
somewhere--not from us. But there they are.
In fact, after the first truncated meeting was adjourned and a
possible follow up meeting was postponed Tuesday morning, the
conference was never called back into public session to debate the
proposal or even permit amendments to be offered and voted on. I
predicted at the first and only preliminary meeting of the conference
that I would not be allowed an opportunity to improve the bill by
adding balance and protecting consumers, or at least even get a vote on
it. I am sorry to report that I was correct. In fact, the conference
report was filed without any follow up meeting or votes by the
conference committee.
That is an interesting way of doing things. If we have a lobby that
does not want something, like the juvenile justice bill that passed--
they do not want it because they lost on the gun issues--why, it comes
to a screeching halt: We are studying it, we are reviewing it, we want
to deliberate this, we need to have time for votes, we have to have a
conference and go thoroughly into it.
We have another lobby that says we want this Y2K bill: We do not like
the bill that passed the Senate, and the House did not do enough for
us. Will you throw a bunch of stuff in, don't vote on it, don't talk
about it, don't have any procedure, just toss it in, because this is
what we want, and, oh, by the way, we want it right now, we need it in
a hurry.
This vagueness of a potential Y2K failure will also add to more
future litigation instead of curbing it. From a bill that is supposed
to deter frivolous litigation, this new, vague definition will produce
more lawsuits and may give special legal protection to many more
companies than the Senate-passed bill.
These special legal protections include: 90-day waiting period to
file a lawsuit, heightened pleading requirements, duty to anticipate
and avoid Y2K damages, overriding implied warranties under State law,
proportionate liability, and many others. All these special legal
protections still apply to small business owners and consumers in this
so-called compromise. In fact, the bill, as presently drafted, would
preempt consumer protection laws of each of the 50 States.
I have to ask: Why does this bill create new protections for large
corporations while taking away existing protections for ordinary
citizens? Maybe they do not have as much influence at the conference.
Many consumers may not be aware of potential Y2K problems in the
products they buy for personal, family, or household purposes. They
just go to the store and buy it and expect it to work. They are going
to find a real surprise if there is something in there that does not
work. One thing that will not work is the usual remedies they expect
out of the consumer protection laws.
This bill as presently drafted would preempt the consumer protection
laws of each of the 50 states and restrict the legal rights of
consumers who are harmed by Y2K computer failures.
Why is this bill creating new protections for large corporations
while taking away existing protections for the ordinary citizen? We all
know that individual consumers do not have the same knowledge or
bargaining power in the marketplace as businesses with more resources.
Many consumers may not be aware of potential Y2K problems in the
products that they buy for personal, family or household purposes.
Consumers just go to the local store or neighborhood mall to buy a home
computer or the latest software package. They expect their new purchase
to work. What if it does not, due to a Y2K problem?
Then the average consumer should be able to use his or her home
state's consumer protection laws to get a refund, replacement part or
other justice. But not under this bill.
The conference report also greatly expands the jurisdiction of the
federal courts to consider Y2K cases under its class action
provisions--now throwing Y2K cases into Federal court if a plaintiff
seeks an award of punitive damages. Again, this expansion of the
Senate-passed bill is unjustified.
It could be legal malpractice for an attorney not to seek punitive
damages at the beginning of a case, when the complaint is filed and
before discovery of all the facts has commenced. This provision makes
no sense and may cause great harm.
Chief Justice Rehnquist and the Judicial Conference soundly rejected
this approach months ago. The Judicial Conference found that shifting
Y2K cases from state courts ``holds the potential for overwhelming the
federal courts, resulting in substantial costs and delays.'' I wonder
who pays for that. I bet it is us.
In addition, the Judicial Conference concluded ``the proposed Y2K
amendments are inconsistent with the objective of preserving the
federal courts as tribunals of limited jurisdiction.''
These views are shared by the state court judges, as reflected in the
position of the Conference of Chief Justices. They note that these Y2K
bills ``pose a direct challenge to the principles of federalism
underlying our system of government.'' They describe these bills as
``radically'' altering the complementary role of the state and federal
courts. The Chief Justices of our state courts remind us: ``The
founding fathers created our federal system for a reason that Congress
should be extremely reticent to overturn.''
I thought the Administration had also rejected this approach.
Mr. President, I suspect that the sweeping federal procedural and
substantive changes to state law in this conference report will not
pass constitutional muster when challenged. The conference report does
not create a federal cause of action for Y2K lawsuits. Instead, the
bill forces federal rules and liability protections on state-based
claims and procedures. This will result in the dismissal of claims that
might otherwise succeed under state law and clearly usurps the ability
of state legislatures to make and enforce the laws for their citizens.
The conference report is an arrogant dismissal of the basic
constitutional principle of federalism. Given the Supreme Court's
recent rulings on the power of the States in relation to the Congress
under our Constitution, I predict the Supreme Court will strike down
this new law as unconstitutional.
We in Congress should not be tramping on the rights of the States to
set the legal procedures for their courts and define the legal rights
for their citizens.
On May 1, 1999, Assistant Attorney General Eleanor Acheson outlined
the Department of Justice's views on this legislation. The Department
of Justice concluded that: ``Because the McCain-Wyden-Dodd proposal
modifies tort and contract law so as to reduce the liability of
potential Y2K defendants, it reduces the incentive for potential
defendants to avert Y2K failures. In a similar fashion, we do not
believe that modifying the rules of liability that apply to meritorious
tort and contract actions will deter frivolous Y2K claims, which by
definition will be filed regardless of the rules of liability. Instead,
the modification in the McCain-Wyden-Dodd bill seem more likely to
curtail legitimate Y2K lawsuits.''
I agreed with the Department of Justice on May 1, 1999, when this
letter
[[Page S8021]]
was written, and I agree with this letter today. Mr. President, I ask
unanimous consent that the full text of the Department of Justice's
views as of May 1, 1999, be printed in the Record at the conclusion of
my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. LEAHY. This conference report is telling the business community:
Don't worry, be happy when it comes to Y2K remediation; don't worry
about fixing the problem, don't worry about trying to protect the
consumers, because the Senate and the House are going to protect you;
all you have to worry about is yourself, not those who buy your
products.
If they take that attitude using this bill as a shield, it only makes
Y2K computer problems worse next year instead of fixing them this year.
The best defense against any Y2K lawsuit is to be Y2K compliant in
1999, not waiting for a problem to happen and in the year 2000 say: Oh,
wait a minute, they took care of us in the Congress; too bad, we're
home free.
That is why I hosted a Y2K conference in Vermont to help small
businesses prepare for 2000. That is why I taped a Y2K public service
announcement in my home state. That is why I cosponsored Senator Bond
and Senator Kerry's new law, the ``Small Business Year 2000 Readiness
Act,'' to create SBA loans for small businesses to eliminate their Y2K
computer problems now. That is why I introduced, with Senator Dodd as
the lead cosponsor, the ``Small Business Y2K Compliance Act,'' S. 962,
to offer new tax incentives for purchasing Y2K compliant hardware and
software.
These real measures will avoid future Y2K lawsuits by encouraging Y2K
compliance now.
Last year, I joined with Senator Hatch to pass into law a consensus
bill known as ``The Year 2000 Information and Readiness Disclosure
Act.'' We worked on a bipartisan basis with Senator Bennett, Senator
Dodd, the Administration, industry representatives and others to reach
agreement on a bill to facilitate information sharing to encourage Y2K
compliance.
The new law, enacted less than nine months ago, is working to
encourage companies to work together and share Y2K solutions and test
results. It promotes company-to-company information sharing while not
limiting rights of consumers. That is the model we should use to enact
balanced and narrow legislation to deter frivolous Y2K litigation while
encouraging responsible Y2K compliance.
Unlike last year's Y2K information sharing law, this conference
report is not narrow or balanced. Instead it is an justified wish list
for special interests that are or might become involved in Y2K
litigation.
The coming of the millennium should not be an excuse for cutting off
the rights of those who will be harmed. It should not be an excuse for
turning our States' civil justice system upside down. It should not be
an excuse for immunizing those who recklessly disregard the coming
problem to the detriment of American consumers.
Exhibit 1
U.S. Department of Justice,
Office of Policy Development,
Washington, DC, May 1, 1999.
Hon. Albert Gore, Jr.,
President, U.S. Senate,
Washington, DC.
Dear Mr. President: I am writing to clarify the Justice
Department's views on the McCain-Wyden bill, S. 96, as
amended by Senator Dodd's April 28 proposal. We appreciate
the efforts of Senator Dodd to improve S. 96. Nevertheless,
Senator Dodd's amendments do not cure many of the defects
that prompted the Department to oppose S. 96, and the
Department continues to oppose the bill, even with Senator
Dodd's amendments. The Department, however, understands that
Senators Kerry and Robb are working on an amendment in the
nature of a substitute that addresses our primary concerns
and which we can support.
The Administration has, all along, advocated Y2K
legislation as long is it serves three important goals: (i)
giving companies every incentive to become Y2K compliant;
(ii) encouraging resolution of Y2K problems without resort to
litigation; and (iii) deterring frivolous Y2K lawsuits
without deterring legitimate Y2K claims. We are convinced,
however, that the McCain-Wyden-Dodd bill does not achieve
these goals. In fact, that bill may significantly undermine
two of them. Because the McCain-Wyden-Dodd proposal modifies
tort and contract law so as to reduce the liability of
potential Y2K defendants, it reduces the incentive for
potential defendants to avert Y2K failures. In a similar
fashion, we do not believe that modifying the rules of
liability that apply to meritorious tort and contract actions
will deter frivolous Y2K claims, which by definition will be
filed regardless of the rules of liability. Instead, the
modifications in this McCain-Wyden-Dodd bill seem more likely
to curtail legitimate Y2K lawsuits.
I will now outline briefly some of the Department's major
concerns with the McCain-Wyden-Dodd version of S. 96.
coverage issues
The McCain-Wyden-Dodd proposal would apply to Y2K lawsuits
brought by consumers and to private securities actions.
McCain-Wyden-Dodd contains a number of provisions that make
it more difficult for plaintiffs to assert and recover on
their Y2K claims--they must provide more extensive notice to
all defendants, satisfy higher pleading requirements, and may
even then be denied their economic losses and punitive
damages. Although these restrictions may be appropriate as
applied to businesses with greater financial and other
resources, imposing these heavier burdens is likely to erect
insuperable obstacles for plaintiffs who are consumers.
The McCain-Wyden-Dodd proposal also applies to private
securities actions, even though such actions are already
governed by the comprehensive provisions of the Private
Securities Litigation Reform Act of 1995 and the Securities
Litigation Uniform Standards Act of 1998. Considerable time
and effort was spent in designing those two laws as a means
of barring meritless claims but allowing the filing of
legitimate claims. In the absence of any evidence that this
legislation was ineffective at achieving these purposes,
there would appear to be no need to upset the careful balance
it achieved by applying the sweeping reforms of McCain-Wyden-
Dodd to litigation already covered by that prior legislation.
class action provisions
The McCain-Wyden-Dodd proposal creates federal jurisdiction
over any Y2K class action where more than one million dollars
is at issue. With this low threshold, this proposal allows
most Y2K class actions brought in state court, even those
based solely on state law, to be moved to federal court,
where they would be analyzed under federal standards. Class
action claims that could have been brought under state law
would have to be dismissed unless they also satisfy those
federal standards. Not only would this result in the
dismissal of claims that might have succeeded under state
law, but it would also usurp the ability of state
legislatures to define the relief available to their
citizens.
provisions modifying state tort law affecting y2k claims
The McCain-Wyden-Dodd proposal substantially rewrites state
tort law as applied to Y2K claims. Section 13, for example,
freezes in time many aspects of the state law governing
resolution of Y2K tort claims as it existed on January 1,
1999, thereby preventing the States from enacting any reforms
to their tort law, even reforms that apply generally to all
tort claims. Other sections of McCain-Wyden-Dodd
significantly curtail the damages Y2K plaintiffs may recover
for their injuries. Most dramatically, section 12 bars
recovery of economic losses in all tort suits not involving
personal injury or property damage, including fraud and
misrepresentation suits where the only damages are economic
losses. This is not simply a codification of existing state
law rules; section 12 establishes a new--and much broader--
restriction for the recovery of these damages. Finally,
section 5 of McCain-Wyden-Dodd usurps state law regarding
recovery of damages with a rule of proportionate liability
for all Y2K defendants, no matter how much they might have
contributed to the plaintiff's injuries.
Because of the concerns I have outlined, the Department
remains opposed to S. 96, even as modified by Senator Dodd's
proposed amendments.
The Office of Management and Budget has advised us that
from the perspective of the Administration's program, there
is no objection to the submission of this letter.
Sincerely,
Eleanor D. Acheson,
Assistant Attorney General,
U.S. Department of Justice.
The PRESIDING OFFICER. Who yields time?
The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, I yield sufficient time as may be
necessary under the time I am allotted under the agreement.
Mr. President, a notable author once stated that ``decades
surrounding a new millennium are periods of severe disruptions and
cultural transformations.'' In the context of American politics, it
appears that this prophecy is coming to fruition even before the 21st
century officially arrives.
From the manner in which this legislation has been considered, and
unfortunately, from its ultimate passage, it appears that this country
is embarking upon a serious transformation of America's
constitutionalism.
For 200 years, we have honored a system of federalism that recognized
the appropriate balance between States
[[Page S8022]]
and the Federal Government concerning the administration of civil law.
Civil disputes unrelated to constitutional claims were considered to be
reserved to the states and local citizens. But this cherished notion of
states' rights no longer seems to be the case. Now, upon the idea of
promoting industrialism, and more specifically, the so-called growth of
technology, it appears that federalism, as well as the constitutional
rights of American citizens, are becoming not only dishonored, but for
sale to the highest bidder.
There are some who will support this legislation today upon the
grounds that this is a bill limited in scope. Nothing could be further
from the truth. This legislation includes some of the broadest
limitations ever imposed on consumers' civil remedies, including severe
restrictions on the recovery of economic losses and the ability to
pursue class action suits.
The majority's claims about the recovery of economic losses greatly
exceed the degree to which economic losses will be recoverable under
the bill. In reality, the legislation will forbid the recovery of
economic losses in almost every situation.
The conference majority contends that the class action provision has
been made more pro-plaintiff because of the change made to the monetary
requirement--from $1 million to $10 million--and the change made to the
class size requirement, which is now 100 members. However, the
conference majority failed to highlight the decision by the conference
committee to add a provision that allows any class action suit to be
removed to federal court in the event the suit includes a claim for
punitive damages. The addition of this provision has expanded the
federalization of class actions suits well beyond the provision in the
original bill.
The conference report states that my provision on consumer credit
protection has been revised to reflect the true intent of the
provision, which was to prevent consumers from losing their mortgages
because of Y2K failures. However, the purpose of the provision was not
to singularly protect mortgages, but to protect consumers against
adverse actions in relation to all debt-related transactions, including
automobile loans and credit card obligations.
I know that many of my colleagues on this side of the aisle will vote
for final passage because of the President's decision to sign this
bill. I am most disappointed in the President's decision. When the
President announced and carried out his veto of the products liability
bill three years ago, I applauded. He states then that there was no
justification for broad restrictions on punitive damages, joint and
several liability, and broad preemption of State law. He reiterated
those concerns in several statements on this bill. Yet, he announces
his intention to sign the bill. In fact, his staff says he'll sign the
legislation, even though it doesn't reflect the actual agreement
between the White House and conference members.
I assure my colleagues that if we remain on this course, the
constitutional and moral soul of this Nation will soon perish. This
ideology of short term gain, and success at all costs, will surely work
to our detriment. Consideration of this bill reminds me of a quote by
Horace Rumpole, when he said:
We went to all that trouble with King John to get trial by
our peers, and now a lot of lawyers with the minds of
business consultants want to abolish juries.
Mr. President, when I hear the expression by my distinguished
chairman about a victory for the Nation and such nonsense from the
distinguished Senator from Oregon about the consumers not getting the
shaft--that is exactly what they are getting. That is exactly what is
happening.
We tried our best to protect the consumers. You name the consumer
organization in America--Public Citizen, Consumers Union--they are all
still opposed to this conference report.
I stand here with a letter which the American Bar Association
recently wrote:
The American Bar Association opposes enactment of H.R. 775
in either the form that passed the Senate on June 15, 1999 or
the form that passed the House of Representatives on May 12,
1999. . .The American Bar Association believes that the
rights of the States should not be trampled in the rush to
enact legislation to address concerns about Y2K.
Traditionally, legal principles governing both tort and
contract action have been the province of the States, not the
Federal Government. The legal issues likely to be presented
by the Year 2000 problem are not unique.
I ask unanimous consent the letter from the American Bar Association
be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
American Bar Association,
Governmental Affairs Office,
Washington, DC, June 22, 1999.
Hon. Trent Lott,
U.S. Senate,
Majority Leader of the Senate,
Washington, DC.
Dear Mr. Majority Leader: We understand that the
Administration and key members of Congress are continuing to
try to resolve differences with respect to H.R. 775, Y2K
liability legislation. Last Friday, the ABA's Board of
Governors met in Boston and adopted policy regarding the
pending legislation. I am writing to you to express the
American Bar Association's views on this legislation.
The American Bar Association opposes enactment of H.R. 775
in either the form that passed the Senate on June 15, 1999,
or the form that passed the House of Representatives on May
12, 1999. The ABA is supportive of efforts to impose a
reasonable waiting period before a lawsuit could be brought
and encouraging potential litigants to utilize alternative
dispute resolution methods during this period. The ABA is
also supportive of encouraging the disclosure of known Y2K
defects and of encouraging businesses, with appropriate
antitrust relief, to cooperate in the development and
implementation of remediation of Y2K defects. However, the
ABA strongly opposes provisions in the versions of the
legislation that passed both in the House and in the Senate
that would: (1) provide for federal standards regarding the
award of punitive damages; (2) limit the extent of
defendants' liability to their proportional share of damages;
(3) limit the liability of officers and directors in Y2K
proceedings; (4) allow for removal of almost all Y2K class
actions to federal court; and (5) preempt the state laws to
place a federal cap on punitive damages. The ABA also opposes
the fee-shifting provisions of section 508 of H.R. 775, as
passed by the House.
The ABA believes that the rights of the states should not
be trampled in the rush to enact legislation to address
concerns about Y2K. Traditionally, legal principles governing
both tort and contract actions have been the province of the
states, not the federal government. The legal issues likely
to be presented by the Year 2000 problem are not unique.
Except for some regulatory action undertaken by federal
and state agencies, there is little in the nature of
special Y2K law. Disputes arising from Year 2000 computer
failures likely will involve garden-variety claims of
misrepresentation, fraud, breach of contract, insurance
coverage and the like. There is no reason to believe that
the legal standards and procedures applicable to non-Y2K-
related tort, contract and class action claims are not
appropriate for resolution of lawsuits involving the Year
2000 issue.
The ABA believes that it is doubtful that H.R. 775, as
passed by either House, would encourage more or better Year
2000 remediation, or more or better disclosure about Year
2000 readiness. In fact, we believe that the opposite result
is the more likely. Many businesses are inspired to undertake
their Year 2000 remediation projects with a higher degree of
diligence precisely because of potential legal liability.
Legislation changing the standards of liability breeds
uncertainty, and prudent business people frequently opt not
to spend money in the face of uncertain returns. Where the
relevant law of the jurisdictions in which businesses now
operate is fairly certain, any new federal law will only
muddy the waters. In light of the almost certain
constitutional challenges and the necessity of litigation to
interpret a new law in the various states, the efficacy of
any new legislation will also be minimal at best.
From the perspective of directors and officers insurance
issues, a Y2K safe harbor could put the directors and
officers in a Catch-22 situation. Year 2000 compliance is
expensive. Compliance obligations must be weighed, like any
other business decision, against the costs and the
liabilities of non-compliance. If the penalties associated
with Year 2000 are removed, it is plausible the directors'
and officers' decision-making pendulum would swing the other
way--toward maximizing corporate short term profits.
Moreover, proposed legislation has the potential to
penalize organizations that have been the most diligent in
their Year 2000 preparations. Many companies have spent
millions of dollars in this endeavor. More significantly,
many started early, and have virtually completed their
projects, performing innumerable tests and drills. Some are
helping their customers and other members of the business
community by sharing the knowledge they have learned. These
efforts should be encouraged. However, by raising the bar for
bringing and sustaining legal action, Congress may be
penalizing those companies who through their own foresight
spent their resources to adequately
[[Page S8023]]
deal with Year 2000 issues. Those who choose not to spend
sufficient resources could have a competitive advantage. In
short, whatever benefits the proposed legislation may have
are likely to be too little, too late and to reward the wrong
people.
The fee-shifting provisions of Section 508 of H.R. 775, as
passed the House, would preempt federal, state and local
statutes and court rules to apply a modified ``losers pay''
or fee-shifting court rule with respect to any Year 2000
claim for money or property. They would require that if
either side rejected a settlement offer prior to trial and
did less well at trial than the offer, that party would be
responsible for the attorney's fees and costs of the other
party from the date on which the last offer was made by the
adverse party.
Section 508 would force parties either to accept a
settlement offer or run the risk of incurring the fees of the
other side. This would encourage ``low-ball'' settlement
offers by the defendant rather than a realistic appraisal of
the value of the case. Only the wealthy claimant would be
able to run the risk of incurring such fees; in particular,
the middle-class claimant who has some assets to lose would
be in the greatest jeopardy. In a clear case of liability,
the advantage might be partially alleviated by a counter
offer or demand. But in all cases, the risk of litigation
would be greater for someone who believes their claim or
defense is just.
The American Bar Association does not endorse court rules
or statutes that provide for fee-shifting based upon
rejection of settlement offers. Such proposals would deter
those who lack the financial wherewithal to absorb not only
their own legal fees but also those of their adversaries from
filing meritorious claims or defending meritorious positions.
They favor the litigant with financial muscle, provide a
disincentive to all claimants with limited financial means
and encourage settlement by gamesmanship rather than
encouraging realistic appraisals. Ultimately they erode our
country's concept of equal justice under the law.
Although the ABA does not support court rules or statutes
that provide for fee-shifting based on rejection of
settlement offers, it adopted policy in February 1996
suggesting that if such a statute or rule is being
contemplated, certain safeguards outlined in an ``offer of
judgment procedure'' be incorporated in such a statute or
rule. We would be happy to provide you with a copy of this
offer of judgment procedure should you wish to review it and
to answer any questions you may have about the ABA policy on
this matter.
Please let me know if I can provide you with additional
information or otherwise be of assistance to you on this
matter.
Sincerely,
Robert D. Evans.
Mr. HOLLINGS. No Governor, no Attorney General, no State legal group
supports this legislation. On the contrary, there is a letter here from
the Conference of Chief Justices of the several States in opposition to
this measure.
I ask unanimous consent to have that printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Conference of Chief Justices, Office of Government
Relations, National Center for State Courts,
Arlington, VA, May 25, 1999.
Hon. Tom Daschle,
Minority Leader, U.S. Senate, Hart Senate Office Building,
Washington, DC.
Dear Senator Daschle: I am writing on behalf of the
Conference of Chief Justices (CCJ), to express our concern
with S. 96 and H.R. 775 in their present form. We understand
that S. 96 and H.R. 775 are attempts to address the serious
problem of potential litigation surrounding the Y2K issue.
However, in part, the bills pose a direct challenge to the
principles of federalism underlying our system of government.
We are particularly concerned that each bill would in effect
replace established state class action procedures in favor of
removal to the Federal courts on most cases. The members of
CCJ seriously question the wisdom of such an action.
In this regard, CCJ agrees with the position of the U.S.
Judicial Conference as submitted by Judge Walter Stapleton to
the House Judiciary Committee on April 13, 1999. His
testimony points out that:
``State legislatures and other rule-making bodies provide
rules for aggregation of state-law claims into class-wide
litigation in order to achieve certain litigation economies
of scale. By providing for class treatment, state
policymakers express the view that the state's own resources
can be best deployed not through repetitive and potentially
duplicative individual litigation, but through some form of
class treatment. H.R. 775 could deprive the state courts of
the power to hear much of this class litigation and might
well create incentives for plaintiffs who prefer a state
forum to bring a series of individual claims. Such individual
litigation might place a greater burden on the state courts
and thwart the states' policies of more efficient
disposition.
Federal jurisdiction over class litigation is an area where
change should be approached with caution and careful
consideration of the underlying relationship between state
and federal courts.''
We would emphasize that State courts presently handle 95
percent of the nation's judicial business. State and Federal
courts have developed a complementary role in regard to our
jurisprudence and these bills would radically alter this
relationship. It is not enough to argue these bills affect
only a segment of commerce, or that resolution of the problem
on a state by state basis is inconvenient. It is a bad
precedent that could have future ramifications. The founding
fathers created our federal system for a reason that Congress
should be extremely reticent to overturn.
If you have any questions, please feel free to contact me
directly, or contact Tom Henderson or Ed O'Connell who staff
our Government Relations Office. They can be reached at (703)
841-0200.
Respectfully,
David A. Brock,
Chief Justice,
President, Conference of Chief Justices.
Mr. HOLLINGS. Certainly everybody wants money. I want money. You want
money. Republicans want money. Democrats want money. The White House is
going crazy after money. Heavens above, everybody knows everybody wants
money.
If you think this is just a spurious comment, let's go back. Here it
is: ``GOP Vies for Backing of High-Tech Leaders. Party Aims to Exploit
Y2K Vote. . .''
That is from the Washington Post, dated June 13. I ask unanimous
consent to have that printed in the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
GOP Vies for Backing of High-Tech Leaders--Party Aims to Exploit Y2K
Vote, CEO Summit
(By Thomas B. Edsall)
Republicans will make an all-out bid to wrest the cash and
prestige of Silicon Valley from the Democratic Party this
week by capitalizing on a crucial Senate vote and a three-day
National Summit on High Technology, events that will have
high-tech executives lining the halls of Congress in
unprecedented numbers.
The Senate vote on a measure to protect the high-tech
industry from Y2K computer damage suits and the gathering of
the industry's corporate elite at the summit sponsored by the
Republican-controlled Joint Economic Committee are designed
to demonstrate the commitment of the GOP to the unfettered
market forces so beloved by the chip makers, venture
capitalists and software CEOs of ``the new economy,'' and to
reveal pointedly to high-tech leaders the influence in the
Democratic Party of one of their most feared adversaries, the
trial lawyers.
The trial bar has filed numerous securities suits against
the industry and its members are expected to unleash lawsuits
over the expected breakdown of computers that have not been
adjusted to deal with the date change on Jan. 1, 2000,
popularly known as the Y2K computer glitch.
``This is one of the few segments of the business community
that hasn't reflexively gone Republican,'' said Rob Atkinson,
director of the Technology and New Economy Project of the
Democratic Progressive Policy Institute. ``Now, the
Republicans have started to wake up and say, `We want the
high-tech community to be ours.' ''
The high-tech industry is a significant source of political
money. The Center for Responsive Politics estimated that the
computer industry and its executives gave just under $9
million to congressional candidates in 1997-98, and early in
the presidential nomination fights, Vice President Gore has
raised an estimated $75,000 from the industry, slightly more
than the $67,000 raised by Texas Gov. George W. Bush.
As, or perhaps more, important than the money, however, is
the partisan competition to be on the side of a driving force
in the national economy.
Rep. Thomas M. Davis III (Va.), chairman of the National
Republican Congressional Committee and a leader of the GOP's
high-tech drive, contends that high-tech executives realize
that such ``vestiges of the old Democratic coalition'' as
organized labor and the trial lawyers ``will not allow them
[Democrats] to support high tech.''
In fact, the legislative record of both parties and of the
Clinton administration on high-tech issues is mixed, with
each taking stands for and against positions supported by the
Information Technology Industry Council (ITIC), a group
praised by both sides of the aisle.
In Congress, the GOP has a substantial advantage in its
ITIC ratings. In the House, computations based on the ITIC's
vote analysis showed Republicans receiving an average ranking
of 69.7 percent, compared with the Democrats' 49.1 percent.
The ratings were closer in the Senate: 83.9 percent for
Republicans, 71.1 percent for Democrats.
The ratings were based on 1997-98 votes on securities
litigation reform, Internet taxes, temporary work visas for
skilled foreigners,
[[Page S8024]]
``fast-track'' trade proposals, computer export controls and
encryption legislation.
Only votes on economic and regulatory issues were
considered. Votes on social issues such as abortion, school
prayer and pornography were excluded, since those have little
bearing on the industry's bottom line. The libertarian
tradition in the hightech community makes the religious right
and the antiabortion movement significant liabilities for the
Republican Party.
Also, the development of sophisticated encryption and
faster computers has put the industry in direct conflict with
those seeking to restrict trade with potentially hostile
nations, and with law enforcement officials seeking wiretap
access to electronically transmitted information.
And the demand for technology-sophisticated workers runs
head-on into anti-immigration forces in both parties.
In terms of partisan competition, Democrats are
increasingly worried that the GOP's full-scale assault is
likely to weaken the Democratic advantages among libertarian
high-tech entrepreneurs.
Some Democrats have been stunned by the impressive
collection of technology company executives who have joined a
72-member high-tech fund-raising committee for Bush. These
computer industry leaders include America Online's James L.
Barksdale, Cisco Systems' John Chambers, Intel's Gordon
Moore, LSI Logic's Wilfred J. Corrigan, Applied Materials'
James C. Morgan and Advance Mirco Devices' W.J. Sanders III.
Democratic conflicts pitting plaintiffs' lawyers against
the technology sector will be thrust into the open when the
Senate votes this week on legislation limiting corporate
liability in Y2K damage suits, a measure backed strongly by
the high-tech industry but opposed by trial lawyers.
That vote is expected to take place Tuesday, in the middle
of the Joint Economic Committee's three-day summit. The
sessions, put together by Republican Sens. Connie Mack (Fla.)
and Robert F. Bennett (Utah), will provide a public forum to
an extraordinary array of high-tech luminaries.
On Monday, those scheduled to testify include IBM's Louis
V. Gerstner Jr., Intel's Craig R. Barrett and Federal Reserve
Chairman Alan Greenspan. Day two will feature Microsoft's
Bill Gates, Adobe Systems' John E. Warnock and Novell's Eric
Schmidt. Wednesday will be the turn of Sun Microsystems'
Scott McNealy, America Online chief technology officer Marc
Andreessen and eBay's Meg Whitman.
Democrats are worried about the timing of the hearings and
the Y2K vote, said Lisa Quigly, chief of staff of Rep. Calvin
M. Dooley (Calif.), co-chairman of the New Democrat
Coalition, which has strong ties to the technology sector.
``We are miles ahead of them [Republicans]; they don't have
the relationships at all,'' Quigly said, but ``because some
[Democrats] are not supporting Y2K [liability legislation],
it looks as if Democrats are not for high tech.''
Democrats have made what they hope will be a preemptive
strike that will take the edge off the Republican challenge.
Last week, House Minority Leader Richard A. Gephardt (D-
Mo.), who has not had strong ties with the high-tech
community, appointed a high-tech advisory committee headed by
two Californians whose districts are centers of high-tech
entrepreneurial activity: Reps. Zoe Lofgren and Anna G.
Eshoo.
The Gephardt announcement coincided with a New Democrat
Network-sponsored ``technology outreach'' day, which featured
sessions with Microsoft senior vice president Craig Mundie,
venture capitalist John Doerr, Dell Computer's Michael Dell
and Hewlett Packard's Lewis E. Platt.
In what may prove to be a faint hope, Simon Rosenberg,
executive director of the New Democrat Network, said that
high-tech leaders are going to see the GOP drive this week as
``a very overt and clumsy attempt to catch up on high tech.
But this challenge of which party is going to be the one that
most adapts to the new realities and the new challenge is
going to be with us for a long time.''
Mr. HOLLINGS. Here is the same: ``Congress Chasing Campaign Donors
Early and Often'' about Y2K. That is from the New York Times, dated
June 14. I ask unanimous consent to have that article printed in the
Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the New York Times, June 14, 1999]
Congress Chasing Campaign Donors Early and Often
(By Alison Mitchell)
Washington, June 13--As campaign finance legislation
languishes, Congress has gone on an allout funding-raising
binge driven by the battle for control of the House,
competition for money with the Presidential campaigns and an
early push by incumbents to scare off challengers.
In a sign of just how intense the money chase has become,
all four Senate and House campaign committees have, for the
first time, created their own special programs to court and
cater to donors willing to give them $100,000 in each of the
two years of the 2000 campaign cycle.
Unabashed by the debate over President Clinton's use of the
White House to court deep-pocketed donors in 1996, the
committees are offering generous contributors an array of
incentives, like access to party leaders, special issue
briefings and meetings in lush locales.
In the case of the Democratic Congressional Campaign
Committee, which is led this year by Representative Patrick
J. Kennedy of Rhode Island, that even includes a weekend at
the Kennedy family compound in Hyannisport, Mass., as close
as it gets to a Democratic shrine.
``If we're going to raise more money,'' said Edward M.
Kennedy of Massachusetts, ``we're going to have to do it in
bigger chunks.''
The creation of the groups is a sign of how the 2000 battle
for Congress is causing an escalation in the pursuit of so-
called soft money, the kind of unrestricted contributions
from wealthy individuals, corporations and labor unions that
the parties have used to get around the post-Watergate
contribution limits.
By law, an individual can give only $20,000 a year to the
party committees to use for the direct purpose of electing a
Federal candidate. So the bulk of these $100,000 donations
would be considered of soft money, which can be used for
activities like party building or advertisements advocating
issues.
Once such money was largely the purview of the national
political parties, not their Congressional arms. But last
year the Congressional committees became more aggressive in
pursuit of the money, and these programs show that they are
now going even further. Previously the big-donor programs on
Capitol Hill were tailored for the $15,000 and $25,000
contributor. (The Republicans had a $100,000 ``Majority '98''
program for the House and Senate elections last year, but
divided the proceeds among several party committees.)
For those trying to stanch the flow of money into politics,
these are bad omens.
``You've ended up with an absolutely `anything goes'
attitude,'' said Fred Wertheimer, an advocate of legislation,
now stalled, that would ban soft-money contributions. He
called the $100,000 groups a ``qualitative expansion of soft
money.''
Representative Thomas M. Davis 3d of Virginia, the chairman
of the National Republican Congressional Committee, says the
Democrats are hypocrites for raising such donations because
they have rallied around the bill to ban them while
Republican leaders have firmly opposed it. ``The difference
is they profess to oppose soft money,'' Mr. Davis said.
The Democrats say the will not disarm until the law
changes.
``All of us are hoping for campaign finance reform, but we
are also preparing for the worst'' said Senator Robert G.
Torricelli of New Jersey, who as chairman of the Democratic
Senatorial Campaign Committee is in charge of fund-raising
and recruiting candidates.
The fund-raising flurry is driven in large part by an
unusual political season in which not just the White House
but the House could change hands. A few even argue that
control of the Senate could be in play.
``It's impossible to predict which party will control which
institution,'' Mr. Torricelli said.
The House and Senate committees are also pushing to raise
money before they have to go into head-on competition with
the Presidential race. And they want to show the kind of
high-dollar strength that gives an air of victory and draws
more donors. The committees are just as zealous in pursuit of
the traditional donations for Federal campaigns as they are
in seeking soft money.
``The stakes are high, whatever the outcome,'' said Gary J.
Andres, a lobbyist who is working closely with the National
Republican Congressional Committee to advise endangered
Republicans and help them raise money. ``So I think you're
going to see an expanded effort on both sides of the aisle.''
The fund-raising is particularly aggressive in the House,
where a shift of just six seats in the next election could
return the Democrats to the majority. Congressional leaders
say the narrowness of the Republican majority is not only
attracting more money for each party, it is causing some
donors and interests to give to both.
It's a funny dynamic,'' Mr. Davis said. ``You have some
people scared to death the Democrats will take the House and
they will give you more. And there are groups that will hedge
their bets. If they didn't think the Democrats had a chance
they would probably just give to us.''
House Democrats are bluntly telling lobbyists and corporate
interests with offices along K Street here that they had best
take out some insurance should the Democrats take back the
House.
Representative Kennedy said that Democrats in this cycle
would be ``expecting much more from those who haven't
traditionally been supporters of us but have been giving
large contributions to our opponents and can't be expected to
not at least meet us halfway.'' He said, ``They need to
balance out the sheets a little bit.''
Through the first quarter of 1999, the House Democrats'
campaign committee took in a record $6.8 million. By the end
of this month, Democratic officials say they might reach
about $14 million--what it took House Democrats the entire
year to raise in 1997, the last comparable nonelection year.
In three separate events last week, President Clinton, Vice
President Al Gore and Hillary Rodham Clinton all appeared at
fund-raisers for House Democrats.
The House Republicans' campaign committee will be posting
its first contribution
[[Page S8025]]
figures at the end of this month. But the Republicans say
they beat the Democrats in the first quarter in traditional
donations by 2 to 1, raising over $7 million, and also topped
the Democrats in soft money. On June 23, Republicans expect
to raise more than $7 million at a gala for both the House
and Senate.
The Republicans traditionally bring in far more money than
the Democrats.
The fund-raising drive is equally intense for individual
candidates. Particularly in the House, any incumbent who
could face a competitive race in 2000 is working overtime to
raise as much money as possible by June 30, the next filing
deadline for the Federal Election Commission. Almost every
night there is at least one fund-raiser somewhere in the
vicinity of Capitol Hill.
The election commission reports are used by political
strategists and donors to judge the potential strength of
candidates. And in many cases the size of these bank accounts
can draw in more donors--or scare them away from a
competitor, helping determine whether a strong challenger
should jump into a race.
House Republicans are pushing incumbents who already face
significant challengers or who drew less than 55 percent of
the vote in 1998. The goal is to try to have $200,000 in each
of their campaign accounts by the end of the month.
Mr. Davis of Virginia says he knows the importance of the
June 30 filing deadline. When he was trying to decide whether
to challenge the incumbent Democrat, Leslie Byrne, in 1994,
he looked at her campaign bank account. ``She had only 25
grand in the bank and I said, `Maybe I can do this,' '' he
said. ``If she had had $250,000 in the bank, I guarantee I
wouldn't have run.''
House Democrats are trying to make sure that all their
freshmen in seats that may not be safe have about $150,000 in
their accounts by the end of the month. ``It's a real focused
and intense effort,'' said David Plouffe, the executive
director of the Democratic Congressional Campaign Committee.
In some cases the House Democrats say they have challengers
lined up and are helping them, too.
Patrick Casey, who lost by a whisker to Representative
Donald L. Sherwood of Pennsylvania in one of the closest
House races of 1998, traveled to Washington last Wednesday
for a fund-raiser where Representative Richard A. Gephardt or
Missouri, the minority leader, helped him raise $50,000.
Congressional leaders have also joined the sweepstakes.
Speaker J. Dennis Hastert, for example, is now spending
Mondays, Fridays and weekends raising money for House
members, hopscotching the country.
He plans to take a four-day tour of California later this
month to try to raise $2 million at 16 events, most of it for
House candidates. His aides say he has raised $5 million this
year for candidates and the party.
Mr. Gephardt, who would supplant Mr. Hastert as Speaker if
the Democrats were to win back the House majority, is also on
the circuit. Last week he helped raise money for Mr. Casey
and for Representative Carolyn McCarthy of Long Island,
attended a Rhode Island event with Mr. Gore and flew home to
Missouri to appear with Mrs. Clinton. He aides say that by
June 30, he will have raised $4 million.
Representative Tom Delay of Texas, the majority whip, has
mobilized his entire whip organization of House members to
help the Republicans' 10 most vulnerable incumbents. In a
program he calls Romp, for Retain Our Majority Program, he
has asked these members to raise $3,000 each for each of the
10 incumbents.
And all the House Republican leaders have helped raise
money for a new group called the Republican Majority Issues
Committee, which is trying to raise $25 million to get out
the conservative vote in critical Congressional districts.
The Democrats have called for an investigation of the group
because it is not registered with the Federal Election
Commission as a campaign organization or disclosing its
donors.
Karl Gallant, an ally of Mr. DeLay, who is forming the
group, said it was not required to register because it would
not be endorsing candidates. ``We are not giving money to
candidates,'' Mr. Gallant said. ``We are going to be an
independent committee that will educate voters on where
candidates stand on conservative issues.
Mr. HOLLINGS. You think it is not timely on money? Here at 2 o'clock
this afternoon an article was printed regarding Governor Bush. I guess
have to be more respectful. He is liable to be President. It reads,
Governor Bush--``At a breakfast this morning Bush gets big support from
Silicon Valley.'' He got all the executives out there. He just pledges
all these things, I am telling you right now, way better than the
distinguished chairman. And the distinguished chairman is pretty good.
I ask unanimous consent to have this printed in the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
Bush Gets Big Support From Silicon Valley
(By Alan Elsner, Political Correspondent)
Palo Alto, CA (Reuters)--Republican presidential front-
runner George W. Bush's money-raising juggernaut roared
through Silicon Valley Thursday, drawing support from a
stellar list of high-tech industry titans.
Bush, the governor of Texas, has smashed all previous
records by raising more than $36.3 million in the first half
of the year. He began the second half with a fund-raising
breakfast that had been expected to bring in an additional
$300,000 but seemed likely to far exceed that estimate.
``This is not my first trip to this incredible land called
Silicon Valley. This is my first trip as president of the
United States,'' an elated Bush said, before quickly
correcting himself to say, ``As soon-to-be president of the
United States.''
Among the executives there to greet him were Cisco Systems
chief executive John Chambers, Microsoft executive vice
president Robert Herbold, Oracle Corp. (Nasdaq: ORCL--news)
president and CEO Ray Alen, Intel Corp. (Nasdaq: INTC--news)
chairman Gordon Moore, eBay president and CEO Meg Whitman,
Hewlett Packard president Lew Platt and Charles Schwab,
chairman and CEO of the stockbroker company that bears his
name.
It was a highly impressive turnout from a region that Vice
President Al Gore, who may be Bush's Democratic presidential
opponent in next year's election, has been courting for
years. But Bush had already raised more money from Silicon
Valley than Gore in the first three months of this year.
Executives said they were attracted by Bush's program of
supporting innovation, breaking down trade barriers and
removing government regulation.
``The governor has strong support from the high-tech
industry that is driven by ingenuity, innovation and the free
enterprise system. It's great to have a candidate focused on
those fundamentals,'' said Herbold.
Lane added: ``This industry needs support from government
to continue growing and the Republicans and Bush have been
more supportive of business aspects of building this
industry.''
Bush, who leads the field for the Republican presidential
nomination by a wide margin and has a 10 to 20 percentage
point advantage over Gore in recent polls, said the
attendance of so many prominent executives at his fund-raiser
sent an important message that would be noted all across the
country.
In his speech, Bush pledged to ``take the side of
innovation over litigation every single time'' and put
forward a number of general ideas of what he might do as
president.
He said he would reduce the threat of massive litigation
arising from the Year 2000 computer bug known as Y2K. He gave
grudging praise to President Clinton, who this week struck a
compromise with Congress to limit liability awards.
Bush has promised to fight for meaningful tort reform to
limit lawsuits against business, a favorite Republican theme.
He also proposed making the Internet a duty and tariff-free
zone worldwide and promised to combat theft of U.S.
intellectual property.
Bush said he would loosen regulations limiting the export
of civilian computer technology while still protecting
militarily sensitive technology.
He also proposed a permanent tax credit for research and
development. Currently, the credit, worth about $2.5 billion,
needs to be renewed annually by Congress.
Bush's unprecedented fund-raising prowess has led some
commentators to predict the race for the Republican
presidential nomination is virtually over before it has
begun. Only publisher Steve Forbes, who can draw on a vast
personal fortune, will be able to come close to matching
Bush's financial resources.
Of the other Republicans, Arizona Sen. John McCain has a
war chest of $6.1 million and the rest of the field is under
$3.5 million. Bush also outpaced Gore in fund raising by two-
to-one.
Mr. HOLLINGS. So the record is made with respect to money.
Ordinarily, we have the rule--I want to be within the Senate rules of
the dignity of the body. But we have to get to the reality. No one is
asking for this except those in the money chase. And, yes, it is
bipartisan. There isn't any question about that.
But this is a shabby performance. It is a sad day in the history of
the Senate. Now what really occurred when we went into that conference
is that the House receded to the Senate except for a minor amendment.
We voted on it. Then they started negotiating on the fix, so as to
ensure everybody was on board. They knew they were going to get a bill.
The Senator from Connecticut then made the call to the President after
midnight. I thought the only person who could get the President after
midnight was Monica.
The White House sent five veto letters. Yet, the President plans to
sign the bill, notwithstanding.
How emblematic of this administration. We fought like tigers to get
this economy going with the 1993 budget. We cut spending. We raised
taxes. We did away with 300,000 Federal employees. We got the economy
going even though we could not get a single vote on the other side.
[[Page S8026]]
Then later, of course, the President joined the other side, went down
and threw all of his friends in Congress overboard saying we taxed them
too much. Then we had GATT. Then we had the NAFTA with Mexico, and he
threw his labor friends overboard. Of course, that has been an
abomination.
You cannot get to reality. They said it was going to increase trade.
We went from a $5 billion-plus to a $20 billion-minus deficit. That was
going to pay the Mexican worker better. He is taking home 20 percent
less pay. It was going to solve the immigration problem. It is worse.
It was going to solve the drug problem. They have a narcodemocracy down
there.
But the President threw that crowd overboard. Now he throws overboard
the consumers, middle America, after five veto messages on a much worse
bill.
The Senator from Vermont is right on target. There isn't any
question, when they put out this sheet here--even from my side--in the
policy committee meeting there at lunch: How the conference report
improves on the Senate-passed bill proportionate liability, even though
they rejected Senator Kerry's proposal to place the burden on the
defendant. They put the burden on the plaintiff. Individual consumers
supposedly are carved out of proportionate liability, that is if they
are not part of a class.
If by chance they are part of a class, their suit is automatically
removable to federal court, in the event the claim seeks punitive
damages. The President said he would never federalize class actions.
They claim the bill preserves the authority of states to void
contracts. But I can list a number of contracts that would be illegal
under State law but would be enforceable under the conference-reported
bill. So contracts which were entered into on a fraudulent or
unconstitutional basis would still be enforced.
I will never forget the distinguished Senator from North Carolina; he
tried to instruct the Senator from Oregon on economic damages.
I will give you the case. The client comes in. I am an old-time
lawyer, and I represent clients. You have to tell them the truth. The
poor client comes in and says: Hollings, I've got a $10,000 computer I
bought last year, and now it's after January the first, and it has
crashed. It is not Y2K compliant. They told me it was going to last for
10 years. I want you to bring my case.
I said: Wait a minute. They have to understand you have 90 days to
wait around even though there is no duty to fix. The Senator from
California, Mrs. Boxer, offered an amendment to require a free fix--
that was in response to the Senator from Oregon's lament about fix the
problem, fix the problem, just fix the problem. Well, that is exactly
what were attempting to do. We said: Let's get rid of the lawyers. We
will fix the problem. Yet, they would not accept that in the conference
report.
So I say to the prospective client: In that 90 days nothing is going
to happen. Then I have to investigate in great detail because on
proportionate liability I do not want to find that the parquet from
Hewlett-Packard was made in India and thus discover that I should have
gone to New Delhi instead of Hartford to bring this case. I have to
then file the pleadings. I have to thereupon get in with the
interrogatories, attend all the discoveries because that is the
billable-hour crowd.
You do not have money for billable hours obviously. This is middle
America. That is how they get their day in court. So I will attend the
interrogatories. I will conduct the trial, and I will handle the
appeal.
By that time, you will owe me over $10,000. Now do you really want me
to bring this case, considering you can't get any economic loss? I know
you said you had to let two of your employees go because you could not
pay them during all this time that it has been down. I know you have a
loss of business. I know you have lost your reputation and everything
else of that kind. But there is no economic loss.
The distinguished Senator from North Carolina is the best in the
business. He will elaborate on that particular point. But that, more or
less, gets rid of the lawyers. There never has been anything really for
Y2K cases for attorneys. But to come in here now and say it does that,
it is just shocking that we have just done away with middle America.
The civil justice system has been permanently damaged. The very system
that supports our Democratic society and consumers. That is why I stand
here, for the consumers of America, for middle America, for those who
cannot employ a trial attorney.
I go right to that White House and why they changed, because the best
story that came out was in the New York Times. I think it is dated just
yesterday, June 30. It has this statement in here, that the Vice
President, as he begins his campaign for the Presidency, was eager to
rid himself of the ``taint'' of financial support from trial lawyers.
No. 1, try to get some money out of that trial lawyer crowd, hard
money. It is limited to $1,000. Soft money, let's go to Silicon Valley.
There is Bush. He is there this morning, the Governor. This is the soft
money bill. That crowd, he has $36 million. He has more than Gore, the
Vice President, the President, and Bill Bradley all put together. One
fellow has it. He can get that money. They know where to get soft
money.
I can't get much hard money out of that trial lawyer crowd. I want
more from them, I want them to know. I have publicly stated that on the
floor. But they don't have soft money.
But the ``taint'' is the one I take exception to, because I am proud
to be associated with trial lawyers. They are in there, down in the
pits, on the front lines protecting middle America. All I hear in this
Congress is about middle America--taxes, taxes, taxes. How about
rights, rights, rights? They don't have the money for billable hours.
A crowd such as we have up here in this Washington group, all the
lobbyists, I am glad they put that list--is that the billable hour list
the distinguished chairman just handed in for the record?
So with the billable hour list, sure, they are lazy. They don't try
cases. They continue cases. They go to the golf course. The clock runs
and they send the bills. But you have to produce if you are a trial
lawyer or you don't get anything. You take on all the expenses.
This is a system that has worked for over 200 years at the State
level. All the State authorities now are opposed to this Federal
adulteration, but they are talking about how they are looking out for
consumers and a victory for America and those kind of things.
I am particularly shocked at my Republican chairman who has led the
fight on campaign finance reform. I worked with him. I have a bill in
for a constitutional amendment to try to legalize, if you please, the
1974 act before it was made unconstitutional by the Supreme Court of
the United States. In one line: The Congress of the United States is
hereby empowered to regulate or control spending in Federal elections.
Once we do that, we go back to the 1974 act, do away with the soft
money, everything on top of the table, and we are limited on the amount
of money--we, candidate--we are limited on buying the office. But the
money to buy the office is bad enough when the money goes so far as to
buy the principle. That is a shocking thing to me. If there is such a
thing as campaign finance reform, then in the name of campaign finance
reform, kill this conference report, because this is an abortion. There
isn't any question in my mind. It is way worse than we have ever had in
any particular measure.
I want to say one word about the software industry, because I have
worked in the Congress over the years with that particular industry,
but they are learning a bad lesson now. They are learning they can buy
anything, because they can change around State law, just them.
I have been up here, 32, now going on 33, years. We have never done
this for any special group. Here they agree something could be fixed in
90 days. That is the provision in the bill.
We are giving them still--you have July, August, September, October,
November, December, almost 6 months to still get it fixed, rather than
90 days. But they come in and demand this, when they now really are
trying to demand everything.
Everybody ought to know that the Internet was started by the
antigovernment crowd, free market, free market. After we developed the
Internet in 1968, with Dopper, thereupon, there came, later on, in the
middle of the 1980s, none other than the
[[Page S8027]]
best of the best, President Reagan. He gave a voluntary restraint
agreement to the semiconductor industry because they were going broke.
Intel had given up one of their particular display chips, if you
remember. They were going out of business. They hung on, and we
instituted Semi-Tech. When I went into the Intel plant in Dublin,
Ireland, the manager there, Mr. Frank McCabe, said: Senator, we would
have never had all of this if you hadn't put the $500 million in Semi-
Tech. That is government.
They are all talking about pork, pork, pork. I want to emphasize the
pork about which my distinguished colleague always talks. We gave them
that particular pork, and now they have come to town and they want
estate tax cuts. They want the capital gains tax cut. They want to do
away with taxing the Internet. If you buy something on Main Street,
America, you have to pay the sales tax. But if you buy it on the
Internet, there is no tax. It is a free ride. Don't tax the Internet.
And by the way, don't hold me liable. Let's legalize negligence. Let's
legalize fraud, with this particular bill, and then just repeal the
tort system.
This is a sad day for the Senate to come here with this particular
conference report and talk in terms of a victory for America. It is a
real bad setback by the White House, the leadership--not on the House
side, I can tell you that. We have struggled over this thing. I tried
to hold it up as much as I could, but the die has been cast.
I will retain at this particular point the remainder of my time.
The PRESIDING OFFICER (Mr. Smith of Oregon). The Senator from
Connecticut.
Mr. DODD. Mr. President, I don't think I know where the Senator from
South Carolina stands on this issue, having listened to his eloquence.
I disagree with him about this bill, but he is a wonderful Member of
the Senate and a good friend. I always enjoy being a witness to his
eloquence here on the floor of the Senate, even when I may be the
object of some of that eloquence, along with my capital city of
Hartford, CT.
Let me begin by saying I support this conference report. I commend
the chairman of the committee, Senator McCain, for his fine work. There
was a tremendous amount of pressure on him last week. There were some
who wanted to get this done about a week ago, with the hope there would
be a veto. I guess they may have seen some political mileage if the
bill had been vetoed. That would have been a victory in the minds of
some. He willingly allowed us to have the weekend and the following few
days to try to work out differences.
None of us knew whether we would succeed. Frankly, we weren't very
optimistic we could work out the differences, given a lot of the
rhetoric associated with this bill. The fact that we were able to spend
some time at it and see if we couldn't find common ground, I appreciate
very much. I know most of the Members of this body and others do, as
well.
I also want to commend my colleague from Oregon, Senator Wyden, who
did a very fine job. We worked very closely on this to try to find some
language and some provisions which would build broader support for this
legislation. Also, I want to recognize the efforts of a number of our
colleagues whose support was also instrumental in the successful
completion of this conference report: Senator Gorton, Senator Hatch,
Senator Feinstein, my colleague, Senator Lieberman, and Senator
Bennett, with whom I serve on the special committee on the Y2K issue,
which was established by the majority leader and the minority leader,
Senators Lott and Daschle, about a year and a half ago, to look at the
issue of the Y2K problem.
We have had some 22 hearings in that committee, examining all aspects
of our society--government, the private sector, nonprofits, hospitals,
telecommunications, transportation, utilities, financial markets--to
determine to what extent this computer bug may affect people in this
country and elsewhere. I think I can say with some degree of certainty
that we think, at this juncture, things should not be too bad. A lot of
work has been done at all levels in our society, from local communities
to the States and the national government, to try to fix this problem
so it doesn't cause the kind of disruptions that many thought could
occur. But I can't stand here today and tell you we can say with
absolute certainty there won't be disruptions and problems. There will
be some. We just hope they aren't going to be as significant as some
have predicted.
One of the areas we were asked to look at is the potential for
widespread litigation, the rush to the courthouse. It is no great
secret in this country that we have become tremendously litigious; we
like suing each other. It has become a problem that has grown over the
years. Anybody who has been around certainly knows the statistics and
the numbers that tell of the rush to solve every problem by a lawsuit.
Certainly, I will be the first to recognize, as a member of the legal
profession, that without an active and vibrant legal profession, a lot
of consumer rights would be lost in this country. You need that. It
can't all be done by the Justice Department, the Securities and
Exchange Commission, or other agencies at the federal, State and local
level. You need a vibrant private bar. That is essential.
But it also has to be one that is tempered. You have to recognize
certain fact situations as they occur and determine whether or not
there may be a better way of trying to resolve some of these
difficulties.
That is what this bill is really all about. I will start out by
saying it is a 36-month bill. This bill sunsets; every provision of
this bill dies after 36 months. We are not writing something in
concrete or marble here that is going to last in perpetuity. For 36
short months, this bill will exist.
During that period of time, of course, we will learn whether or not
we are going to have as widespread a problem with this Y2K computer
issue as some have anticipated. If we don't, then this bill really
isn't that important. I hope that will be the case. Nothing would make
me, as one of the coauthors of this bill, happier than to find next
January, February, and March, that all of the fears that have been
raised by the Y2K issue turn out to be nothing more than that--fears--
and that there would be no reason to litigate or to take 90 days to try
to resolve the problems. If that is the case, then the bill will last
for 36 months, but it won't have any significance.
If, however, there are problems that go beyond what I think will be
the case, we could end up with people racing to the courthouse to
litigate the issues rather than trying to solve the problem. If
businesses are spending money on legal fees rather than trying to spend
money on technicians and others to solve the problem so that the users
of their equipment will be made whole, then we could end up having the
Y2K problem be a lot more serious than I think it is apt to be.
This agreement, this conference report--even if you had no idea what
was in it, I think you would be safe to conclude that it is probably a
good one, for one basic reason: no one is fully satisfied. Everyone had
to make concessions in this proposal.
It is not perfect, by any stretch of the imagination. But that should
not obscure the fact that it is an outstanding achievement, in my view,
arrived at in a manner that is bipartisan, bicameral, and in
cooperation with the executive branch.
It is narrowly crafted to address the repercussions of an event that
will only happen once in history: the changing of the calendar, 183
days from today, to the new millennium. We don't know, as I said, with
precision what the repercussions will be. We hope and trust that, for
our citizens, they will be minimal. But we know there will be
repercussions, affecting virtually every facet of our lives, from
energy to health care, from food to telecommunications.
We will encounter problems associated with the Y2K glitch. And in
America, where there are problems, lawsuits are never far behind. The
Y2K committee, as I mentioned earlier, which I cochair with Senator
Bennett, heard hard evidence that some members of the trial bar have
been gearing up for quite some time to usher in the new millennium not
with a celebration, but with a subpoena. By some estimates, they will
file claims totalling $1 trillion or more.
While some of these suits will have merit, many, I am fearful, will
not.
[[Page S8028]]
They will become vehicles for profit by select members of the trial
bar, not to rectify wrongs done to consumers or to businesses.
Ultimately, an avalanche of frivolous lawsuits seeking to reap a
bonanza from this Y2K problem could have a crippling effect on our
economy, especially on the technology-based businesses that are
creating the lion's share of new jobs in our Nation today.
This bill would slow the knee-jerk rush to the courthouse. It says to
those who would seek litigation as a first resort: Look before you
leap. It focuses businesses and consumers on fixing the problems, not
fighting over them, and getting on-line, rather than getting in line at
the courthouse. It encourages them to resolve differences in a
conference room, not a courtroom.
This conference report is narrowly crafted to address frivolous Y2K-
related litigation, and only frivolous Y2K-related litigation. Its
carefully circumscribed scope was acknowledged --albeit reluctantly--
the night before last by Mr. Mark Mandell, president of the Association
of Trial Lawyers of America. He had this to say about the conference
report:
It is positive that this unique response to a unique
situation will be law for only three years and that the legal
rights of anyone who suffers a physical injury are preserved.
I commend him for the responsibility of that statement. He is the
head of the trial lawyers in this country. I quickly add that he is not
endorsing this bill; he disagrees with it, but he has framed it right.
It is a unique answer to a unique problem that, for 36 months, we want
on the books to avoid the potential problems that can affect our
society.
These are two important points that deserve to be restated:
First, as I said, this is only a 3-year bill. It works no permanent
changes in our legal system. Second, it completely and totally exempts
consumers who allege they have suffered physical injury as a result of
a Y2K failure.
In addition, the conference report contains several other responsible
and modest provisions that weed out frivolous lawsuits, do no injury to
tort law and, most important, allows America's businesses to continue
to create jobs.
This bill establishes a 90-day period before a suit can be filed to
at least create an opportunity for the parties to remedy the defects
and avoid expensive, time-consuming litigation.
We are not going to guarantee the problem will get fixed in that 90
days, but it will sort of call a timeout for 90 days, 3 months, to try
to solve the problem. That is not a radical idea. It is not a radical
idea at all to try to get people to work out their differences. That
may be a radical idea if your motivation is to get to the courthouse as
fast as you can. To that crowd, it is a radical idea. But to the
businesses and consumers who would like to be made whole and have the
problem fixed, having a cooling-off period for 90 days as we try to
solve this problem is not asking too much in a 3-year bill.
The bill also requires plaintiffs to plead with particularity about
the nature of the harm allegedly done to them, and the monetary amount
of damages they are seeking as a result of that harm. That is another
``radical'' idea--that you have to allege with some specificity what
caused the problem. I know that is a bad idea if you would like to sort
of use boilerplate language and race to the courthouse. If you are a
defendant, you ought to know what you are charged with, what the
plaintiff thinks you have done wrong. That ought not to be a great
radical deviation from the norm. For 36 months, we are going to require
that. That ought to be permanent law, in my view, but in this bill it
lasts only 36 months.
The bill also prevents plaintiffs from recovering damages that they
could have reasonably and foreseeably avoided. Another radical idea. To
discourage plaintiffs from suing the so-called ``deep-pocket''
defendants, the bill establishes a rule of proportionate liability.
As a general matter, it holds the defendant responsible only for the
harm it causes, and not for the harm caused by other defendants. Again,
what a radical idea that is. If you are fractionally responsible, they
would like you to have to pay the whole tab. Again, I appreciate their
desire to do so. So you shop all around, and, if you can find anybody
with deep pockets who may have handled the box for 5 minutes, then you
can get them in a court, and, boom, you can hit them for the total
amount.
That is what has caused as many problems as anything else--the lack
of proportionality and balance.
At the same time, we don't allow that provision of proportionality to
apply across the board without exception. We make several reasonable
exceptions in the interest of fairness.
Plaintiffs who sue as individuals, rather than as members of a larger
class, may recover jointly and severally from any defendant, even if
they are marginally involved, thus helping to ensure that individual
consumers will fully recover damages.
The bill contains other provisions to ensure that irresponsible,
reckless, or intentionally wrongful defendants are in no way shielded
and are fully responsible for their actions. Defendants that commit
intentional torts will be held jointly and severally liable, even if
only fractionally, including for economic losses.
In addition, defendants who knowingly make false statements about the
Y2K readiness of their goods or services may not seek mitigation of
damages when plaintiffs rely in good faith on such statements. That is
yet another consumer protection contained within this conference
report.
There are still other improvements that have been made here, largely
at the behest of the Administration--improvements, which, in my view,
strengthen the legislation. For instance, the class action provisions.
Members of a class of under 100 people, and with claims under $10
million, can stay in State court.
We made change after change to accommodate the concerns that were
raised--many of them reasonable concerns, I might add--to make this a
stronger and a better bill.
We are trying to avoid frivolous lawsuits for 36 months. We are
trying to solve the problem. I again want to thank the committee
chairman and other colleagues who have played such an important role.
Lastly, I thank this President of the United States. When I saw the
President--not at 1:30 in the morning, but he was in my State last
Monday--I mentioned this bill to him in a conversation that may have
lasted 1 minute. I said: We will have the Y2K issue up in the next day
or so. The President said: I would like to sign a bill. I think it is
important to have one. But there have to be changes in this legislation
before I can sign it. If you can get those changes and work with our
staff, I will take a look at it.
That is not an unreasonable statement for an American President to
make on an issue like this that confronts our country in 183 days. We
went to work that night and worked on these changes. It was late in the
evening.
When I, along with my colleague from Oregon, submitted the final
proposal to the President of the United States, he said, to his credit:
If you can make one more change in this particular area, then I think I
could support this bill.
That is how this happened.
He is being ridiculed today because he tried to get a bill done to do
something about a problem that affects, or will affect, or could
affect, millions of people in this country. He ought not be ridiculed.
He ought to be commended for it. Yes, he could have caved in and gone
along. I know a lot of his staff and others didn't want him to sign
this bill. But this President went to work, and he listened to the
proposal. He made some suggestions, and he said: If you can accommodate
or meet me part way here on some of these ideas, then I would be
willing to sign this bill into law.
As a result of those efforts, he could have said to me on Monday
afternoon: I am sorry, there isn't anything you can do with this bill;
I am just flat out against it. That would have been the end of it,
frankly. I wouldn't have stayed up half the night trying to work out
differences. But he said try. We did. And we reached that level of
support, or a level of achievement which he thought he could support,
and that brought us to the point of getting this legislation done.
Again, there is nothing perfect about it. I am fully aware that there
may be
[[Page S8029]]
some problems with it down the road. I think this is a good effort to
try to minimize those difficulties, to avoid lawsuits and solve the
problems, and make this country stronger when it comes to the interest
of the 21st century.
Let me again thank my colleagues who persisted in their efforts to
reach this point. I also want to recognize the staff who were so
instrumental in bringing us to this point, particularly: Marti Albright
and Mark Buse of the Commerce Committee; Manus Cooney and Larry Block
of the Judiciary Committee; Jeanne Bumpus with Senator Gorton; Robert
Cresanti, Tania Calhoun, and Wilke Green of the Year 2000 Committee;
Carol Grunberg with Senator Wyden; David Hantman with Senator
Feinstein; Laurie Rubenstein with Senator Lieberman; and Steven Wall
with Senator Lott.
I thank my colleague for yielding, and I urge adoption of the
conference report.
Mr. HOLLINGS. Mr. President, I yield such time as necessary to the
distinguished Senator from North Carolina.
The PRESIDING OFFICER. The Senator from North Carolina.
Mr. EDWARDS. Thank you, Mr. President.
Let me say, first, that there are two very important reasons that
this has been an extraordinarily difficult issue for me. The first of
those reasons is that I have extraordinary respect for the Senator from
Arizona, the Senator from Connecticut, and the Senator from Oregon.
They are friends of mine. They are good Americans. They are good
people. They care about this country. They care about it deeply. I
don't question their motives for one moment. I believe they are doing
what they think is right.
The second reason is that I began this process myself desperately
wanting to support some kind of Y2K bill.
The problem with the way the debate has been conducted is that the
focus of my colleagues from Oregon, from Arizona, and from Connecticut
has been on things we all agree on. We all agree--speaking for myself--
that we should create incentives for computer companies to solve these
problems, that we should create incentives for people who buy computers
to work with those folks to solve problems, and to mitigate whatever
damage or loss they may sustain.
We all believe there ought to be a cooling-off period. At least I
believe there should be a cooling-off period. I do not think we want
folks rushing to the courthouse the first time a problem rears its ugly
head. I think we should have reasonable, thoughtful alternative dispute
resolution.
I think all of those things are good things. They are laudable. They
accomplish important goals. They are things I support and believe in.
On those subjects, and on the subject of preventing frivolous
litigation, I am totally in agreement with my colleagues who support
this bill.
The problem is, we are not focusing on the single, most fundamental
problem in this bill, which is that in 99 percent of the cases small
businesses and consumers who suffer losses as a result of an
irresponsible act by a computer company in respect to Y2K can recover
nothing but the cost of their computer. They can't recover their lost
wages. They can't recover their actual lost profit. They can't recover
their overhead. If they are run out of business, they are just stuck.
Unfortunately, what we have here is what I am afraid happens too
often in Washington. The little guy loses, and the big guy wins.
There is no question that the computer industry has a powerful voice
in this body. The people who are going to be damaged and hurt by this
bill don't even know it yet. They largely are completely unaware of it.
The small business men and women of this country and consumers in small
towns all over North Carolina and across the United States don't even
know that they are going to suffer losses, that they are going to be
put out of business. They do not know that. My question to my colleague
is, Who speaks for them?
We have heard the voices loudly, clearly, powerfully, and
articulately for powerful, big business. There are many things I will
support industry on that I believe are in the best interests of
America. The problem is, the people who are going to be injured by this
bill, the people who are going to be put out of business, the people
who by all accounts--my colleagues from Oregon and Connecticut have
just conceded--will have real and legitimate losses, who speaks for
them? I am afraid the answer is that no one speaks for them. They don't
give big money to campaigns. They don't even know what is going to
happen to them yet. They are out there and are innocent victims. Who is
the voice for the little guy in this debate?
These losses we have talked about--I am eliminating frivolous
lawsuits, I am eliminating causes that ought to be resolved, things
that ought to be resolved by discussion between the seller and the
buyer, all of those things that we are all in agreement on--I am
talking about that little business guy or woman in Murfreesboro, NC,
who bought a computer believing that it was Y2K compliant, having been
told that it is Y2K compliant, and the computer is not Y2K
compliant. They lose their business. They have lost thousands and
thousands of dollars, and they are literally out of business.
That loss--no matter what we do in this Senate, no matter what we do
in this Congress, and, with respect, no matter what the President signs
in the Oval Office--that loss will not go away. It will be there, and
it will not disappear.
There is a fundamental concept we all have to recognize when we come
to the well later today to vote. Those who vote for this bill have made
a conscious decision. As long as we are willing to recognize that
decision, I will respect the vote. That decision is this: We have made
a conscious decision that losses --which are real and legitimate, out-
of-pocket losses suffered by small business men and women all over this
country--that losses are going to be shifted. We are going to move them
from the responsible party to the innocent party. In this case, the
innocent party is a small business; is a consumer; is somebody who
cannot pay their employees anymore; is somebody who has no cash-flow
because their manufacturing operation has been shut down because of a
Y2K problem.
The bottom line is this: We are making a judgment on the floor of the
Senate that those real and legitimate losses which everyone concedes
are going to occur--that is the ``nut'' of this. Everything else we
agree on. I agree with my colleagues about eliminating frivolous
lawsuits, about alternative dispute resolution, about cooling off
periods, about trying to do everything in our power to solve these
problems. The nut of this problem is, what happens to the little guy
who suffers a real loss?
When this conference report passes on the floor of the Senate later
tonight, we have made the judgment that we will shift that loss. We are
going to shift it on to the people who have no voice, who don't even
know they are victims. They are not sitting in our offices. They are
not sitting there because they don't know they have been hurt yet. We
are going to shift the loss to them. We are going to make sure it stays
right with them. We are going to make sure that multimillion-dollar and
multibillion-dollar businesses bear as little of that loss as possible.
That is exactly what this bill does. It is that simple.
For all of the rhetoric on the floor, it is not about lawyers. It is
about the people who make computers. It is about the people who make
computer chips. It is about the people who buy computers. Those are the
parties to this transaction.
The bill that came back from conference is worse than the bill that
went to conference. It is worse for a very simple and fundamental
reason: It creates multiple additional roadblocks to innocent people
who get hurt by the Y2K problem. A job that was already extraordinarily
difficult, for them to recover for what happened to them, has become
almost impossible at this point.
I say with complete respect to my colleagues who have argued
vehemently on the floor that this is a 3-year bill, that it will sunset
in 3 years, and for that reason it is not bad, that the argument is a
smokescreen. Every Y2K problem that will come into existence will
happen during that 3-year period--99 percent. By its very nature this
problem will show its ugly head in
[[Page S8030]]
the year 2000 or the year 2001. Essentially, we are going to cover
every single Y2K problem that can come into existence.
One bit of language that has been referred to in the bill that
proponents claim helps improve this report over the Senate-passed
version has to do with the issue of recovery of economic losses such as
lost profits, lost overhead, lost income. A phrase reads: ``A party to
a Y2K action making a tort claim other than a claim of intentional
tort''--up until then it is fine--``arising independent of a
contract.''
I have spent the last 20 years of my life as a practicing lawyer.
This is what that phrase means. If a computer person walks into a small
business anywhere in this country and makes a fraudulent
misrepresentation, intentionally misrepresents the Y2K compliance of
their product, lies, commits criminal fraud, and induces somebody to
sign a contract on that basis, and in fact, if the contract itself
contains fraudulent misrepresentations, what that person can recover is
the cost of their computer.
They are victims of criminal fraud. I want the American people to
hear this. They are the victims of criminal fraud. What they can get
back is the cost of their computer.
This bill started with a good purpose. It is supported by Members of
the Senate whom I have extraordinary respect for. I absolutely have no
question about their motives. They are doing what they believe is
right. They have made beautiful cases for it on the floor of the
Senate. My concern has been and continues to be that there is a voice
that is not being heard on the floor of the Senate. It is the voice of
the victims; it is the voice of the consumers; it is the voice of the
people who don't know yet that they are going to be put out of
business. It is the voice of people who don't know yet that they have
been lied to or misrepresented to, been induced to sign a contract
under the specific language of this bill.
As a result of this bill, they can recover absolutely nothing but the
cost of their computer.
It is wrong. It violates every concept of justice that exists in the
United States and has existed for the last 200 years.
We can do the things that my colleagues want to do: Get rid of
frivolous lawsuits, induce people to solve these problems, get people
to work together, not go into court. We can do all those things, and we
can accomplish those things. But we can do it without gutting the right
of the little guy who has a real and legitimate claim and has suffered
a tremendous loss, been put out of business, without taking away that
very fundamental right.
Those people are going to be sitting in our offices. So I have one
last question to my colleagues: When those men and women are sitting in
your offices in February, March, and April of the year 2000, saying: I
have been put out of business, who do I go see? Who do I go see about
this? I am out of business. Computer people made fraudulent
misrepresentations in my contract. They were reckless in the way they
made their product. I never knew it. I am out of business.
They are sitting on our couch in our offices, and they look in our
eyes and say: Who do I go see about this problem? Maybe some of my
colleagues have an answer to that question. Unfortunately, I do not.
I yield the floor.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. I have only been in this body for 13 years. I have never
heard quite such a mischaracterization of legislation as the Senator
from North Carolina just displayed.
I yield 5 minutes to the Senator from Washington.
Mr. GORTON. Mr. President, the success of legislation in a matter of
considerable controversy in our society is always built upon the
foundation of compromise. This relatively short debate on the final
passage of H.R. 775 is a perfect example of that compromise. The
Senator from Oregon, who was so responsible for the final form of this
bill, listed all of the changes that he required in order to approve of
this legislation. The Senator from Connecticut spoke eloquently of the
way in which he worked with the administration to change a ``no'' into
a ``yes,'' and make this legislation a reality. My very good friend,
the chairman of the Commerce Committee, the Senator from Arizona, spoke
of the fact that both the original House bill and the original Senate
bill were much more sweeping and much more decisive in dealing with
this Y2K problem. He deserves an extraordinary degree of our thanks and
our admiration for working constantly and tirelessly toward a
successful conclusion, even though that conclusion is not something he
regards as wholly satisfactory.
I fall on his side of that debate. I think we should have done much
more. I am, in fact, a radical reformer in this whole litigation field,
whether it is this narrow issue or the broader issue of product
liability or medical malpractice or the questionable utility of
punitive damages in civil litigation. I would go much further than this
bill does. But what we have done is to bring people together to solve a
problem in a way that we can deem a success, all the way through to the
signature of the President of the United States.
During the last 20 years, our society and our economy may have
changed more dramatically than in any other similar period of history.
We have become a computerized information society, due to the very
technological developments that resulted in a Y2K challenge. But the
Senator from North Carolina claims to speak for the voiceless. They are
not voiceless. They played a major role in this debate. The coalition
that has wanted far stronger legislation than this does, of course,
consist of software and hardware companies. But it also consists of the
great bulk of the representatives of the customers of those companies.
The National Federation of Independent Business is the largest single
organization of small business in this country. It favors this
legislation. It favors legislation stronger than this. So whoever the
Senator from North Carolina was speaking for, it was not the small
businesspeople who do not look forward to a blizzard of litigation on
this subject.
Of course, in retrospect, this new technology might have thought
about the Y2K problem earlier than it did. But at this point, our goal
should be a solution to the problem, not a blizzard of second-guessing
litigation, especially litigation that will almost certainly slow down
the future development of the very technology that has been so
responsible for the growth in the American economy and has caused such
significant changes for the good in the lives of people all around the
world.
This bill is by no means perfect. In the view of this Senator it
lacks that perfection because it is not all-encompassing enough. It is,
however, at least a modest step in the right direction, one supported
not only by the technology companies that are responsible for the
computer revolution but by their customers and consumers as well.
So with my colleagues on both sides of the aisle, I can
wholeheartedly recommend the passage of this legislation to the Senate
and look forward with satisfaction to the President's approval of this
bill.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER (Mr. Bennett). The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, once again I do not yield from the
statement made that this has been one shabby charade. I intended to,
and did, take the President to task, and I do so. You don't send five
veto messages and then come with a sorry bill, a worse compromise. It
is obvious. You can look at it on the face of it. It did not take care
of the consumers. Senator Leahy tried to. It was what we adopted in the
Congress last year, in the securities bill, in the other measure; we
always take care of the consumers. But here the one group penalized,
sidelined, damaged, if you please, are the consumers of America.
I ask unanimous consent to have printed in the Record the letter from
Public Citizen, opposing the bill, opposing this report.
There being no objection, the article was ordered to be printed in
the Record, as follows:
Public Citizen,
Washington, DC, June 24, 1999.
Please Oppose the Senate Y2K Immunity Bill
Dear Representative: On behalf of Public Citizen's 150,000
members, we thank you for
[[Page S8031]]
your vote against passage of H.R. 775, the Y2K immunity bill.
We urge you to continue to stand up for consumers and small
businesses by voting against the Senate-passed version of
this unfair legislation if it is brought to the House floor.
Although this measure is somewhat ``less extreme'' than the
version of the bill that you opposed when the full House
voted on this measure last month, the Senate bill is also
sweeping in scope, and its effect on individual and small
business consumers will be virtually the same as the House
bill: it will make it next to impossible for those with
legitimate Y2K claims to seek full and fair compensation in
state courts.
Both the Senate and House Y2K bills bestow special legal
protections upon companies responsible for manufacturing and
selling technology products and computer systems that will
not work in the Year 2000--even to those companies that
knowingly sold Y2K defective products within the last few
years, and even to those that are still selling defective
products and systems today. This kind of blanket protection
from accountability is unfair and unwise. Not only will these
bills preempt important consumer protections under state law,
they are likely to undermine Y2K readiness by sending a
message that Congress will not allow companies to be held
accountable for their acts and omissions. They will lead to
more Y2K failures and injuries, not fewer.
The Senate bill has not all, but many, of the same kind of
extreme provisions that made the House bill unacceptable. For
example, the Senate proposal contains:
A mandate that, to receive punitive damages at all against
any defendant--even a huge corporation--a plaintiff must
prove applicable state law standards for punitive damages by
clear and convincing evidence--a higher burden of proof than
is required under many state laws; this provision would make
it harder to hold the most irresponsible defendants fully
accountable.
In addition, the bill also imposes a cap on punitive
damages of $250,000 or three times actual damages, whichever
is less, in cases involving defendants with 50 or fewer
employees; this cap applies no matter how egregious the
defendant's behavior unless the plaintiff can prove by clear
and convincing evidence that the small business defendant
specifically intended to harm the plaintiff--an extremely
difficult standard for a plaintiff in a civil case to meet.
The elimination of joint liability of defendants in most
instances--even for defendants that are substantially
responsible for causing a Y2K failure--with no requirement
that defendants take any steps to avoid Y2K failures in the
first place to receive this liability limitation; this change
in law would leave many injured individuals and small
business consumers without full compensation.
A provision to allow defendants to remove most state law
Y2K class actions into federal court--a proposal opposed by
the Judicial Conference of the United States, chaired by U.S.
Supreme Court Chief Justice Rehnquist.
Additional burdens on class action plaintiffs such as
heightened notice and pleading requirements and requirements
that courts find that the majority of class members' injuries
to be ``material'' at the outset of any litigation; these
requirements will make it harder for consumers to bring their
cases as a class, even if that represents the most efficient
way to adjudicate their cases.
So-called ``bystander liability'' provisions, limiting the
liability of parties other than the product manufacturer or
seller by making it more difficult to prove claims of fraud,
negligent misrepresentation, interference with contract and
other claims where the defendant knew or should have known
about the Y2K failure at issue.
A mandatory waiting period of 90 days before plaintiff can
bring a suit--with no requirement that defendants actually
fix any Y2K problems during that time, even though some
plaintiffs could suffer substantial losses during that
period, such as a small business that is forced to close.
In addition, the Senate added more special protections for
defendants and one-sided provisions that make the Senate bill
even worse in some respects than the bill that passed the
House. These include:
A complete one-way preemption of state law, preserving
every state law that gives more liability protections to
defendants while ensuring that the bill only wipes out all
current state law rights that benefit consumer and small
business plaintiff.
A complete affirmative defense against governmental
enforcement actions for defendants that failed to comply with
most federally enforceable measurement or reporting
requirements because of a Y2K failure that was ``beyond the
reasonable control of the defendant;'' this applies to rules
of the Environmental Protection Agency, the Food and Drug
Administration, the Occupational Safety and Health
Administration and other agencies, unless the violation poses
an imminent threat to the environment, health, or safety.
The suspension of federal penalties for any violation of
any federal regulation caused by a Y2K failure (except a rule
related to the banking or monetary system) for businesses
with 50 or fewer employees as long as that business did not
violate the same rule within the last three years and made
some ``good faith effort'' to avoid the Y2K problem.
The only pro-consumer amendment added to the bill in the
Senate offers temporary protection against adverse actions by
financial institutions or credit agencies for individuals or
small businesses unable to meet a financial obligation, such
as making a mortgage payment or paying a credit card bill,
because of a Y2K failure. This is an important provision to
ensure that a person's credit is not ruined or a family
evicted because of an inability to make a payment through no
fault of their own. But this one pro-consumer amendment in no
way makes up for the overwhelming unfairness of the
underlying Senate bill to most consumers and small businesses
who will experience Y2K failures in products and services
they have purchased, or who suffer Y2K damages from chemical
spills or other Y2K-caused accidents.
Please oppose the Senate version of H.R. 775.
Sincerely,
Joan Claybrook,
President, Public Citizen.
Frank Clemente,
Director, Public Citizen's Congress Watch.
Mr. HOLLINGS. Mr. President, this is the letter we received from the
distinguished executive assistant, Mr. John Podesta. I ask unanimous
consent this be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
The White House,
Washington, June 30, 1999.
Re H.R. 775--the Year 2000 Readiness and Responsibility Act.
Hon. Thomas A. Daschle,
Democratic Leader, U.S. Senate,
Washington, DC.
Dear Mr. Leader: 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:
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.
Mr. HOLLINGS. We go to what we knew. They made the agreement, it was
all signed up, and after the agreement was sent over to the White
House, it was not what they agreed to even then. I read:
The agreed-upon changes were translated into legislative
language extremely narrowly, threatening the effectiveness of
the negotiating protections. Nonetheless, we have concluded
that, with these changes . . . [we are going to sign the
bill].
They were going to sign a bill. They were going to get a bill for the
Vice President. We have to get this Silicon money. And they ought to be
taken to task for this kind of performance here. We know what this is
about. Like I say, no State, no Governor, no Attorney General, no
legislature supports this effort. Let say that my distinguished friend
from Connecticut is very effective. He says: What a radical idea when
we have a unique problem.
No, not at all. I am reading from the American Bar Association, all
the lawyers:
Traditionally, legal principles governing both tort and
contract actions have been the province of the States.
[[Page S8032]]
Not the Federal Government. We all know that.
The legal issues likely to be presented by the year 2000
problem are not unique.
We know that. He said it is not unique, it is not a radical idea, it
is not a radical idea to say what is wrong, specify in your complaint
what is wrong. When the computer breaks down, I don't know what is
wrong. Who does? It is like in the Food and Drug Administration, when
there is bad food we have good product liability; we have a Food and
Drug Administration. These products they have within their own purview,
the proprietary information on the manufacturer, so if there is a
product that breaks down, they know where it is. We cannot find it
ordinarily. But here, they really sidelined middle America, consumers
and the poor small businessman.
They said that is a radical idea. It is a radical idea. It goes
against the entire thrust of the safety principles we experience here
in America. We have a safe society. You can depend on the food. You can
depend on the products. The European Union is now following strict
liability and joint and several liability that we have here in America.
A radical idea to run to the courthouse? We are not running to the
courthouse.
It is a litigious society, but we will show tort claims are down and
business suing business is up; domestic cases, rights cases for this
right, that wrong; environment and otherwise, are up. But tort
liability cases are down.
This here really legalizes torts, it legalizes negligence, it
legalizes fraud, all in the name of something that happens 6 months
from now when, by their own measure they say we ought to have 90 days
to fix it. Unreasonable? The Senator from California, she came and
said: Let's get rid of all the lawyers, just use those 90 days to
require the manufacturer to fix it; that's all we need. We need to get
back in business. We do not need a rush to the courthouse.
Rush to the courthouse? That implies you are going to get a rush
judgment. Try to get 12 jurors to agree on anything today. You cannot
get 12 Senators.
They surely have gotten something very easily. Surely, it was not
unreasonable to at least say you have to fix the problem, in return for
expansive restrictions on plaintiffs' rights.
Instead, they say you have to find out what is wrong and specify it
before they do anything. Come on. They say that is in behalf of the
consumers of America? And that is a good measure and it is a victory
for America? No, Mr. President; this is a sad day when the moneys in
campaigns are not just taken to get elected, are not taken just to buy
the office, but when they buy the principles in order to cater to a
crowd to pass this kind of legislation.
How much time remains?
The PRESIDING OFFICER. The Senator has 10 minutes 37 seconds.
Mr. HATCH. Mr. President, I want to take a few moment to speak on
behalf of the conference report. As you know, the negotiations over the
details of the Y2K Act entered their final phase last Friday, during
the weekend, and through Monday and Tuesday of this week. With the
tremendous help and diligence, particularly of Senators McCain, Dodd,
and Wyden, we were able to craft a compromise bill which addresses
every one of the major concerns of the White House.
Let me say that the final bill reflects the spirit of compromise. But
I must admit that I believe the original Judiciary and Commerce
Committee bills--along with the House bill--would have been far more
effective in dealing with the problem of the expected frivolous and
massive Y2K litigation--than the current compromise measure. But
because of the overwhelming importance and need for this bill, both
sides acted in good faith and reached an equitable agreement. Let me
explain the depth and breadth of the changes that were made.
First of all, the House, recognizing the urgent need to pass this
legislation, acceded to the far more lenient Senate bill. In practice,
this meant that twelve major provisions of the House bill were dropped,
ranging from elimination of both caps on director and officer liability
to caps on attorneys fees. In the conference negotiations, seven
further important concessions were made. Finally, in negotiations with
the White House led by Senator Dodd, we agreed to six further
significant modifications to the bill. Mr. President, I have a list of
these changes. I also have a letter from John Podesta to Senator Dodd,
dated June 29, that enumerates the changes requested by the White House
and--except for minor technicialities--agreed to by the conference. I
ask unanimous consent that these two documents be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
The Y2K Act
1. Concessions Made On Y2K Act Since House & Senate Action
House receded to the Senate, which means:
No caps on Directors and Officers liability;
Applies current state standards for establishing punitive
damages, instead of new preemptive federal standard;
Cap on punitive damages no longer applies when defendant
specifically intended to injure the defendant;
Removed caps on punitive damages for larger businesses;
Restore principle of joint liability for defendants who
knowingly commit fraud. (House bill provided for several, but
not joint, liability);
Definition of Y2K failure narrowed and targeted directly on
year-2000 date-related data;
Dropped provisions dealing with attorneys fees;
Added sunset provision limiting application of Act;
Three major exceptions to proportional liability rule
added. These exceptions and, indeed, the proportionate
liability section itself, were taken from recent securities
law sponsored by Senator Dodd;
Dropped the reasonable efforts defense or Federal rules for
admissibility of reasonable efforts;
Dropped Federal rule for heightened state of mind
requirement;
Confirms substitution of Federal question for minimal
diversity standard
2. Further Concessions
Revised definition of Y2K action--strike ``harm or injury
resulted directly or indirectly'' and replace with the WH
formulation of ``harm or injury [that] arises from or is
related to'' an actual or potential Y2K failure. Add same
formulation to claims or defenses.
Securities claims exclusion--Rejected WH formulation that
private securities claims should be exempted from the bill.
New provision would allow provisions of the securities law to
stand only it if conflicts with provisions of the Y2K Act. We
also agreed to exempt from the Y2K Act's application of
securities law the duty to mitigate section.
Revised language on duty to mitigate--Added an exception
for intentional fraud (unless there was an unjustifiable
reliance on defendant's misrepresentations). Also exempted
securities claims from this section.
Revised language on Economic Loss Rule--Adopted the
approach of the Kerry Amendment, which allow for economic
damages where the defendant committed an intentional tart
(except where the defendant committed misrepresentation or
fraud ``regarding the attributes or capabilities of the
project or service that forms the basis for the underlying
claims.''
Warrany and contract preservation--Addition to existing
language, makes clear that contract terms can be voided by
state-law doctrines of unconscionability existing as of
January 1, 1999, in controlling judicial precedent of
applicable sate law.
Proportion liability--new section which includes: Added
three provisions: (1) made clear that the provision does not
apply to contract provisions; (2) remove the 50% cap placed
on those whose shares are not collectable; (3) made clear
that all state law (common law as well as statutory) with
grater protection applies.
Revised language on class actions--Two changes: (1) to
discourage the filing of all state class actions in federal
court, we increase the jurisdictional amount from $1 million
to $2 million. We also add a requirement that there must be
50 or more plaintiffs to remove state class actions to
federal court; and (2) to prevent elimination of state class
actions, which have been removed to federal court and the
judge remanded the class action as not proper in federal
court (does not meet the criteria of FRCP 23), such remands
will be without prejudice allowing the class action to be
refiled in state court (and, if appropriate, amended and
returned to federal court).
Punitivies--Punitive damage cap for small business--50 or
less employees--which is the lesser of $250,000 or 3 times
compensatory damages. The cap does not apply if a defendant
acted with specific intent to injure the plaintiff.
concessions proposed by senator dodd
Proportionate Liability; Double orphan share for all
solvent defendants; Triple orphan share for defendants proven
by plaintiffs to be had actors; Exempt individual consumers
in individual, but not class, actions.
Class Actions; Increase monetary threshold to $5 million;
Increase class size exemption to 100 plaintiffs; Securities.
Exempt all private security claims from Y2K Act, except
from bystander provision of that Act (Sec. 13(a) and (b)).
Contract Enforcement: State law governing contracts of
adhesion and unconscionability remains enforceable.
[[Page S8033]]
Economic Loss; Doctrine will not apply to claims of fraud
related to contract formation; Regulatory Relief (Gregg and
Inhofe amendments).
Inhofe: Exemption applies so long as defendant could not
have known of the underlying violation because of a Y2K
failure of a reporting system. Similar approach with respect
to Gregg. (Specifics to be worked out with Administration and
others.)
____
The White House,
Washington, DC, June 29, 1999.
Hon. Christopher J. Dodd,
U.S. Senate, Washington, DC.
Dear Senator Dodd: After our discussions regarding H.R.
775, the Year 2000 Readiness and Responsibility Act, to limit
liability resulting from Y2K failures, I am prepared to
recommend to the President that he sign legislation that
includes the following changes:
Proportionate Liability--double orphan share for all
solvent defendants, triple orphan share for defendants proven
by plaintiffs to be bad actors, and exempt individual
consumers in individual, but not class, actions.
Class Actions--Increase monetary threshold to $10 million,
and increase class size exemptions to 100 plaintiffs.
Securities--exempt all private security claims from Y2K
Act.
Contract Enforcement--State law governing contracts of
adhesion and unconscionability and contracts that contravene
public policy remain enforceable.
Economic Loss--Doctrine will not apply to claims of fraud
related to contract formation.
Regulatory Relief (Gregg and Inhofe amendments)--Changes
made to ensure that the provision would not endanger the
environment, public health or safety.
Should the language of the legislation reflect our
understanding of the resolution of these issues, I would
advise that the President sign this bill. I am hopeful that
if these changes are made, legislation can be enacted on a
bipartisan basis.
Sincerely,
John Podesta.
Mr. HATCH. There can be no question that the final bill is more than
a fair compromise. It balances the need to protect consumers against
the need to safeguard business--particularly our high tech industries--
from the ravages of unrestrained predatory litigation. Indeed, some
experts maintain that litigation over the Y2K bug could cost the world
economy over one trillion dollars.
I must emphasize the importance of this. One reason that our economy
has been prospering is the beneficial effect of its increasing
computerization. The Chairman of the Federal Reserve Board, Alan
Greenspan, has asserted several times that the economy's increased
productivity is in part due to computerization and the information
revolution. And one of America's biggest exports is high technology
goods and services. Without this bill, we would be strangling the
proverbial goose that lays the golden egg. America must remain the
pacesetter in high technology and the leader of the information
revolution. Our security and national defense demands it.
Because of the importance of this issue, I have stated that I want a
bill and not a partisan issue. I believed that compromise was the only
way to achieve a product that was both fair and that would pass
Congress. The bill we produced is a good product. But, it could have
been a better product if the administration had been more forthcoming.
Despite frequent requests by myself, Chairman McCain, and other
Senators, for the administration to become actively involved, the
administration did not seriously enter into negotiations until last
week. They now--after hours and hours of talks--reluctantly support the
bill. Well, better late than never, I guess.
I want to reiterate my thanks to Chairman McCain and Senators Dodd
and Wyden. I also want to thank the other conferees, Senators Bennett,
Thurmond, Gorton, Stevens, Burns, Leahy, Hollings, and Kerry, for all
their hard work and efforts in making this bill fair, as well as,
effective. Senator Bennett in particular was an early advocate for
prompt and meaningful action on Y2K. I would also be remiss not to note
my appreciation for the hard work and dedication of the cosponsor of my
Senate Judiciary Y2K bill, Senator Feinstein.
I also want to thank the House conferees for their hard work and for
their wisdom and prudence. Finally, I want to thank the Senator and
House staff for their dedication. I know the long hours they labored.
I urge all Senators to support this compromise conference report.
Mr. BOND. Mr. President, I rise to applaud my colleagues in the
Senate and our friends in the House of Representatives for acting
promptly to negotiate a conference report on the Y2K Act. As chairman
of the Committee on Small businesses, I have paid particular interest
to the small business community's concerns about the Y2K problems.
While the ultimate consequences that will result from the Y2K problem
are as yet unknown, small family-owned businesses are understandably
concerned about their futures after the new year. They are concerned
that their companies may be in danger either from the problem itself or
from suits brought by trial lawyers concerned only with the fees they
can obtain from settlements.
These businesses have reason to worry that they will be bankrupted by
never-ending litigation. Small, woman-owned and family-owned businesses
are the most vulnerable from costly litigation, either as plaintiffs or
defendants, because they do not have the time to devote to it and do
not have excess revenue to afford it. In addition, small businesses do
not want to sue companies with which they have long-standing
relationships and whose survival is tied to their own. Yet, these
vulnerable businesses see the looming specter of endless litigation on
the horizon.
Experts have estimated that total litigation costs related to the Y2K
problem will be astronomical. For example, the Gartner Group, an
international consulting firm has estimated that more than $1 trillion
will be spent on Y2K litigation. Therefore, this legislation, by
encouraging resolution of Y2K disputes outside the courtroom and
decreasing the number of frivolous lawsuits that small businesses may
have to face, will help to ensure that litigation arising from this
problem will not devastate the millions of small businesses that are
the engine of our nation's economy.
The small businesses that are troubled about the prospects of Y2K
litigation are located on Main Streets all across America, not just
Silicon Valley. They are this country's mom and pop groceries, its dry
cleaners and its hardware stores. The National Federation of
Independent Businesses, the nation's largest small business
association, strongly supports this legislation. The NFIB surveyed its
members and found that an overwhelming 93 percent support capping
damage awards for Y2K suits. The small business community is speaking
with a unified voice in support of legislation to limit the impact of
Y2K suits for the good of this nation and by voting for the conference
report today we are not ignoring this voice.
The conference report also contains an important amendment that was
adopted in the Senate sponsored by Senator Gregg and co-sponsored by
me. While the underlying bill will ensure that small businesses do not
face financial ruin from costly litigation, the amendment will make
certain that our own government does not bankrupt small businesses over
the Y2K problem. This amendment will waive Federal civil money
penalties for blameless small businesses that have in good faith
attempted to correct their Y2K problems, but find themselves
inadvertently in violation of a Federal regulation or rule, despite
such efforts.
Most experts that have studied the Y2K problem agree that regardless
of how diligent a business is at fixing its Y2K problems, unknown
difficulties are still likely to arise that may place the operations of
such businesses at risk. The last thing this government should do is
levy civil money penalties on small businesses that find themselves
inadvertently confronted with Y2K problems. Many of these businesses
will already have had their operations disrupted and may be in danger
of going out of business entirely. The Gregg-Bond amendment in the
conference report ensures that the Federal government does not push
them over the edge. I urge all my colleagues to support the conference
report for the sake of our country's small woman- and family-owned
businesses and to ensure that the economic health of our nation is not
imperiled by the Y2K problem in the coming year and beyond.
Mr. KERREY. Mr. President, as I have stated before, the debate
surrounding Y2K Liability is a very important one. The estimated cost
associated with Y2K issues vary greatly,
[[Page S8034]]
ranging from $600 billion to $1.6 trillion worldwide. The amount of
litigation that will result from Y2K-related failures is uncertain, but
at least one study has guestimated the costs for Y2K related litigation
and damages to be at $300 billion.
With that in mind, Congress has been debating legislation which
encourages companies to prevent Y2K failures and to remedy problems
quickly if they occur, and to deter frivolous lawsuits. Although I
support the goals of the bill that passed the Senate last month, I
voted against that bill because I did not feel it provided enough
protection for consumers.
I am pleased to see that changes were made in the Conference Report
that address my concerns and provide protection for consumers. Because
of these important changes, I intend to support the Y2K Liability
Conference Report. Many of my colleagues have pointed out positive
changes to this bill. I would like to highlight just two provisions
that will put consumers in a better position with respect to Y2K
litigation.
The first provision concerns proportionate liability. Exceptions to
the general rule of proportionate liability were made to ensure
ordinary consumers are protected and ``bad actor'' defendants are not
rewarded. These bad actor defendants, those who act recklessly, will
bear a higher proportion of liability for otherwise uncollectible
damage claims. This both protects consumer plaintiffs and provides
companies with an incentive to identify and remedy Y2K problems.
The second provision deals with the duty to mitigate. Under the bill,
plaintiffs have a duty to mitigate damages, which means that they have
a duty to fix computer problems that could have been reasonably
avoided. The Conference Report adds an important exception to this
rule. Consumers who rely on fraudulent misrepresentations made by
defendants about Y2K readiness will be exempted from this duty to
mitigate. In other words, if a computer company tells a consumer in bad
faith that his computer is ``Y2K compliant'' and that turns out to be
false, the consumer will be in a better position to recover damages
from that bad faith defendant.
The Y2K issue is a very unique, once in a millennium, problem.
Because it is so unique, I agree that legislation is needed. I believe
this legislation now strikes a proper balance between consumers and the
high tech industry---computer companies have an incentive to identify
and remedy potential Y2K problems, and consumers have important
protections when faced with bad actor defendants. Therefore, I will
cast a vote in support of the Y2K Liability Conference Report.
Mrs. FEINSTEIN. Mr. President, I am pleased that the long road to
enacting this critical legislation is finally coming to an end.
The conference report now before the Senate is the product of more
than seven months of tough, complex negotiations between the high-tech
industry, the White House, trial lawyers, consumer groups, computer
consultants, countless Members of the House and Senate and other
interested parties.
The final, bipartisan bill--now supported by the President--will
create a once in a millennium, three-year law. Without it, I believe we
could see the destruction or dismemberment of America's cutting edge
lead in technology.
Mr. President, several well-known consultants and firms, including
the Gartner Group, have estimated that Y2K litigation could quickly
reach as high as one trillion dollars. This potential litigation flood
could prevent companies from solving Y2K defects, and as a result could
put the high-tech engine that has propelled our economy to new heights
at risk.
This bill is especially important to California, where over 20
percent of the nation's high-tech jobs are located.
And the problem extends beyond high tech companies into the lives of
employees, stockholders and customers of a wide range of American
business.
We solved part of the Y2K problem last year when Congress
overwhelmingly passed legislation to protect companies who make
statements about Y2K problems in order to help others predict and solve
these problems before they occur.
But we must now take an extra step, in order to encourage companies
to work to prevent and fix Y2K problems with minimum delay.
Without this bill, companies may be forced to devote far too many
resources to preparing for lawsuits rather than mitigating damages and
solving Y2K problems.
And many consultants have come to us and said that they have refused
to become involved in helping companies solve Y2K problems, for fear
that they will open themselves up to being sued later on. They would
rather just not get involved.
As a result, the very people capable of fixing Y2K defects are
unavailable to perform those fixes.
I believe we face a real problem, and we have tried to craft a real
solution.
And crafting that solution has not been easy. On almost a daily
basis, Senate staffers, industry representatives, opponents of the bill
and others have met for hours at a time to hammer out differences,
clarify language, and make significant, substantive changes to the
early versions of these bills.
In fact, even before the Conference Committee met over the last week,
the original sponsors of Y2K litigation reform, including myself and
Senators Hatch, McCain and Wyden, made dozens--if not hundreds--of
changes to these bills. We addressed every concern we could, we
significantly limited the scope of the bills, and we clarified many
sections to ensure that plaintiffs and defendants alike will find an
even, uniform playing field once the bill passes.
And it is important to remember that nothing in this bill is
permanent--rather, it is a three-year bill limited to certain specific
cases. The bill applies only to Y2K failures, and only to those
failures that occur before January 1, 2003.
This bill contains a number of key provisions meant to deter
frivolous suits and encourage remediation, arbitration, and problem-
solving.
Most of these provisions have been modified or limited during the
negotiations that have taken place over the last seven months. Several
changes were made as late as this week, during negotiations with the
White House.
The bill provides a 90-day ``cooling off period'' during which time
no suit may be filed, so that businesses can concentrate on solving Y2K
problems rather than on fending off lawsuits.
Only one 90-day period may be invoked per lawsuit, and the 90-day
period does not delay any injunctive relief--a plaintiff may
immediately file for a temporary restraining order or any other type of
injunctive relief.
The purpose of this section is to give both parties an opportunity to
focus on identifying and then correcting any Y2K problems quickly and
efficiently.
The bill also provides for proportionate liability in many cases, so
that defendants are punished according to their fault, and not
according to their ``deep pockets.''
Under our current system of joint and several liability, a defendant
found to be only twenty, ten or even one percent at fault can
nonetheless be forced to pay 100 percent of the damages.
This system often encourages plaintiffs to go after ``deep pocket''
defendants first, in order to force a quick settlement.
I believe that this system is fundamentally unfair, and I am pleased
to say that this bill eliminates joint and several liability in many
Y2K cases.
Under the new system, defendants will be responsible only for that
portion of damages that can be attributed to them.
However, the bill does have several specific exceptions to the
elimination of joint and several liability.
First, any plaintiff worth less than $200,000 and suffering harm of
more than 10 percent of that net worth may recover against all
defendants jointly and severally. This exception in the bill protects
those plaintiffs with a low net worth, but will not unduly injure
defendants because the damages recovered will not be great.
Second, any defendant who acts with an intent to injure or defraud a
plaintiff loses the protections under this bill and is again subject to
joint and several liability. We do not want to protect those acting
with an intent to harm.
Finally, the original Senate bill provided a compromise for those
cases in
[[Page S8035]]
which certain defendants are ``judgement-proof.'' In cases where a
plaintiff cannot recover from certain defendants, the other defendants
in the case would each liable for an additional portion of the damages.
However, in no case could a defendant be forced to pay more than 150
percent of its level of fault. The Conference Committee increased that
cap to 200 percent, making it even easier for plaintiffs to recover the
fullest possible extent of their damages.
The Conference Committee also inserted provisions in the bill, at the
request of the White House, that will allow any individual consumer to
recover jointly and severally against defendants for any share of
damages that are uncollectible from other, judgment-proof defendants.
And for Y2K class action suits, the bill requires that a majority of
plaintiffs have suffered some minimal injury, in order to avoid cases
in which thousands of unknowing plaintiffs are lumped together in an
attempt to force a quick settlement.
The bill moves many Y2K class actions into federal court for purposes
of uniformity, but at the request of the White House the Conference
Committee increased the threshold to get to federal court from the one
million dollar level found in the Senate bill to ten million now.
Furthermore, the number of required plaintiffs required to move a class
action to federal court has been doubled from fifty to one hundred.
And the punitive damages section, which has been severely curtailed
since early versions of the bill, now caps punitive damages for small
businesses only--to $250,000 or three times compensatory damages,
whichever is lesser.
Another change made to the bill in Conference exempts most
intentional torts from the limits on recovery for economic loss.
Finally, the conference report provides that state laws on
unconscionability will not apply to cases in which individual terms
within a contract should not be enforced--a move further protecting the
plaintiff's right to recover.
Each of the changes made before and during the Conference Committee
negotiations has narrowed the focus and effect of the bill, while still
maintaining the bill's clear intent to allow companies to prevent,
solve and remediate Y2K problems without undue delay stemming from
frivolous lawsuits and meritless claims.
The ``one trillion dollar litigation headache'' is rapidly
approaching, and this Congress can provide some preventative medicine
and some anticipatory pain relief in the form of the reasoned, fair,
and thoughtful compromise before us.
The bill sets forth clear rules to be followed in all Y2K cases, and
the bill levels the playing field for all parties who will be involved
in Y2K suits--plaintiffs and defendants.
Companies and individuals alike will know the rules, and will know
what they have to do. And most importantly, the stability that will
come from this bill will allow companies to prevent Y2K problems when
possible, fix Y2K defects when necessary, and proceed to remediation of
damages in an orderly and fair manner.
This bill has been through a tortuous legislative drafting process,
with criticisms, suggestions and changes made from every side and by
every sector of our society.
So let us pass this conference report today, let us send it to the
President, and let us show this nation that the Y2K crisis will not
cripple our courts, will not disrupt our economy, and will not put a
halt to the technology engine driving our progress towards the twenty-
first century.
Mr. LOTT. Mr. President, as the Senate prepares to vote on the
Conference Report on H.R. 775, the Y2K Act, I want to praise the
bipartisan efforts of so many Senate and House Members who have worked
diligently to construct an effective, fair bill that will address the
important issue of liability as it relates to the possible Year 2000--
or Y2K--computer problems. This has been a group effort, teaming
members on both sides of the aisle with the private sector. The
coalition of high technology businesses, large businesses, small
businesses, and others provided the initiative and momentum that pushed
this bill across the finish line.
This bill is constructive, positive legislation. It allows companies
in the information technology industry to focus their limited resources
on solving Y2K related problems in computer software by preventing
frivolous litigation. Litigation which would divert those limited
resources away from solving Y2K programming deficiencies.
Mr. President, so many Senators and their staffs have worked to
insure the success of this legislation, even when faced with difficult
hurdles and odds. The efforts of Senator McCain, Senator Wyden, Senator
Gorton, Senator Bennett, Senator Dodd, Senator Hatch, Sentor Feinstein
and others, along with the efforts of the House sponsors and conferees,
have brought us to this point.
Mr. President, I am pleased that the House has passed this important
bill today by a vote of 404-24. With only 183 days left until the globe
turns the page on the calendar to a new century and a new millennium, I
urge my colleagues to vote for this important bill. I am confident that
this Conference Report will pass the Senate by a wide margin, just as
in the House, and I urge the President to sign this bill into law when
he receives it.
Mr. HOLLINGS. Mr. President, we have some demands on this side of the
aisle and some obligations.
I yield back the remainder of our time.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, I congratulate the Senator from South
Carolina for his spirited and impassioned defense of his position. It
is a great privilege to do combat with him, both in the committee and
on the floor. I appreciate his eloquence as always. Since this time I
believe we have the votes, I yield back the remainder of my time.
Mr. HOLLINGS. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. All time having been yielded back, the
question is on agreeing to the conference report. The yeas and nays
have been ordered. The clerk will call the roll.
The legislative assistant called the roll.
Mr. NICKLES. I announce that the Senator from Alaska (Mr. Murkowski)
is necessarily absent.
The result was announced--yeas 81, nays 18, as follows:
[Rollcall Vote No. 196 Leg]
YEAS--81
Abraham
Allard
Ashcroft
Baucus
Bayh
Bennett
Bingaman
Bond
Boxer
Brownback
Bryan
Bunning
Burns
Byrd
Campbell
Chafee
Cleland
Cochran
Collins
Conrad
Coverdell
Craig
Crapo
Daschle
DeWine
Dodd
Domenici
Dorgan
Enzi
Feinstein
Fitzgerald
Frist
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Harkin
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Inouye
Jeffords
Kennedy
Kerrey
Kerry
Kohl
Kyl
Lautenberg
Lieberman
Lincoln
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moynihan
Murray
Nickles
Reed
Robb
Roberts
Roth
Santorum
Schumer
Sessions
Smith (NH)
Smith (OR)
Snowe
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
Wyden
NAYS--18
Akaka
Biden
Breaux
Durbin
Edwards
Feingold
Hollings
Johnson
Landrieu
Leahy
Levin
Reid
Rockefeller
Sarbanes
Shelby
Specter
Torricelli
Wellstone
NOT VOTING--1
Murkowski
The conference report was agreed to.
Mr. LOTT. Mr. President, I move to reconsider the vote, and I move to
lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The majority leader is recognized.
____________________