[Congressional Record (Bound Edition), Volume 145 (1999), Part 9]
[Senate]
[Pages 12043-12093]
[From the U.S. Government Publishing Office, www.gpo.gov]



                                Y2K ACT

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
resume consideration of S. 96, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 96) to regulate commerce between and among the 
     several States by providing for the orderly resolution of 
     disputes arising out of computer-based problems related to 
     processing data that includes a two-digit expression of that 
     year's date.

  The PRESIDING OFFICER. The Senator from Arizona is recognized.


                           Amendment No. 608

   (Purpose: To regulate interstate commerce by making provision for 
  dealing with losses arising from Year 2000 Problem-related failures 
 that may disrupt communications, intermodal transportation, and other 
                 matters affecting interstate commerce)

  Mr. McCAIN. Mr. President, I am pleased to start out by offering a 
substitute amendment to S. 96, the Y2K Act. This substitute amendment 
is truly a bipartisan effort. It represents spirited discussion, hard 
fought compromise, and agreement with a number of my colleagues on both 
sides of the aisle, led by Senators Dodd, Wyden, Hatch, Feinstein, 
Bennett, Lieberman, Gorton, Lott, Abraham, Santorum, and Smith of 
Oregon.
  The substitute is at the desk, and I ask for its immediate 
consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arizona [Mr. McCain], for himself, Mr. 
     Dodd, Mr. Wyden, Mr. Hatch, Mrs. Feinstein, Mr. Gorton, Mr. 
     Bennett, Mr. Lott, Mr. Abraham, Mr. Frist, Mr. Burns, Mr. 
     Santorum, Mr. Smith of Oregon, and Mr. Lieberman, proposes an 
     amendment numbered 608.

  Mr. McCAIN. I ask unanimous consent reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. McCAIN. Mr. President, I thank Senator Wyden for being one of the 
true leaders on this bill. Senator Wyden said at our committee markup 
that he wanted to get to ``yes.'' He has worked tirelessly with me and 
others to get there. Having not only the necessary majority vote but 
the 60 votes necessary to move forward is directly related to his 
efforts.
  I also thank Senator Dodd of Connecticut. He has offered an important 
perspective and has provided excellent suggestions and comments which I 
think make this substitute we offer today a better piece of 
legislation.
  I am grateful to my colleagues, especially the senior Senator from 
Connecticut, for their unflinching dedication to dialogue, to working 
through our differences and remaining focused on the common goal of 
enacting this critical piece of legislation. Without the leadership of 
Senators Dodd and Wyden, this bipartisan effort would not have been 
possible.
  Before I talk about the legislation and the language of the 
substitute itself, I would like to note that there was a unanimous 
consent agreement that 12 amendments would be in order on both sides. 
We are now in the process of working with the sponsors of those 
amendments, some of which we can agree to, some of which may require 
votes. But I hope my colleagues will also come over here ready to offer 
those amendments so that in a very short period of time we can begin to 
dispense with them.
  We all know the very heavy schedule of legislation that lies before 
us between now and the next recess on the Fourth of July. So I am 
hopeful we can take up and dispense with these amendments in a timely 
fashion.
  The first effort, obviously, will be to get time agreements on those 
amendments that we are unable to get agreement on, although I believe, 
from a first look at many of these amendments, we will be able to work 
out language so that we can accept a number of them. In fact, I think 
some of them will improve the legislation.
  I want to walk through the details of this substitute amendment and 
the background and history of this bill.
  First, let me summarize what this substitute contains.
  Specifically, the substitute amendment:

[[Page 12044]]

  Provides time for plaintiffs and defendants to resolve Y2K problems 
without litigation.
  It reiterates the plaintiff's duty to mitigate damages and highlights 
the defendant's opportunity to assist plaintiffs in doing that by 
providing information and resources.
  It provides for proportional liability in most cases, with exceptions 
for fraudulent or intentional conduct or where the plaintiff has 
limited assets.
  It protects governmental entities, including municipalities, school, 
fire, water, and sanitation districts, from punitive damages.
  It eliminates punitive damage limits for egregious conduct while 
providing small businesses some protection against runaway punitive 
damage awards.
  And it provides protection for those not directly involved in a Y2K 
failure.
  The substitute, as the original bill, does not--I emphasize, does 
not--cover personal injury and wrongful death cases.
  The specific changes the substitute makes from the version of the 
bill which Senator Wyden and I offered in April are those proposed by 
Senator Dodd. It eliminates the director and officer liability caps, it 
eliminates the punitive damages caps for businesses with more than 50 
employees, it provides that State evidentiary standards will be used in 
specific situations, and it preserves the protections provided in the 
Year 2000 Information and Readiness Disclosure Act.
  Let me be quite blunt. These revisions represent significant 
compromise. They move this bill a considerable distance from the Y2K 
bill passed by the House. Even with these compromises, I believe the 
bill will accomplish the goals for the legislation--to encourage 
remediation and prevention of Y2K problems and eliminate frivolous and 
opportunistic litigation which can only serve to damage our economy. 
However, I do not believe any additional compromises are necessary or 
warranted.
  I want to reemphasize that point. There have been additional efforts 
made to have us accept or work on additional changes to the bill. We 
run the risk right now of compromising to the degree where it makes 
these protections, if not meaningless, so reduced that we are not able 
to achieve the goal we seek. So I do not intend--nor do, I believe, the 
majority of my colleagues, including those on the other side of the 
aisle--to continue to work behind the scenes towards a compromise. If 
there is a change that Members believe needs to be made to this 
legislation, then let's go through the amending process, let's have a 
time limit on debate, and vigorously debate and educate our colleagues, 
and then have votes.
  We have, thanks to Senator Wyden, moved a significant way, and also 
thanks to Senator Dodd; we have done that. We cannot move from our 
position further. Yet we do obviously have 12 amendments in order on 
that side, 12 amendments on this side, which is ample opportunity for 
debate and discussion about this issue and further amending, obviously, 
with majority rule.
  So I point out again, these are significant compromises that have 
already been made, some of them to the dissatisfaction of some of our 
constituents. It has not made everybody happy. But having been around 
here now for some years, it is my firm belief that we have to make 
compromises, because that is the essence of legislation. But we have 
made enough compromises that we can no longer make any further changes 
without compromising the fundamental principles behind this 
legislation.
  Let me make one other point. Time is of the essence here. We cannot 
dally. We cannot wait until the end of the year when Y2K is upon us.
  Already lawsuits have been filed, some of them pretty interesting, 
and emphasize, at least to my mind, the necessity of this legislation.
  But we need to move. I fully intend, once we pass this legislation, 
to move to conference as quickly as possible. There are differences 
between the House-passed legislation and this legislation. I am 
absolutely convinced we will be able to reach agreement in conference 
and come back here before the recess with a final conference report and 
bill to be approved by both Houses.
  I am committed to passing legislation which is effective. I am not 
interested in passing a meaningless facade. We will do the public a 
great disservice to claim victory in passing legislation which leaves 
loopholes for spurious litigation. If we aren't going to legitimately 
fix the problem, then we must be forthright with the public and tell 
them it could not be done. I think that would be a disastrous result, 
but it would be more honest than to pretend to provide a solution and 
not.
  This bill deserves the support of every Member of the Senate. It is 
fair, practical, and legally justifiable. It is important not only to 
the high-tech industry or only to big businesses but carries the strong 
support of small businesses, retailers, and wholesalers.
  The coalition of support for this bill is compelling. Yesterday a 
press conference was held to reiterate the support of the overwhelming 
majority of the Nation's gross national product: the U.S. Chamber of 
Commerce; the National Association of Manufacturers; the National 
Retail Federation; virtually every high-tech industrial association, 
including the ITAA, the Business Software Alliance, and others who 
participated, to emphasize the need for the bill and their support for 
the compromises which have been made.
  Many of those supporting this legislation will find themselves as 
both plaintiffs and defendants. They have weighed the benefits and 
drawbacks of the provisions of this legislation and have overwhelmingly 
concluded that their chief priority is to prevent and fix Y2K problems 
and make our technology work, not to divert their resources into time-
consuming and costly litigation.
  The estimated cost of litigation associated with fixing the Y2K 
problem is really quite enormous. In the view of some, it is as high as 
$1 trillion. I do not know if it is that high, but already major 
corporations in America have spent millions and millions, in some cases 
tens of millions, of dollars in fixing existing problems. If we throw 
into the mix the litigation we have already seen the beginnings of, it 
could really have an effect, not only on the ability of our businesses 
to do business, not only on the ability of our high-tech corporations 
to continue investing in research and development and improvements in 
technology, but it really would have a significant effect on our 
overall economy. You take that much money out of our economy in the 
form of litigation, you are going to feel the economic impacts of it.
  Let me remind my colleagues how this legislation came to be, its 
genesis and rationale. The origin, as we all know, of the Y2K problem 
was in the 1950s and 1960s, when computer memory was oppressively 
expensive. According to the February 24, 1999, report of the Senate 
Special Committee on the Year 2000 Technology Problem, headed by 
Senators Bennett and Dodd, in the IBM 7094 of the early 1960s, core 
memory cost around $1 per byte. By comparison, today's semiconductor 
memory costs around $1 per million bytes. Thus, there was a strong 
incentive to minimize the storage required for a program and data.
  A two-digit data code became the industry standard in order to 
economize on storage space. It was presumed that sometime during the 40 
or 50 years before the end of the millennium, the coding would be 
changed as computer memory became more accessible. Unfortunately, 
although memory costs fell dramatically, the interface requirements of 
old software with new discouraged and slowed the changeover process. 
The computer equipment and software that was expected to become 
obsolete survived many layers and programming updates. The result is 
that the two-digit programs are not designed to recognize dates beyond 
1999 and may not be able to process data-related operations beyond 
December 31 of this year.
  Although some who oppose this litigation charge that the solutions 
are simple and should have been completed long ago, the reality is not 
that simple. First, there are over 500 programming

[[Page 12045]]

languages in use today. A universally compatible Y2K solution would 
have to be compatible with most or many of these languages. Embedded 
processors in embedded chips have to be found and replaced. There are 
also several ways to reprogram causing additional interfacing issues.
  Technical approaches to solving the problem include reprogramming all 
two-digit date codes with a four-digit date code; windowing the date 
codes to make programs think that the two-digit codes are applicable to 
the year 2000 and beyond; and encapsulation which, like the windowing 
method, tricks the computer program into thinking that the two-digit 
date code is applicable beyond 1999. Unless the same approach is taken 
in all computers, additional programming is required to allow interface 
of four-digit codes with two-digit codes which have been windowed or 
encapsulated.
  Let me read from a recent publication of the National Legal Center 
for the Public Interest, the Year 2000 Challenge, Legal Problems and 
Solutions, which summarizes why the year 2000 problem is so difficult 
to solve.
  I quote from the article from the National Legal Center for the 
Public Interest:

       One of the most insidious characteristics of the Year 2000 
     problem is that the difficulty of solving it in any 
     particular organization often is so underestimated. Since 
     both the nature of the problem and the actions needed to fix 
     it are relatively easy to explain, people who are not 
     familiar with IT projects in general and the peculiar 
     difficulties of Year 2000 projects in particular tend to 
     think of Year 2000 projects as less difficult and risky than 
     they really are.
       The unfortunate fact is that there is no ``silver bullet'' 
     solution to the Year 2000 problem in any organization, and 
     the risks and difficulties in any Year 2000 project of even 
     moderate size and complexity can be enormous. None of the 
     remediation techniques described above is without 
     disadvantage, and for many IT users the time and resources 
     required to accomplish Year 2000 remediation far exceed what 
     is available. Most major remediation programs involve finding 
     and correcting date fields in millions of lines of poorly 
     documented or undocumented code. There is no single foolproof 
     method of finding date fields, no assurance that all date 
     fields will be found, corrected, or corrected accurately, and 
     no assurance that corrections will not produce unintended and 
     undesirable consequences elsewhere in the program. In many 
     cases it will be necessary to rely on information or 
     assurances from third-party vendors regarding the Year 2000 
     compliance of their products, even though experience teaches 
     that many such representations are inaccurate or misleading. 
     Comprehensive end-to-end system testing of remediated systems 
     in a simulated Year 2000 ``production'' environment is often 
     impractical or impossible, and less intensive testing may 
     fail to detect uncorrected problems. And even when an IT user 
     has succeeded in making its own system Year 2000 ready, Year 
     2000 date handling programs of external programs or systems 
     (such as the systems of customers or suppliers) can often 
     have a devastating effect on internal operations.

  In addition to the technical problems with solving the problems, we 
must consider the cost dimension of the Y2K problems. From the ITAA, 
Information Technology Association of America, Year 2000 website, I 
have the following information:

       At $450 to $600 per affected computer program, the Gartner 
     Group has estimated that a medium-sized company will spend 
     between $3.6-$4.2 million to convert its software. The cost-
     per-line-of-code has been estimated between $1.00-$1.50. 
     Viasoft estimates cost-per-impacted-programs between $572-
     $1,204.
       Estimates place correcting the problem for businesses and 
     the public sector in the United States alone between $100-
     $200 billion. If you accept the premise that the total 
     information technology services marketplace in America 
     approaches $150 billion annually; that means Year 2000 
     Software Conversion could represent anywhere from 33%-50% of 
     dollars spent for information systems in one year. Some ITAA 
     Year 2000 Task Group members report estimates placing the 
     worldwide total to correct the problem between $300 to $600 
     billion.

  In addition, the Senate Year 2000 Committee in its report cites 
figures for several specific companies, as well as total costs which 
include estimated litigation costs.

       There is no generally agreed upon answer to this question. 
     The Gartner Group's estimate of $600 billion worldwide is a 
     frequently cited number. Another number from a reputable 
     source is that of Capers Jones, Software Productivity 
     Research, Inc. of Burlington, MA. Jones' worldwide estimate 
     is over $1.6 trillion.\5\ Part of the difference is that 
     Jones' estimate includes over $300 billion for litigation and 
     damages but Gartner's does not. A sense of the scale of the 
     cost can be gained from looking at the Y2K costs of six 
     multinational financial services institutions; Citicorp, 
     General Motors, Bank America, Credit Suisse Group, Chase 
     Manhattan and J.P. Morgan. These six institutions have 
     collectively estimated their Y2K costs to be over $2.4 
     billion.

  Mr. President, the point here is that this is a complex technical 
problem with no easy, cheap solution. Although the opponents of this 
legislation would have us believe that Y2K failures can only result 
from negligence or dereliction on the part of the technology industry, 
and all those who use computer hardware and software, in truth, massive 
efforts are underway, and have been for some time, to prevent the Y2K 
problem from occurring. Even with the nearly incomprehensible amounts 
of money being devoted to reprogramming date codes in virtually every 
business and industry in our country, there are going to be failures. 
Well-intentioned companies, acting in good faith, are nevertheless 
going to encounter problems in their systems, or in the interface of 
their systems with other systems, or as a result of some other 
company's system.
  But what experts are also concluding is that the real problems and 
costs associated with Y2K may not be the January 1 failures, but the 
lawsuits filed to create problems where none exist. An article in USA 
Today on April 28 by Kevin Maney sums it up:

       Experts have increasingly been saying that the Y2K problem 
     won't be so bad, at least relative to the catastrophe once 
     predicted. Companies and governments have worked hard to fix 
     the bug. Y2K-related breakdowns expected by now have been low 
     to nonexistent. For the lawyers, this could be like training 
     for the Olympics, then having the games called off.
       The concern, though, is that this species of Y2K lawyer has 
     proliferated, and now it's got to eat something. If there 
     aren't enough legitimate cases to go around, they may dig 
     their teeth into anything. . . . In other words, lawyers 
     might make sure Y2K is really bad, even if it's not.

  Mr. President, the sad truth in our country today is that litigation 
has become an industry. While there are many fine, scrupulous attorneys 
representing their clients in ethical fashion, there are also many 
opportunistic lawyers looking for new ``inventories'' of cases. The Y2K 
problems provide these attorneys with a lottery jackpot.
  Let me read from an article published in March of this year, by the 
Public Policy Institute of the Democratic Leadership Council, written 
by Robert D. Atkinson and Joseph M. Ward:

       As the millennium nears, the Year 2000 (Y2K) computer 
     problem poses a critical challenge to our economy. Tremendous 
     investments are being made of fix Y2K problems, with U.S. 
     companies expected to spend more than $50 billion. However, 
     these efforts could be hampered by a barrage of potential 
     litigation, as fear of liability may keep some businesses 
     from effectively engaging in Y2K remediation efforts. Trail 
     attorneys across the country are actually preparing for the 
     potential windfall. For those who doubt the emergences of 
     such a litigation leviathan, one only needs to listen to what 
     is coming out of certain quarters of the legal community. At 
     the American Bar Association annual convention in Toronto 
     last August, a panel of experts predicted that the legal 
     costs associated with Y2K will exceed that of asbestos, 
     breast implants, tobacco, and Superfund litigation 
     combined.\1\ That is more than three times the total annual 
     estimated cost of all civil litigation in the United 
     States.\2\ Seminars on how to try Y2K cases are well underway 
     and approximately 500 law firms across the country have put 
     together Y2K litigation teams to capitalize on the event.\3\ 
     Also, several law suits have already been filed, making trail 
     attorneys confident that a large number of businesses, big 
     and small, will end up in court as both a plaintiff and 
     defendant. Such overwhelming litigation would reduce 
     investment and slow income growth for American workers. 
     Indeed, innovation and economic growth would be stifled by 
     the rapacity of strident litigators.

  I want to point out that is from the Public Policy Institute of the 
Democratic Leadership Council.
  Mr. President, already at least 65 lawsuits--some report as many as 
80--have been filed, and we are still 6 months away from January 1. 
Most of these lawsuits involve potential problems that have not even 
occurred yet.

[[Page 12046]]

Our nation's legal system is not designed to handle the tidal wave of 
litigation which will undoubtedly occur if we do not act to prevent it. 
We must reserve the courts for the cases with real harm, real factual 
support, and which cannot be otherwise resolved through mediation and 
resolution.
  Probably the classic example of opportunistic litigation is a class 
action suit filed in California by Tom Johnson against six major 
retailers. Tom Johnson, acting as a ``private attorney general'' under 
California consumer protection laws, has brought an action against a 
group of retailers, including Circuit City, Office Depot, Office Max, 
CompUSA, Staples, Fryes, and the good guys, inc. for failing to warn 
consumers about products that are not Y2K compliant.
  He has not alleged any injury or economic damage to himself, but, 
pursuant to state statute, has requested relief in the amount of all of 
the defendants' profits from 1995 to date from selling these products, 
and restitution to ``all members of the California general public.'' 
Although he claims that ``numerous'' products are involved, he has not 
specified which products are covered by his allegations, but has 
generally named products by Toshiba, IBM, Compaq, Intuit, Hewlett 
Packard, and Microsoft.
  It is crystal clear that the real reason for this lawsuit is not to 
fix a problem that Mr. Johnson has with any of his computer hardware or 
software, but to see whether he can convince the companies involved 
that it's cheaper to buy him off in a settlement than to litigate--even 
if the case is eventually dismissed or decided in their favor.
  And, even more interesting, is the history of how this case came to 
be filed. The Wall Street Journal carried a story on Friday, May 14, 
1999 in its Politics and Policy column by Robert S. Grernberger.
  It says:

       Michael Verna, a California lawyer, is warning a group of 
     technicians about the dangers ahead if they don't get the 
     gliches out of their companies' computers by the end of the 
     year.
       Here in Seattle, Mr. Verna is explaining how writing 
     internal memos or careless e-mail could hurt a firm in a Y2K 
     lawsuit. Loretta Pirozzi of Data Dimensions Inc., a 
     consulting firm, complain that most bosses aren't budgeting 
     enough money to fix the problems. A knowing chuckle sweeps 
     the room. Mr. Verna warns that memos on such budget disputes 
     become smoking guns in court.
       ``What can we do?'' asks another woman.
       ``Have lawyers show you how to protect your documents, for 
     one thing,'' he says. ``By the way,'' he adds, ``that isn't a 
     sales pitch.''
       But, of course, it is. Bowles & Verna, a 21-member firm in 
     Walnut Creek, Calif., has a Y2K game plan. It starts with 
     semimars that help develop new clients. The millennium itself 
     will usher in the ``failure litigation phase'' of court 
     fights. And in about five years, just when it seems like 
     everyone has sued everyone else, comes the ``insurance-
     coverage phase,'' when companies go after their insurers to 
     pay some of their Y2K losses.
       ``You want to be on the leading edge of the tort of the 
     millennium,'' Mr. Verna says.
       Bowles & Verna's journey to 2000 began almost by chance, in 
     1997, while Kenneth Jones, then a third-year law student, was 
     playing a computer football game. It is wife, Sandy, was 
     telling him that people were stocking up on canned goods and 
     bottled water for the expected chaos of Y2K. At that moment, 
     Mr. Jones recalls, he had an epiphany.
       A new area of law, involving future failures due to Y2K 
     bugs, was being born, and Mr. Jones, a law student 
     comfortable with technology, was perfectly positioned for it. 
     He also was headed for a job at Bowles & Verna, where he had 
     been a summer law clerk. ``I decided the firm could be the 
     experts.
       With Mr. Verna's strong encouragement, the 28-year-old Mr. 
     Jones proded his colleagues, giving some of the firm's 
     techno-challenged lawyers a book, ``Year 2000 Solutions for 
     Dummies.'' Gradually, the firm formed a Y2K team. All it 
     lacked was a client. Then, late last year. Mr. Jones's friend 
     Torn Johnson, a Walnut Creek swimming coach, went shopping 
     for a laptop computer--and Bowles & Verna found its first Y2K 
     lawsuit.
       But with no apparent injury to Mr. Johnson, the firm needed 
     a legal theory. California's Unfair Business Practices Act 
     came to the rescue. The statute permits citizen lawsuits on 
     behalf of the people of the state to stop unfair or deceptive 
     business practices. And so Mr. Johnson is suing about half a 
     dozen retailers for injunctive relief to require disclosure 
     for Y2K compliance, but not for damages. And, under the state 
     law, Bowles & Verna would collect attorney's fees.

  This is precisely the type of frivolous and opportunistic lawsuit 
which would be avoided by S. 96. Rather than have all of these named 
companies wasting their time and resources preparing a defense for this 
case, S. 96 would direct the focus to fixing real problems. In this 
instance, Mr. Johnson does not have an actual problem, but if he did, 
he would need to articulate what is not working due to a Y2K failure. 
The company or companies responsible would then have an opportunity to 
address and fix the specific problem. If the problem isn't fixed, then 
Mr. Johnson would be free to bring his suit.
  This case is the tip of the iceberg--if thousands of similar suits 
are brought after January 1, the judicial system will be overrun--and 
the nation's economy will be thrown into turmoil. This is a senseless 
and needless abuse that we can avoid by passing S. 96.
  Mr. President, let me turn to the substance of the substitute 
amendment offered today. Without going through every paragraph of the 
bill, let me highlight the most important provisions.
  Certainly the centerpiece of the bill are the provisions of Section 7 
regarding notice. This section requires plaintiffs to give defendants 
30 days notice before commencing a lawsuit. This provides an 
opportunity for someone who has been harmed by a Y2K failure to make 
the person responsible aware of the problem and to fix it. If the 
defendant doesn't agree to fix the problem, then the plaintiff can sue 
on the 31st day. If the defendant does agree to fix the problem, 60 
days are permitted to accomplish the remediation before a lawsuit can 
be filed. This offers a reasonable time and opportunity for people to 
work out legitimate problems with sincere solutions, without cost of 
litigation. It focuses on the fact that most people want things to 
work--they don't want to sue.
  A corresponding critical element of this legislation is the 
requirement for specificity in pleadings found in Section 8. Not 
written nor intended to cause loopholes for lawyers, the thrust of this 
requirement is that there must be a real problem in order to sue. Our 
judicial system should not be clogged with possible Y2K failures, nor 
novel complaints to ensure the payment of lottery style settlements and 
attorneys fees. We must reserve our judicial resources for real 
problems which have caused real injury which can be redressed by the 
court.
  The Duty to Mitigate in Section 9 is also important. While it is in 
some respects merely a statement of current law, it highlights the 
emphasis to be placed on preventing problems and injury to the maximum 
extent possible, and articulates the role that prevention information 
made available by the affected industries can play in limiting injury 
to product users.
  The economic loss rule found in Section 12 is also a restatement of 
law in the majority of states. It is critical, however, because it 
confirms that damages not available under contract theories of law 
cannot be obtained through tort theories. This is particularly 
important here where personal injury claims have been excluded.
  Punitive damages caps have been retained for small businesses, 
defined as those with 50 fewer than 50 employees. Punitive damages are 
permitted under some state laws in certain egregious situations 
primarily as a deterrent from a repetition of the conduct.
  Punitive damages are awarded primarily as punishment to a defendant. 
They are intended to deter a repeat of the offensive conduct.
  Punitive damages are not awarded to compensate losses/damage suffered 
by a plaintiff.
  The Y2K cases are unusual in that the conduct is not likely to occur 
again, thus there is little deterrent value in awarding punitive 
damages.
  Without a deterrent effect, punitive damages serve only as a windfall 
to plaintiffs and attorneys.
  Additionally, since we have eliminated personal injuries from 
coverage of the bill, the only harm caused by defendants will be 
economic damage, which can be appropriately compensated without the 
need for punitive awards.

[[Page 12047]]

  Further, excessive punitive damage awards will simply compound the 
economic impact of Y2K litigation and the costs will be passed along to 
the public/consumers through higher prices.
  In this situation, punitive damages truly become a ``lottery'' for 
the plaintiff, thus they should be limited.
  S. 96 provides an exception to the caps for intentional injury to the 
plaintiff, which is most likely to be conduct worthy of additional 
punishment.
  S. 96 protects all governmental entities so that taxpayers are asked 
to provide compensation for actual damages, but not provide windfalls 
to plaintiffs. This is especially important to municipalities and 
special districts (school, fire, water and sanitation). This is 
strongly supported by National League of Cities.
  Let me speak to some of the points raised by the proposal of Senators 
Kerry, Robb, Daschle, Reid, Breaux, and Akaka. While it is encouraging 
that they agree the Y2K problem is one which must be addressed, it is 
unfortunate that they continue to reject some of the most important 
goals of the legislation.
  First, their proposal applies only to ``commercial losses.'' It 
excludes consumer actions from the scope of the bill. I think this 
exclusion is misguided and merely strengthens the hand of the 
opportunistic lawyers.
  It denies the consumer the protections afforded by S. 96, including 
the ability to have problems fixed quickly and without the need for 
expensive litigation. It places a burden on those least able to afford 
legal counsel.
  Notwithstanding the purported attempt to cover consumer claims 
brought as class actions, in fact it provides a ``lawyers' loophole'' 
by permitting individual claims to be brought and consolidated or 
aggregated to avoid the notice and pleading requirements of the class 
action section.
  There are no punitive damage limitations or protections, either for 
business (large or small) or for governmental entities. Punitive 
damages are intended to punish poor behavior and deter a repeat of it 
in the future. Punitive damages do not have such an effect in Y2K 
litigation because of the uniqueness of the problem. Thus, in Y2K 
litigation, punitive damages become an incentive for ``jackpot 
justice'' and abusive litigation.
  The proportionate liability provisions are ineffective in preventing 
``deep pocket'' companies from being targeted by mass litigation.
  The approach of requiring a defendant to prove itself innocent in 
order to be assured proportionate liability is misguided and ignores 
the vast array of potential defendants and the myriad of factual 
situations which may be encompassed in a Y2K action. In particular, 
defendants who are in the middle of the supply chain may be sued for a 
breach of a contract caused not by the failure of the defendant's 
computers but by those elsewhere in the supply chain.
  Requirements in the Kerry proposal would result in that defendant 
being jointly and severally liable--an injustice. The result is, the 
deep-pocketed defendants will face needless and abusive litigation and 
will be subjected to either defending or settling such cases, 
regardless of their share of responsibility for causing the plaintiff's 
problems.
  The Kerry proposal also fails to encourage settlement of cases before 
trial. Defendants who do settle with the plaintiff should not be 
subjected to continued liability or responsibility for other 
defendants. This defeats the purpose of incentive for early settlement 
in mediation.
  The Kerry proposal rejects the protections for settling defendants 
contained in S. 96. The fair rule in this situation is that each 
defendant pays for the portion of the problem which that defendant 
causes. S. 96 provides that clear rule, with exceptions patterned after 
the Securities Act, as proposed by Senator Dodd.
  There are important differences as well. The Kerry proposal does not 
protect contracts as negotiated but permits them to be revised and 
overturned by uncertain common law. This results in the parties being 
uncertain of their duties and obligations under their contracts and 
will increase the likelihood of litigation. The proposal also too 
narrowly applies the economic loss rule, subjecting defendants to 
broader damages available under current law in most States.
  Taken as a whole, the Kerry proposal simply does not provide the 
solutions which are needed to the Y2K problem. It is a meager attempt 
to provide lip service to the business community while protecting the 
trial lawyers' income stream. I urge my colleagues to carefully review 
the details of the proposal and reject this form-over-substance 
amendment.
  I have taken a long time on this legislation. This is a very 
important issue, to say the least. It has a profound impact on our 
economy, on our country, and the lives of men and women who are engaged 
in small, medium, and large business throughout America.
  This substitute amendment is a good piece of legislation that 
deserves the support of the Senate. It is not perfect. It certainly 
does not provide a wish list of product liability or tort reform. The 
business community certainly would like more than what is in this 
compromise. The House passed a bill that contained many of the 
provisions we have eliminated to reach this bipartisan compromise.
  As in any negotiation process, there must be give and take. We have 
given a great deal. I remain convinced that the Y2K problem is real and 
must be addressed now. I believe that this substitute offered will 
achieve a just and reasonable approach to Y2K: Fair prevention, 
remediation, and litigation. This bill should not be further 
emasculated. It has the support of the broadest possible cross section 
of our Nation's economy. It is a bill which is good for our country. It 
will ensure that our economy is not derailed with opportunistic 
litigation.
  It is critical that it pass without further delay. I ask each of my 
colleagues for their support in bringing this bill to its final 
successful conclusion and enacting it into law.
  I thank the Senator from South Carolina, who I know has the very 
strongest views on this issue. He is a fierce fighter for the 
principles he believes in, which are obviously in opposition to this 
legislation. However, the Senator from South Carolina has allowed this 
bill to come to the floor. He could easily have blocked it further. I 
appreciate his cooperation in doing so.
  We have 12 amendments that are in order on each side. We would like 
to see those amendments, and we would like to start work on them so we 
can resolve those and perhaps get time agreements or accept those 
amendments on both sides.
  I thank my two dear friends who are on the floor today, Senator Wyden 
and Senator Dodd, without whose cooperation and effort we would never 
have reached this stage nor would we reach enactment of this 
legislation. The essence of doing business in this body on these kinds 
of issues is a bipartisan coalition. That is why we have a 60-vote 
rule, which many times I decry when I am pushing issues which have no 
more than 50 votes, such as campaign finance reform.
  I think it also compels Members to work in a bipartisan fashion so we 
can work together. I argue that at the end of the day the legislation 
is probably much better for it.
  If it is agreeable with the Senator from South Carolina, I will begin 
with colleagues on our side and then the other side of the aisle to 
begin addressing the amendments, so we can get agreement and time 
agreements so we can dispatch this legislation as soon as possible, 
although I know that the Senator from South Carolina will have a great 
deal to say on this issue, as he has in the past.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. Mr. President, the distinguished chairman is correct, 
the Senator has had sufficient time now during the negotiations over 
the past 4 weeks to consider, after hearings before our committee, all 
the different ramifications and contentions by the parties. It is the 
intent of Members on this side of the aisle to expedite the

[[Page 12048]]

vote on this particular measure whereby we will have only amendments 
that are germane to the particular issue, and that they be limited and 
there be no delaying conduct and action.
  I must address immediately some of the comments made by my 
distinguished colleague from Arizona with respect to trial lawyers, 
with respect to punitive damages, the lottery, and various other things 
that go without contest up here in Washington because they look good on 
a poll.
  If we were to poll the States' attorneys general or the Governors, 
they wouldn't be here at all. The State tort law has taken care of 
product liability, according to the American Bar Association, in a very 
efficient manner over the many years. In fact, we have the safest of 
all societies in America as a result of product liability. That is the 
subject at hand, of course--product liability--namely, the 
computerization, the software, the glitch or the Y2K problem that could 
occur January 1, 2000.
  Everybody is on notice for January 1, 2000. All of these measures 
before the Senate--the McCain-Wyden-Dodd amendment--say January 1, if 
we have a glitch, we should first talk about it for 2 or 3 months. We 
have 6 months right now. We have had 30 years.
  The computer industry, the software industry, has appeared before the 
committee. They have known about this problem for the past 30 years. 
Ross Perot says it is easy to fix; just take the year 1972; everything 
conforms in the year 2000 with the year 1972, and we have a fix.
  There are other sinister drives, motives, and intents behind this 
particular measure that must be surfaced at the very outset. This is 
not a product liability problem for the computer industry. They know 
and have warned everybody, and everybody is making tests. For example, 
the best of the best, some 2,000 leading industries, are named in March 
in Business Week. The market, of course, has taken care of the problem. 
It is a nonproblem, as far as Y2K, as far as computerization, as far as 
the product itself.
  There is another problem with respect to the Chamber of Commerce, the 
Business Roundtable, and that crowd coming in here and trying to 
diminish the rights of consumers, the protection for consumers, of all 
Americans.
  March 1 in Business Week, an article tells a story about Lloyd Davis, 
in his Golden Plains Agricultural Technologies, Colby, KS, business.
  He needs $71,000 to get his particular system Y2K-compliant. He has a 
problem. He can borrow up to $39,000, but he has not been able to 
borrow the rest of it.
  We are not talking about an injured party in an auto collision who 
has a bad back and brings a frivolous suit--nobody can tell whether the 
back is bad or not until after the verdict--and then walks away. That 
has happened in America several times. But these are substantial small 
businesses. I am quoting now from the article:

       Multinationals such as General Motors, McDonald's, Nike, 
     and Deere, are making the first quarter--or the second at the 
     latest--the deadline for partners and vendors to prove 
     they're bug free. A recent survey says that 69 percent of the 
     2,000 largest companies will stop doing business with 
     companies that can't pass muster.

  Mr. President, 2,000 companies of the blue chip corporations in 
America here are coming forward and saying--already, 2 months ago, 3 
months ago--if you are not compliant by the end of this month, June at 
the latest, we are going to have to find another supplier. We cannot 
play around. We have to do business. We are going to others:

       Cutting thousands of companies out of the supply chain 
     might strain supply lines and could even crimp output. But 
     most CEOs figure it will be cheaper in the long run to avoid 
     bugs in the first place.
       Some small outfits are already losing key customers. In the 
     past year, Prudential Insurance Co. has cut nine suppliers 
     from its ``critical'' list of more than 3,000 core vendors, 
     and it continues to look for weak links, says Irene Deck, 
     Vice President for Information Systems at the company. And 
     Citibank Vice President, Ray Apte, ``cuts have already been 
     made.''

  Mr. President, you are talking about frivolous lawsuits. Not with all 
this warning, with all the record made and public hearings here in the 
Government itself and the Congress, with all the chances to cure all 
the glitches. We have had chance upon chance upon chance and effort 
upon effort. The most recent one here, of course, was just a couple of 
weeks ago in the Washington Post:

       Banking regulators worried about the year 2000 readiness of 
     a big ATM service company in the west have just ordered it to 
     get in shape by June 30 or face possible contract 
     cancellations by its 750 bank customers.

  The point is, business is not telling business let's work it out in 
90 days, like the law that they propose. Business is telling business: 
Blam, you either get with it, business is business, or we are going to 
cut you off.
  As an old-time trial lawyer, the punitive damages they are talking 
about is only for willful neglect. By January 1, 6 months from now, we 
have this big debate, we have the best of minds, we have the best of 
witnesses, we have the best of software experts coming, everything 
else--we have the best of business leadership saying: Get with it or we 
are going to cut you off. If they have not gotten with it by January 1, 
that is willful neglect. All cases after January 1, under the record 
being made here in 1999 in the National Government, ought to indicate 
if there ever were an indication of willful neglect, willful 
misconduct, it would be now on Y2K.
  No, this is not really about business because business cannot wait 
around. Incidentally, the claimants are not frivolous--which is a 
remarkable thing, how they can tie people in. The National Federation 
of Independent Business ought to be standing here with me in this well, 
because the average computer for these small businesses, I would say, 
is around $20,000. These are not people willy-nilly looking for a 
lawsuit. They are not looking for a punitive damage lottery and all of 
that kind of nonsense that they make fun of here and try to stir up the 
emotions and say we have those old trial lawyers.
  The truth of the matter is, these small business people have to get 
on and do business. They have no time to get a lawyer and wait the 90 
days and come back around after 90 days, then file a pleading, and then 
on and on. Then under their particular bill, on joint and several--I 
cannot tell where the parts are made, but I guarantee the majority of 
the parts of the computers are made outside of the United States. If I 
cannot get joint and several, where am I going? To India, where a lot 
of the parts in computerization are made? Am I going to Malaysia to 
bring my suit? I am a small businessman.
  Oh, no, they have to get joint and several out of here. Why? On 
account of product liability, the Chamber of Commerce on account of Tom 
Donahue and Victor Schwartz. I have been here for 20 some years in the 
Federal Government proudly standing on the side of the American Bar 
Association, the Association of State Supreme Court Justices, the State 
legislators. They met and they back us up every time, because this is a 
problem at the local level that has long since been solved in tort law, 
in verdicts made there. But otherwise, long since, here, there is 
evidence upon evidence of businesses saying we cannot wait around for 
lawsuits and lawyers and punitive damages and everything else of that 
kind. We have to get on with it.
  But Silicon Valley has the money. People are falling over pell-mell. 
I wish we could have passed campaign financing reform because we are 
going to talk money out here on the floor, which is when this 
legislation really gets any kind of impetus or attention. Everybody 
wants Silicon Valley contributions. I do, too. But I cannot see 
changing 200 years of tort law in order to get it.
  Most advisedly, if General Motors came up here to the National 
Government and said: Look, we are going to put out a new model come the 
first of the year, and it might have some glitches. So, if we find any 
glitches in our 2000 year's model, what we need to do is get together 
with anybody who has a glitch, and let's talk to them for 2 or 3 
months. I don't know what they are supposed to do with the car during 
that time because it will not work.
  But that is the law they want to pass: let's talk about it for 90 
days.

[[Page 12049]]

How fanciful and nonsensical this whole move is. Thereafter, bring your 
lawsuit. By the way, everybody has known about this particular problem 
for years on end, every business magazine and everything else. But 
let's not have any punitive damages or willful misconduct. Let's not 
have any joint and several liability.
  General Motors would say: Senator, how about changing 200 years of 
the State tort law for me because I am going to put out a new model?
  You would run General Motors out of town. You would not listen to 
them at all. But General Motors is not up here making those kinds of 
contributions. Silicon valley is. Oh, boy, we can bring the records 
here and show just exactly what the issue is. Everybody wants to show I 
am a friend of technology.
  They do not have to talk to this Senator about technology. I authored 
the Advanced Technology Program. I authored the Advanced Technology 
Business Partnership Act. I have been working with the young 
computerization people and technology people for 20-some years at 
least. So don't tell me about technology and being a friend of 
technology. What they are is a friend of campaign contributions.
  So, you have the money marrying up with the manifest intent of the 
Chamber of Commerce, the Business Roundtable, the Conference Board, the 
National Association of Manufacturers and the National Federation of 
Independent Business. The reason I can correlate them so easily is I 
had to face them last year in the campaign. Of course the Chamber of 
Commerce endorsed my opponent because I was such a sorry Senator. Then 
in February they gave me the Enterprise Award for the year 1998, since 
I had done such a good job. They do not have any shame. That is the 
bunch with the most gall I ever met to come around, take the fellow 
they opposed, and then give him an award for doing such an outstanding 
job; the very reason, such a sorry job, why they opposed him. But that 
is the kind of shenanigans we have going on and giving it an official 
recognition here.
  Do not let me leave out the insurance companies. The insurance 
companies out there right now are at a hearing, Mr. President, before 
your subcommittee and mine: ``No fault.'' But they have a different 
name for it.
  It has not worked. They have tried it in Connecticut, they have tried 
it in Georgia, they have tried it in Nevada, but it has not worked, and 
they canceled it out. We do not need a hearing. We have the actual 
experience in the States. But the insurance companies, at every turn, 
are in here driving to change the laws here, there and yonder for 
money, to increase their profits.
  I have been at the State level and have been a sort of States rights 
Senator. I have been defending insurance at the State level, saying it 
has been regulated.
  They have come with Y2K; they have come with product liability; they 
have come with auto choice. They call it no fault. They want a little 
tidbit here and a little tidbit there. Let's federalize interstate 
commerce--if any business is an interstate commerce--and let's 
federalize the insurance industry in the United States and set the 
rules for all 50 States, and then they will not have to qualify it.
  I bring these things out because they are most important, for the 
simple reason that the trial lawyers, for example, and punitive 
damages--both--do a wonderful job for America.
  Let's go back to the leading case: the Pinto case back in 1978. There 
is an outstanding attorney in California named Mark Robinson. He got a 
verdict for $3.5 million actual damages and $125 million punitive 
damages. He never collected a red cent of the punitive damages.
  When the Senator from Arizona gets up here and talks about the 
punitive damages lottery, the American Bar Association said less than 4 
percent of all tort cases result in a punitive damage verdict, and half 
of those are reversed again on appeals. So we are talking about less 
than 2 percent. He is up here describing it as ``just roll the dice and 
we can get a lot of money and we have a lottery coming.''
  What has that punitive damage verdict done? Go over, as I have done, 
to the National Safety Transportation Board and you will find out that 
in the last 4 years--Mr. President, I want you to listen to this 
statistic--they have had 73,854,669 vehicle recalls. There were some 
last week. Chrysler was recalling some cars. Another one had something 
to do with the ignition; it was causing fires. Another one had 
something else wrong with it. We are constantly getting the recalls. 
Why? Not because they love safety, but because of the punitive damage 
lottery and the trial lawyers; they are going to get them.
  On a cost-benefit basis, in the Pinto case, they said do not worry 
about it, we can kill a few, let the gas tank explode and let them die; 
but the cost of those deaths is not near as much as the profit we make 
on selling the car.
  On cost-benefit, as a result of trial lawyers, we have had, just in 
the last 4 years, 73 million recalls. That has promoted tremendous 
safety in America, has saved thousands of lives, millions of injuries, 
I can tell you that. If they want to give a good Government award to 
anybody with respect to bringing about safety in America, find Mark 
Robinson in San Diego and give him the award, because I am proud of him 
and America is proud of him.
  The trouble is, they are being derided and rebuked and defamed in the 
National Congress because we have a bunch of Congressmen and Senators 
who have never been in a courtroom, never tried a case, do not 
understand that people do not have time for frivolous lawsuits. Trial 
lawyers know they take on all the expenses, they take on all the time 
and effort for the discovery, for the interrogatories, for all the 
motions, all the appearances, thereupon the trial and thereupon--this 
is what they call a lottery--get all 12 jurors by the greater weight of 
the preponderance of evidence, take the case on appeal and get a 
verdict from the Supreme Court, and then they get that fee they all 
talk about now in the tobacco cases.
  The trial lawyers have done more than Koop and Kessler. I have been 
up here working with them on cancer. I have received national awards, I 
can say immodestly. I helped and worked and got a center for this 
particular disease, but I can tell you advisedly, after 32-some years, 
these trial lawyers on smoking, on lung cancer, on heart attacks, 
saving lives, preventing cancer deaths, have done way more than Koop 
and Kessler, because we used to meet out here and nobody would pay 
attention to Koop and nobody would pay attention to Kessler. When the 
trial lawyers then started bringing the cases and getting these 
settlements, it was not the fees that they got but, more or less, the 
good that they brought to our society. Let's give them the good 
Government award this morning.
  I want to clear the air here because we have just run into all of 
this lottery stuff and spurious suits and frivolous suits. This case 
involves small business folks who have put $20,000 or more into a 
computer, and they are trying, like the doctor who appeared before the 
committee, their dead-level best to get some results because they are 
not waiting, of course, until January 1, 2000.
  We had the testimony of Dr. Robert Courtney on February 9, 1999, 
before the Committee on Commerce, Science, and Transportation. The good 
doctor was from Atlantic County, NJ. I had never met him before, but he 
gave an outstanding recount.
  I ask unanimous consent that his statement be printed in the Record.
  There being no objection, the statement was ordered to be printed in 
the Record, as follows:

 Testimony of Dr. Robert Courtney at the Senate Committee on Commerce, 
Science, and Transportation Hearing on S. 96, the Y2K Act, February 9, 
                                  1999

       Good morning, my name is Bob Courtney, and I am a doctor 
     from Atlantic County, New Jersey. It is an honor for me to be 
     here this morning, and I thank you for inviting me to offer 
     testimony on the Y2K issue.
       As a way of background, I am an ob/gyn and a solo 
     practitioner. I do not have an office manager. It's just my 
     Registered Nurse, Diane Hurff, and me, taking care of my 2000 
     patients.
       These days, it is getting tougher and tougher for those of 
     us who provide traditional, personalized medical services. 
     The

[[Page 12050]]

     paperwork required by the government on one hand, and by 
     insurance companies on the other is forcing me to spend fewer 
     hours doing what I do best--taking care of patients and 
     delivering their babies.
       But it was a Y2K problem which recently posed a serious 
     threat to my practice, and that is why I am here this 
     morning.
       As a matter of clarification, although I am a doctor, I am 
     not here to speak on behalf of the American Medical 
     Association. Although I am also a small businessman, I am not 
     here to speak on behalf of the Chamber of Commerce. I cannot 
     tell you how these organizations feel about the legislation 
     before the Committee. But I can tell you how it would have 
     affected my practice and my business.
       I am one of the lucky ones. While a potential Y2K failure 
     impacted my practice, the computer vendor that sold me the 
     software system and I were able to reach an out-of-court 
     settlement which was fair and expedient. From what my 
     attorney, Harris Pogust, who is here with me today tells me,
       I doubt I would have been so lucky had this legislation 
     been in effect.
       In 1987, I purchased a computer system from Medical 
     Manager, one of the leading medical systems providers in the 
     country. I used the Medical Manager system for tracking 
     surgery, scheduling due dates and billing. The system worked 
     well for me for ten years, until the computer finally crashed 
     from lack of sufficient memory.
       In 1996, I replaced my old system with a new, state of the 
     art pentium system from Medical Manager for $13,000. This was 
     a huge investment for a practice of my size.
       I remember joking with the computer salesman at the time 
     that this was a big purchase for me, and that I was counting 
     on this system to last as long as the last one did.
       I remember the salesman telling me that he was sure that I 
     would get at least ten years out of it. He showed me a list 
     of how many of his local customers had used the Medical 
     Manager for longer than ten years.
       And, the salesman pointed me to this advertising brochure 
     put out by Medical Manager. It states that their product 
     would provide doctors with ``the ability to manage [their] 
     future.''
       In truth, I never asked the salesman about whether the new 
     system that I was buying was Y2K compliant. I honestly did 
     not know even to ask the question. After all, I deliver 
     babies. I don't program computers. Based on the salesman's 
     statements and the brochure, I assumed the system would work 
     long into the future. After all, he had promised me over ten 
     years' use, which would take me to 2006.
       But just one year later, I received a form letter from 
     Medical Manager telling me that the system I had just 
     purchased had a Y2K problem. It was a problem that would make 
     it impossible for me to schedule due dates or handle my 
     administrative tasks--as early as 1999.
       Medical Manager also offered to fix the problem that they 
     had created--but for $25,000.
       I was outraged, as I suspect anyone sitting around this 
     table would be. The original system had cost me $15,000 when 
     I purchased it in 1986. The upgraded system cost me $13,000 
     in 1996. Now, a year later, they wanted another $25,000. They 
     knew when they sold me the $13,000 system that it would need 
     this upgrade--but of course, they didn't tell me.
       I wrote back to the company that I fully expected them to 
     fix the problem for free, since I had just bought the system 
     from them and I had been promised that it would work long 
     into the future.
       The company ignored my request, however, and several months 
     later, sent me an estimate for fixing the problem--again, for 
     over $25,000.
       At this point, I was faced with a truly difficult dilemma. 
     My practice depends on the use of a computer system to track 
     my patients' due dates, surgeries and billings--but I did not 
     have $25,000 to pay for an upgrade. Additionally, I was 
     appalled at the thought of having to pay Medical Manager for 
     a problem that they had created and should have anticipated.
       If I had to pay that $25,000, that would force me to drop 
     many of my indigent patients that I now treat for free. Since 
     Medical Manager insisted upon charging me for the new system, 
     and because my one year-old system was no longer dependable, 
     I retained an attorney and sued Medical Manager to fix or 
     replace my computer system at their cost.
       Within two months of filing our action, Medical Manager 
     offered to settle by providing all customers who bought a 
     non-Y2K compliant system from them after 1990 with a free 
     upgrade that makes their systems Y2K compliant by utilizing a 
     software ``patch.''
       This settlement gave me what I wanted from Medical 
     Manager--the ability to use my computer system as it was 
     meant to be used. To my great satisfaction, the legal system 
     worked for me and the thousands of other doctors who bought 
     Medical Manager's products since 1990. In fact, since I 
     brought my claim against Medical Manager, I have received 
     numerous telephone calls and letters from doctors across the 
     country who had similar experiences.
       Additionally, even Medical Manager has stated that it was 
     pleased with the settlement. According to the Medical Manager 
     president who was quoted in the American Medical News, 
     ``[f]or both our users and our shareholders, the best thing 
     was to provide a Y2K solution. This is a win for our users 
     and a win for us.'' [pick up article and display to Senators] 
     I simply do not see why the rights of doctors and other small 
     businesses to recover from a company such as Medical Manager 
     should be limited--which is what I understand this bill would 
     do. Indeed, my attorney tells me that if this legislation had 
     been in effect when I bought my system, Medical Manager would 
     not have settled. I would still be in litigation, and might 
     have lost my practice.
       As an aside, at roughly the same time I bought the non-
     compliant system from Medical Manager, I purchased a sonogram 
     machine from ADR. That equipment was Y2K compliant. The 
     Salesman never told me it was compliant. It was simply built 
     to last. Why should we be protecting the vendors or 
     manufacturers of defective products rather than rewarding the 
     responsible ones?
       Also, as a doctor, I also hope the Committee will look into 
     the implications of this legislation for both patient health 
     and potential medical malpractice suits. This is an issue 
     that many doctors have asked me about, and that generates 
     considerable concern in the medical community.
       In sum, I do appreciate this opportunity to share my 
     experiences with the Committee. I guess the main message I 
     would like to leave you with is that Y2K problems affect the 
     lives of everyday people like myself, but the current legal 
     system works. Changing the equation now could give companies 
     like Medical Manager an incentive to undertake prolonged 
     litigation strategies rather than agree to speedy and fair 
     out-of-court settlements.
       I became a doctor, and a sole practitioner, because I love 
     delivering babies. I give each of my patients my home phone 
     number. I am part of their lives. This Y2K problem could have 
     forced me to give all that up. It is only because of my 
     lawyer, and the court system, that I can continue to be the 
     doctor that I have been. This bill, and others like it, would 
     take that away from me. Please don't do that. Leave the 
     system as it is. The court worked for me--and it will work 
     for others.
       Thank you.

  Mr. HOLLINGS. I thank the distinguished Chair.
  I will run right down, trying to save time. It says:

       But it was a Y2K problem which recently posed a serious 
     threat to my practice, and that is why I am here this 
     morning.
       As a matter of clarification, although I am a doctor, I am 
     not here to speak on behalf of the American Medical 
     Association. Although I am also a small businessman, I am not 
     here to speak on behalf of the Chamber of Commerce. I cannot 
     tell you how these organizations feel about the legislation 
     before the committee. But I can tell you how it would have 
     affected my practice and my business.
       I am one of the lucky ones. While a potential Y2K failure 
     impacted my practice, the computer vendor that sold me the 
     software system and I were able to reach an out-of-court 
     settlement which was fair and expedient. From what my 
     attorney, Harris Pogust, who is here with me today tells me, 
     I doubt I would have been so lucky had this legislation been 
     in effect.
       In 1987, I purchased a computer system from Medical 
     Manager, one of the leading medical systems providers in the 
     country. I use a Medical Manager system for tracking surgery, 
     scheduling due dates and billing. The system worked well for 
     me for ten years until the computer finally crashed from lack 
     of sufficient memory.
       In 1996, I replaced my old system with a new, state of the 
     art pentium system from Medical Manager for $13,000. This was 
     a huge investment for a practice of my size.
       I remember joking with the computer salesman at the time 
     that this was a big purchase for me, and that I was counting 
     on this system to last as long as the last one did.
       I remember the salesman telling me that he was sure that I 
     would get at least ten years out of it. He showed me a list 
     of how many of the local customers had used the Medical 
     Manager for longer than ten years.

  The salesman pointed out the advertising brochure, and so forth.

       But just one year later, I received a form letter from 
     Medical Manager telling me that the system I had just 
     purchased had a Y2K problem.

  Here comes business. This is the practice of the business that is 
going on here now in June of 1999, 6 months ahead of January 1, 2000. 
The computer people are moving in and they are saying: Wait a minute, 
you have got a Y2K problem.
  I quote again:

       It was a problem that would make it impossible for me to 
     schedule due dates or handle my administrative tasks--as 
     early as 1999.
       Medical Manager also offered to fix the problem that they 
     had created--but for $25,000.
       I was outraged, as I suspect anyone sitting around this 
     table would be. The original system had cost me $15,000 when 
     I purchased it

[[Page 12051]]

     in 1986. The upgraded system cost me $13,000 in 1996. Now, a 
     year later, they wanted another $25,000. They knew when they 
     sold me the $13,000 system that it would need this upgrade--
     but of course, they didn't tell me.
       I wrote back to the company that I fully expected them to 
     fix the problem for free, since I had just bought the system 
     from them and I had been promised that it would work long 
     into the future.
       The company ignored my request, however, and several months 
     later, sent me an estimate for fixing the problem--again, for 
     over $25,000.
       At this point, I was faced with a truly difficult dilemma. 
     My practice depends on the use of a computer system to track 
     my patients' due dates, surgeries and billings--but I did not 
     have $25,000 to pay for an upgrade. Additionally, I was 
     appalled at the thought of having to pay Medical Manager for 
     a problem that they had created and should have anticipated. 
     If I had to pay that $25,000, that would force me to drop 
     many of my indigent patients that I now treat for free.
       Since Medical Manager insisted upon charging me for the new 
     system, and because my one-year old system was no longer 
     dependable, I retained an attorney and sued Medical Manager 
     to fix or replace my computer system at their cost.
       Within two months of filing our action, Medical Manager 
     offered to settle by providing all customers who bought a 
     non-Y2K compliant system from them after 1990 with a free 
     upgrade that makes their systems Y2K compliant by utilizing a 
     software ``patch.''

  This witness appeared before the committee attesting to the fact that 
what really happened is the attorney put it on the Internet. Whoopee 
for the Internet. And once he got his case on the Internet, some 20,000 
purchasers in a similar situation started calling on the phone and 
filing in. Then on a cost/benefit--business is business--they knew what 
the law was. They knew they intentionally misled. The salesman had 
said: Man, this thing will last you more than 10 years, like your last 
system. In a year it was already on the blink. They wanted to charge 
$25,000--more than he paid for the first system and the upgrade 
combined.
  They got a free upgrade. They paid the lawyers, too. They were 
tickled to death to get out of this one after it got on the Internet.
  Let me quote:

       This settlement gave me what I wanted from Medical 
     Manager--the ability to use my computer system as it was 
     meant to be used. To my great satisfaction, the legal system 
     worked for me and the thousands of other doctors who bought 
     Medical Manager's products since 1990. In fact, since I 
     brought my claim against Medical Manager, I have received 
     numerous telephone calls and letters from doctors across the 
     country who had similar experiences.

  Reading on and skipping a good part, to conclude:

       I became a doctor, and a sole practitioner, because I love 
     delivering babies. I give each of my patients my home phone 
     number. I am part of their lives. This Y2K problem could have 
     forced me to give all of that up. It is only because of my 
     lawyer, and the court system, that I can continue to be the 
     doctor that I have been. This bill, and others like it, would 
     take that away from me. Please don't do that. Leave the 
     system as it is. The court worked for me--and it will work 
     for others.

  It is working all over the country, and, frankly, at a very minimal 
cost. The consummate sum total of all products--this is product 
liability matters--of all product liability verdicts does not exceed 
the $12.1 billion that Pennzoil received in a verdict against Texaco. 
When business sues business, oh, boy, as Senator Dirksen stood here at 
this chair and said: Then it gets into money. He said: A billion here 
and a billion there, and before long it runs into money.
  This is something to protect the consumers of America. It is very 
much needed. They are working on it at the State level, and they have 
plenty of notice. They do not need a bill to say, come January 1st, 
give them another 90 days. We are going to give them 90 days beginning 
right now with the debate. And we are going to give them another 60. 
Happy day. We are giving them more days right now.
  Just use the law, use your sense, do what business practices are 
doing all over the country. But there is no question that this thing 
here is just the footprint of a political exercise by those entities 
downtown at the Chamber, which I am embarrassed for because I used to 
be a champion of the Chamber of Commerce.
  Talk about a businessman's politician, I challenge anybody to meet 
the record we made bringing business, and continue to bring, to the 
State of South Carolina. Incidentally, none of them have said anything 
about Y2K; none of them have said anything about product liability.
  I remember taking another prospect the other day to Bosch. They make 
not only all the fuel injectors but all of the antilock brakes for 
Toyota and Mercedes and a 10-year contract for General Motors. Just 
going along down the line, I said: By the way, what do you have on 
product liability?
  The fellow got insulted. He said: Product liability? He ran over and 
said: Look here. He showed me a serial number on every one of the 
antilock brakes. He said: We would know immediately what went wrong.
  You see, substantive basic tort law brings about due care, brings 
about safety, brings about sound products. It is working in America. 
And here comes a bunch of pollster politicians and a downtown group, 
greedy as they are, trying to ruin small business, that is going to 
have a problem.
  Here is what the Washington Post, which is usually on the other side 
of trial lawyers and everything else of that kind, said:

       The Senate is considering a bill to limit litigation 
     stemming from the Year 2000 computer problem. The current 
     version, a compromise reached by Sens. John McCain and Ron 
     Wyden, would cap punitive damages for Y2K-related lawsuits 
     and require that they be preceded by a period during which 
     defendants could fix the problems that otherwise would give 
     rise to the litigation. Cutting down on frivolous lawsuits is 
     certainly a worthy goal, and we are sympathetic to litigation 
     reform proposals. But this bill, though better than earlier 
     versions, still has fundamental flaws. Specifically, it 
     removes a key incentive for companies to fix problems before 
     the turn of the year, and it also responds to a problem whose 
     scope is at this stage unknown. Nobody knows just how bad the 
     Y2K problem is going to be or how many suits it will provide. 
     Also unclear is to what extent these suits will be merely 
     high-tech ambulance chasing or, conversely, how many will 
     respond to serious failures by businesses to ensure their own 
     readiness.
       In light of all this uncertainty, it seems premature to 
     give relief to potential defendants. The bill is partly 
     intended to prevent resources that should be used to cure Y2K 
     problems from being diverted to litigation, but giving 
     companies prospective relief could end up discouraging them 
     from fixing those same problems. The fear of significant 
     liability is a powerful incentive for companies to make sure 
     that their products are Y2K compliant and that they can meet 
     the terms of the contracts they have entered. To cap damages 
     in this one area would encourage risk taking rather than 
     costly remedial work by companies that might or might not be 
     vulnerable to suits. The better approach would be to wait 
     until the implications of the problem for the legal system 
     are better understood. Liability legislation for the Y2K 
     problem can await the Y2K.

  That is the message of Business Week. It was very interesting that 
they reached the same conclusion. I quote from that March 1 article:

       Other industries are following suit.

  It went on to talk about the 2000.

       Through the Automotive Industry Action Group, General 
     Motors and other carmakers have set Mar. 31 deadlines for 
     vendors to become Y2K-compliant.

  There is the Pinto case. They know what is coming down the road. They 
run good business. If I was on the board of General Motors, I would say 
right on. We are not waiting for political fixes of tort law by 
politicians looking for silicon contributions.

       In March, members of the Grocery Manufacturers of America 
     will meet with their counterparts from the Food Marketing 
     Institute to launch similar efforts. Other companies are 
     sending a warning to laggards and shifting business to the 
     tech-savvy. ``Y2K can be a great opportunity to clean up and 
     modernize the supply chain,'' says Roland S. Boreham, Jr., 
     chairman of the board of Baldor Electric Co. in Fort Smith, 
     Arkansas.

  There you go. They look upon it as a wonderful business opportunity, 
the Y2K problem.
  They, in essence, are saying, come on. Let's have the problem. Let's 
find out who is efficient, who can really supply us. Let's find out who 
can become compliant in time. You still have 6 more months. But 
politicians are coming up here, we have to get there and identify. We 
have to get those contributions. We have to get with the Chamber of 
Commerce and Victor Swartz at the NAM and that crowd and

[[Page 12052]]

show them that we are good boys, and we are going to be on their voting 
charts that they will publish when I run for reelection and everything 
else. They have a political problem. It is not a Y2K problem. Business 
says, right on with the Y2K problem. We can clean up the supply chain, 
find out who is not really compliant and everything else early on here 
in 1999. We are not waiting for January 1, 2000.
  Right to the point, this particular legislation changes 200 years of 
tried and true tort law, all for a special group that has the 
unmitigated gall to come in and say all this about punitive damages, 
lotteries, trial lawyers, frivolous lawsuits, and everything else.
  Nothing is going to be frivolous after January. We have talked it to 
death already this year. They have published the business articles 
about it. Everybody has known about it. Every case, come January 1, 
ought to be punitive, I can tell you that, because they ought to know 
about it.
  My particular power company group has already met and they have 
tested to make sure it works. My State of South Carolina was just 
cited, by July 1 the entire State system will be ready and going. So 
everybody is doing it.
  What we see and hear at the Washington level with the McCain-Wyden 
amendment is, sit back, rest on your fanny, don't do anything. We are 
going to take care of you, because on the one hand we are going to 
provide a time that will put you out of business waiting the 90 days, 
because you are a small businessman and you have to do business. And 
then after the 90 days, we are going to say, by the way, the part was 
made in Malaysia, so you have the wrong party.
  Now, that is the game in this particular McCain-Wyden-Dodd amendment. 
It should be defeated outright.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. WYDEN. I thank the Chair.
  Mr. President, I am going to be brief this morning. I know my 
colleague from Colorado has been waiting. The Democratic leader of the 
Y2K effort, Senator Dodd, has also been waiting. I will be brief to 
begin.
  It is just a couple of hundred days to the new millennium. It seems 
to this Member of the Senate that how this body handles this 
legislation will say a great deal about our Nation's ability to keep 
our strong technology-oriented economy prospering in the next century.
  I believe that failure to pass this responsible legislation would be 
like sticking a monkey wrench in the high-tech engine that is driving 
our economic prosperity. There is no question that there are going to 
be problems early next year stemming from the Y2K matter. What is going 
to happen, however, is that the frivolous lawsuits will compound those 
problems.
  The sponsors of this legislation--the chairman of the committee, the 
Democratic leader of the Y2K effort, Senator Dodd, and myself and 
others who have been intensively involved--believe that with this bill 
our Nation will be in a better position to be on line rather than 
waiting in line for a courtroom date when the problems occur.
  We have heard my chairman, Senator Hollings, and others talk about 
the matter of changing jurisprudence in our country. Senator Hollings 
specifically, who I respect so much, talked about how 200 years of case 
law and jurisprudence is being changed.
  This is a very narrow bill. Senator Dodd and I insisted that there be 
a sunset date on this legislation. We believe, and all the evidence 
points to the fact, that we are going to see the problems stemming from 
Y2K trailing off 1 to 3 years into the new century. We have put a tight 
36-month sunset date on this legislation.
  This is not changing Anglo-American jurisprudence for all time. This 
is a narrow bill that will apply for 36 months so that we do not have 
to have, for example, a special session of the Senate early next year 
to deal with this problem.
  Mr. KERRY. Will my colleague yield for a question?
  Mr. WYDEN. I have been waiting about an hour. I will be happy to 
yield to my friend, who I know has also been doing a lot of work.
  Mr. KERRY. Mr. President, I ask my colleague if he might yield during 
the course of his statement so that we may have a good dialogue with 
respect to some of the issues he raises as he raises them.
  The PRESIDING OFFICER. The Senator from Oregon has the floor.
  Mr. WYDEN. Mr. President, I will be anxious to yield to my colleague 
from Massachusetts after I have had a chance for just a few minutes of 
discussion of this issue.
  I will take a minute and outline an example of the kind of issue that 
we are going to see early next century and how this legislation 
specifically responds to it.
  Let's say that Mabel's restaurant buys $10,000 worth of computers 
from the Jones Company and they crash on January 3 of next year. 
Mabel's restaurant loses a million dollars' worth of business as a 
result. Mabel writes to Jones Computer Company telling them that the 
crash was as a result of a Y2K failure; they want the computers fixed, 
she wants compensation for the million dollars.
  Here is what happens: The Jones Computer Company has to respond 
within 30 days of hearing from Mabel's restaurant. They can say: Yes, 
Y2K failure; we are going to fix the computer the way Mabel wants, and 
we are going to pay the million dollars as well. Or they can say: We 
will fix the Y2K problem, but we don't think we ought to be responsible 
for the entire million dollars' loss. Mabel and Jones Computer agree 
Jones ought to fix them, they negotiate and come up with what Jones is 
liable for, and if Mabel doesn't think she is getting everything she 
ought to, she can go out and sue Jones immediately. Or she can say the 
situation isn't fixed the way she wants it and she can go out and again 
file a lawsuit immediately.
  Now, some have said, well, what happens if the Jones Computer Company 
is bankrupt and insolvent? Well, Mabel can name in her lawsuit anybody 
she thinks is a responsible party. The jury will then decide what 
portion of the blame each potential defendant ought to bear. Virtually 
all of these cases are going to be decided on the basis of existing 
State contract and tort law. We lock into this legislation protection 
for existing contracts, and in virtually all of the cases State 
contract and tort law is going to be protected.
  So what you are going to have is a situation where Mabel's 
restaurant, if it isn't fixed to her satisfaction, can go to court 
essentially immediately and recover all of her economic damages. She is 
in a position, by the way, to recover up to a quarter of a million 
dollars in punitive damages. I made my career with the Gray Panthers, 
the senior citizens group, before I came to Congress and now for 18 
years in Congress, around consumer advocacy. It seems to me that is a 
pretty good deal, what I have outlined in this hypothetical case for 
this restaurant, for just about any consumer in our country.
  I want to talk specifically about whether Americans are losing any 
legal rights in this particular legislation. I guess we could say they 
are losing the right to sue for a few days. As I said, they can sue 
immediately if they choose to. But the reason we are trying to have 
that 30-day period for defendants is to make sure they fix people's 
problems. It is better to be on line than waiting in line for that 
court date.
  Second, I guess you can say the cap on punitive damages as it relates 
to small business means we are not going to stick it to small business. 
Well, I happen to think those small businesses are making an 
extraordinary contribution to our economy. So let's have a 
philosophical debate. The Senator from Massachusetts, who has worked 
hard on this issue, and I have a difference of opinion on that. We 
don't disagree on a whole lot of issues. I think we do disagree on that 
one. But I think we ought to protect the small businesses from these 
unlimited punitive damages.
  Third, I guess you can say our legislation does make some changes 
with respect to joint and several liability. What we are saying, 
however, is that anytime you have a corporate defendant who engages in 
egregious conduct,

[[Page 12053]]

rips off consumers, is guilty of fraud, joint and several liability 
applies in those kinds of instances. It also applies when we have 
individuals with a low net worth as well.
  I would like the Senate to also reflect on the fact that essentially 
what we are doing here is what we did in the Securities Litigation 
Reform Act. It parallels most of the key issues in that area.
  I want to wrap up by just mentioning briefly all of the major changes 
that were made in this legislation after it left the Senate Commerce 
Committee where Democrats, in a united fashion, opposed the bill.
  I mentioned the 3-year sunset provision. I want it understood by all 
Members of this body that I will be against any bill that comes out of 
the conference committee that doesn't have a sufficient sunset 
provision. This is not changing Anglo-American jurisprudence for all 
time; this is a 3-year bill. We insisted on it after it came out of the 
Commerce Committee.
  Second, the business community originally talked about a vague 
Federal defense that would essentially give them protection if they 
engage in reasonable efforts. On the basis of what we heard from the 
consumer groups, the Democratic leader of the Y2K effort, Senator Dodd, 
and I thought that was too vague, to give corporate defendants that 
kind of break. So we cut that out.
  Third, we dropped the new preemptive Federal standard for 
establishing punitive damages. The only people we are protecting are 
the small business people. We may have a philosophical difference of 
opinion on that. We think those folks deserve protection.
  On the question of joint and several liability, when it came out of 
committee, even if you engaged in fraud, even if you had a low-net-
worth defendant, there wasn't protection for the plaintiff. We insisted 
on those kinds of changes. We said if a corporate defendant engages in 
outrageous conduct, if they are trying to rip somebody off, you bet 
joint and several applies. Senator Dodd and I insisted on that 
provision as well.
  Also, a provision which is certainly not popular in the business 
community: There is liability for directors and officers if they make 
misleading statements or they withhold information regarding any actual 
or potential Y2K problems.
  So at the end of the day, I believe we have a balanced bill. The 
defendants have an obligation under this legislation to go out and cure 
problems, to get their businesses online and make sure they are in a 
position so that this technology-driven economy can continue to hum as 
it has. The plaintiffs have equal obligations. They have a duty to 
mitigate. So there are obligations on the part of the defendants and 
obligations on the part of the plaintiffs.
  But this is a narrow bill. It is going to discourage frivolous 
claims, but it is also going to make sure that those who have a 
legitimate, honest concern, as in that example of a small business I 
outlined here this morning, that that small business is going to be 
able to go after all of the parties, all of the parties responsible, 
and hold them liable for the portion of the problem to which they 
actually contribute. So I am very hopeful the Senate will pass this 
legislation.
  We heard mention of the trial lawyers on the floor of the Senate 
earlier. Probably, prior to my involvement in this legislation, I was 
considered one of the better friends of those folks. Mention was made 
of the tobacco issue. I was the Member of Congress who got the tobacco 
executives under oath to say nicotine was addictive, which I think has 
had a little bit to do with helping to protect kids and consumers in 
this country. So I don't take a back seat to anybody in terms of 
standing up for consumer rights.
  I say to the Senate today that as a result of months of difficult 
negotiations, led by the chairman of the Commerce Committee, Senator 
McCain, the Democratic leader of the Y2K effort, Senator Dodd, myself, 
Senator Feinstein, and others, we have brought a balanced bill to the 
floor of the Senate. It is going to ensure that we do not throw a 
monkey wrench into this technology engine that is doing so much to 
ensure our prosperity.
  Mr. DODD. Will my colleague yield?
  Mr. WYDEN. Yes.


                         Privilege Of The Floor

  Mr. DODD. Mr. President, I ask unanimous consent that Tania Calhoun, 
a fellow with the Select Committee on Y2K, be granted the privilege of 
the floor during consideration of the bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. Mr. President, I wish to again turn to the Y2K liability 
bill and the very real importance of this issue. As you know, I have 
served for the past year with Senator Bennett on the Senate Special 
Committee on the Year 2000 Technology Problem. For over a year, we have 
examined the coming millennium changeover and the possible problems 
associated with it. We have held hearings to examine the effects of the 
year 2000, including hearings on industry, finance, energy, 
telecommunications, international trade, community safety, health, and 
litigation. Throughout these hearings, the committee has become 
increasingly alarmed at both the perception and the reality of a 
gathering storm of potential liability and consequent litigation that 
could swamp our court system and impact our Nation's businesses.
  Mr. President, I would dare say that many Americans, have in one way 
or another felt the direct effect of our Nation's burgeoning wave of 
litigation that has been growing steadily over the past half century. 
Whether it be the increasing cost of health care, insurance premiums or 
consumer products, we have all experienced the results of litigation 
costs. Americans have become accustomed to living in a litigious 
society. Occasional abuses of the legal system generally arise from 
problems that are generally limited in scope. An example of this can be 
found within the securities industry where the legal system was no 
longer an avenue for aggrieved investors but rather had become a 
pathway for a few enterprising attorneys to manipulate legal procedures 
for their own profit. So-called strike suits were generated whenever 
stocks went down and sometimes when they went up. These costly suits 
were frequently settled by companies seeking to avoid the expense of 
protracted litigation. I authored litigation reform legislation, which 
passed despite a veto by the White House. In other words, I have 
strongly supported litigation reform efforts in the past. As with 
securities litigation reform, the need for Y2K litigation reform arises 
from a national problem yet it should be addressed with a narrowly 
tailored solution.
  Mr. President, only a narrowly tailored solution could effectively 
manage the demands of such a pervasive problem. Potentially, any 
business in the country might be swept into the Y2K problem, either 
because it is itself not prepared or because a firm it depends upon is 
not prepared. The Special Committee on Year 2000 has heard testimony 
that as many as 15 percent of the businesses in this country will 
suffer Y2K-related failures of some kind. Even now we read that small 
and medium-sized businesses across the globe are not taking the 
necessary steps to become Y2K-compliant, and many think they don't have 
a Y2K problem. Since businesses are interconnected these days, just one 
failure in one business may generate cascading failures that may then 
generate numerous lawsuits.
  The mere fact that this is such a pervasive problem is in itself the 
primary reason why litigation on this matter could cost in the hundreds 
of billions. It has been suggested that as a result of Y2K, the United 
States could easily find itself witnessing not only a huge surge in 
litigation, this potential litigious bloodletting could have long-term 
consequences on the economic well-being of our country. By now we have 
all heard that the cost of Y2K litigation could reach the astronomical 
figures. Various experts, including the Gartner Group from my own state 
of Connecticut, have estimated that the costs of litigation may rise to 
$1 trillion. Such estimates, and I must stress that these are only 
estimates, underscore the need for serious review and a

[[Page 12054]]

bipartisan approach to this issue. Massive amounts of litigation has 
the potential to overwhelm the court system, disrupting already-crowded 
dockets for years into the next millennium. We must be careful that an 
avalanche of lawsuits does not smother American corporations and bury 
their competitive edge. A maelstrom of class action lawsuits could have 
long-term consequences on the American economy and the American people.
  There are several things that should be absolutely understood about 
this bill, first and foremost, the provisions in this bill will sunset 
in 2003. Secondly, this bill will not affect the rights of plaintiffs 
and defendants in personal injury actions in any way. Most importantly, 
this bill seeks to encourage individuals and businesses to do all that 
they can do to make themselves Y2K compliant and to encourage efforts 
to mitigate Y2K related damages.
  This is a complex bill with many complex legal issues. Some of my 
colleagues are opposed to the section of the bill that provides for 
proportionate liability, which generally means that a defendant can be 
held liable only for the damages for which he is responsible. Some of 
my colleagues argue that it is unfair for an innocent plaintiff to run 
the risk that it might not recover 100 percent of its damages if it 
can't hold the defendant liable for that amount, even if that defendant 
was only responsible for 20 percent of those damages. I would respond 
by saying that not only is it equally unfair to demand that businesses 
with little complicity in a dispute be required to pay for most of the 
damages just because it has deep pockets. Moreover without some form of 
proportionate liability, plaintiffs' lawyers will always name a deep-
pocketed defendant in a suit because they know the deep-pocket will 
have to pay for all the damages even if that defendant is only 
marginally responsible. I would remind my colleagues that the bill 
retains joint and several liability in cases where the defendant acted 
with specific intent to injure the plaintiff or knowingly committed 
fraud and does not affect personal injury cases. As a result, the 
proportionate liability provision in this bill finds a reasoned balance 
between the rights of plaintiffs and the rights of defendants.
  As I have said on numerous occasions that a Y2K liability bill should 
not be a vehicle for broad tort reform. And efforts to impose broad 
caps on punitive damages are just that. The provisions that I propose 
aren't tort reform, but merely protect small businesses and the mom and 
pop enterprises by capping punitive damages only for small businesses 
that have 50 or less employees and caps damages at $250,000 or three 
times the compensatory damages, whichever is smaller. The White House 
has expressed concern about the bill's provisions for capping punitive 
damages, however as my esteemed colleague Senator Wyden pointed out the 
last time the Senate considered this issue during last year's products 
liability bill, it included a cap on punitive damages lower than this, 
and the White House agreed to this proposal. It is unclear then why 
they are opposing the cap in this bill which provides for more punitive 
damages.
  Other voices have suggested that this bill relieves businesses and 
corporations from accountability or responsibility. The bill does not 
do this, but does try to ensure that those who do sue will do so 
responsibly and specifically and that there will be ample opportunity 
for parties to solve the Y2K problem before litigating their Y2K 
problems. To ensure responsibility on the plaintiff's side, for 
example, the bill requires the plaintiff to provide specific details 
about the injuries they've suffered when they file a complaint. 
Plaintiffs who can articulate the nature of their injuries are less 
likely to be filing frivolous complaints. To ensure accountability on 
the defendants side, companies are given a narrow window of opportunity 
to solve any Y2K problems they've created before a lawsuit is filed. 
This window of opportunity gives them the chance to maintain a business 
relationship by providing professional and responsible service to their 
customers before the business relationship is soured by a lawsuit.
  There are those who say that state courts have been addressing issues 
like the Y2K problem for years and can continue to do so. They also say 
the state legislatures are fully capable of addressing the Y2K problem 
and that there is no need for the Federal Government to become 
involved. My colleagues should know, however, that nearly every state 
to date has either passed Y2K liability legislation or is considering 
such legislation, so Y2K actions in the future will probably not be set 
on long-standing state precedents. Instead, they may be decided under 
new untested and untried state laws. The bill provides in most cases, 
for uniform provisions to be applied to Y2K cases, enabling both 
plaintiffs and defendants to predict the law that applies to them. 
Furthermore, since all of these laws are different, firms engaged in 
interstate commerce--nearly every firm these days--will be at a 
disadvantage. It is difficult to do business where potentially 50 
different and changing sets of laws might apply. The bill's provision 
of generally uniform guidance for Y2K cases levels the playing field 
and reduces the cost of doing business for potential plaintiffs and 
potential defendants. Multiple sets of laws also raise the problem of 
forum shopping, which occurs when plaintiffs try to bring their 
lawsuits in states where the laws are most advantageous to them. This 
leads to imbalances in our state courts, and high costs for defendants. 
Since the bill provides for generally uniform standards across the 
country, forum shopping in Y2K cases will not be a problem. State 
courts can maintain balanced caseloads: and the cost of defending Y2K 
lawsuits will not be unreasonably high due to forum shopping.
  Some are of the view that the Y2K problem has been around for 40 
years and should already have been solved, and that the Senate has no 
business stepping in to protect the high-technology industry. And we 
should be clear, we are not trying to protect the high-technology 
industry, but instead we are trying to manage a problem for all 
business and individuals, the mom and pop grocery and the major 
enterprise. We are all plugged in today, and the bill speaks to the 
massive litigation boom that has the potential to bankrupt all kinds of 
businesses, costing individual Americans their livelihoods.
  While we are rushing to solve the Y2K problem and the policy issues 
therein, we should above all strive to enter the next century with a 
sense of vision, and this vision should include a prudent analysis of 
the looming challenges of potential Y2K litigation. As I have said 
before, no one wants to begin the next millennium by trading a vision 
of the future for a subpoena.
  I commend my colleagues from Arizona, Oregon and others who have 
worked so hard on this. I thank my colleague from South Carolina, the 
ranking Democrat of this committee. He feels very strongly about this 
legislation. It could have--as Members have the right to do--delayed 
action a long time on this. In fact, to be able to get to the 
consideration of it today is something that I deeply appreciate. We 
disagree on this matter. It is one of those rare occasions when we do. 
But, when we do, that is a normal way of conducting business.
  I happen to think this is a good bill. It is a practical bill. It is 
a 36-month bill--3 years. That is it. It is narrow in scope and narrow 
in time. It is a practical way to try to deal with a serious problem 
that looms on the horizon.
  We have to have balance. It incorporates the ideas that are fair to 
the plaintiffs and that are fair to the defendants. It allows 
resolution of these potential difficulties without having to get to 
court. We are a very litigious society. Every person in the country 
knows that. I think every effort that we can make to avoid going to 
court instead of rushing to fix the problem we ought to do. This bill 
tries to achieve that goal without denying people the right to get to 
court.
  I commend my colleagues in this effort. I hope that we can pass this 
bill today or tomorrow after covering a variety of amendments, and go 
to conference.

[[Page 12055]]

  I thank my colleague for yielding.
  Mr. WYDEN. Mr. President, I will yield the floor in just a moment.
  First, I thank the Democratic leader for the Y2K effort, and Senator 
Dodd for all of his counsel and help. He, of course, is the principal 
author on securities litigation legislation which, to a great extent, 
this bill is modeled after.
  Just before I yield the floor, I, too, want to say to Senator 
Hollings, the Democratic leader of the Commerce Committee, that I agree 
with so much of what he has done--whether it is a matter of Social 
Security surplus or campaign finance. I regret that on this one we have 
a difference of opinion.
  I think that we have brought a balanced bill to the floor of the 
Senate. But I look forward to the many other issues on which Senator 
Hollings and I are going to be in agreement.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Colorado is recognized.


                 Amendment No. 609 To Amendment No. 608

  (Purpose: To provide that nothing in this Act shall be construed to 
  affect the applicability of any State law [in effect on the date of 
  enactment of this Act] that provides greater limits on damages and 
               liabilities than are provided in this Act)

  Mr. ALLARD. Mr. President, I have an amendment at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative assistant read as follows:

       The Senator from Colorado [Mr. Allard] proposes an 
     amendment numbered 609 to amendment No. 608.

       At the end of the amendment, add the following:

     SEC.   . APPLICABILITY OF STATE LAW.

       Nothing in this Act shall be construed to affect the 
     applicability of any State law that provides greater limits 
     on damages and liabilities than are provided in this Act.

  Mr. ALLARD. Mr. President, first of all, I want to say that I support 
the piece of legislation that has been brought forward by Senator 
McCain, working with the Senator from Oregon, and also the efforts of 
the Senator from Connecticut in that regard.
  I believe that we need to address a very important issue that is in 
this amendment. I appreciate the work that Senator McCain and the 
Commerce Committee have done to craft this important and vital piece of 
legislation, especially in our high-technology society.
  I support this effort to encourage prompt resolution of Y2K problems, 
minimize business disruptions, and discourage unnecessary and costly 
lawsuits. However, I am concerned about one aspect of this proposal: 
State laws addressing year 2000 liability issues will be preempted by 
Senate bill 96 unless we specifically provide for protection of 
stronger State statutes. I am proposing an amendment to do just this.
  The Colorado State Legislature passed a strong statute which 
specifically addresses the Year 2000 liability issue.
  Our Governor signed the legislation on April 5, 1999, and it will be 
effective July 1, 1999.
  Colorado's law provides certain protections from damages for 
businesses that experience a year 2000 problem. While the intent of 
this state law is similar to that of S. 96, the state's protections are 
stronger than those proposed in S. 96.
  Colorado's statute will be overridden by the Federal legislation we 
are considering today.
  My State is not the only one in this situation; Texas, North Dakota, 
South Dakota, Virginia, Florida, and Arizona have also passed Year 2000 
liability legislation that is stronger than this Federal law would be 
in one way or another.
  The State laws are consistent with the intent of S. 96 and were 
supported by a broad cross-section of concerned groups.
  In addition, 17 other States have pending Y2K legislation that is 
near passage.
  We should not be working to nullify the States' efforts. I am 
offering this amendment in order to allow the greater State limits on 
damages and liabilities to stand.
  The intent of S. 96 as it relates to State law is confusing, and most 
troublesome is the provision stating that the Federal law will 
supersede State law to the extent that it is inconsistent with the 
Federal law.
  I am sure that several of my colleagues will be interested in 
protecting their States' Year 2000 liability laws.
  I encourage those Senators to support my amendment, and I encourage 
others to consider the justification for preempting State laws 
outright, especially those laws that establish stronger limits than 
proposed at the Federal level.
  I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  Mr. McCAIN. May I ask the Senator from Colorado to yield to me?
  Mr. ALLARD. I am glad to yield to the Senator from Arizona.
  Mr. McCAIN. I will tell my friend from Colorado that I believe we are 
going to accept the amendment. So the yeas and nays will not be 
necessary. So I request that he retract his request.
  Mr. ALLARD. Mr. President, I withdraw the request.
  Mr. HOLLINGS. Mr. President, let me commend the distinguished Senator 
from Colorado. This was exactly the intent when we reported this bill 
out by 11 to 9. Of the nine that was the main concern--that if there 
were a problem, we have laws to take care of these problems. We have 
had laws on the books for years. Business was moving.
  What the Senator is saying here in this particular amendment is that 
this shouldn't preempt any greater provisions of State law, that the 
State law would apply.
  I think it is an excellent amendment. I am glad to accept it.
  Mr. ALLARD. Mr. President, I thank both the manager for the minority 
and the manager for the majority for their favorable comments.
  Mr. McCAIN. Mr. President, I don't believe there is any further 
debate on the amendment.
  The PRESIDING OFFICER. Without objection, the amendment is agreed to.
  The amendment (No. 609) was agreed to.
  Mr. HOLLINGS. Mr. President, I move to reconsider the vote.
  Mr. McCAIN. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. McCAIN. Mr. President, I thank the Senator from Colorado. I think 
it is an important amendment. I appreciate not only his concern for the 
entire bill but for the State of Colorado, since this obviously would 
have an effect on the hard work of the State legislature and the 
Governor.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
  Mr. KERRY. Mr. President, at an appropriate time I may send an 
amendment to the desk. But I want to begin at least talking about where 
we are, where this bill currently puts us, and I have a number of 
points I would like to make in the effort to do that.
  I am struck by one thing that has just happened, which is why I am a 
little less hesitant.
  A few moments ago, the Senator from Colorado put in an amendment that 
preserved the State law; but at the same time the Senator from Oregon 
previously had made it very clear that their bill leaves in place the 
existing State law protections for consumers in both tort law and 
contract, but, in fact, what has happened is by virtue of the amendment 
just passed by the Senator from Colorado, they have actually changed 
that so that we have a different law for both contract and for tort.
  It seems to me the bill has already, suddenly, by acceptance, moved 
to a significantly different place from what they had intended. Maybe 
this will be worked out later. I think it certainly makes this bill 
more complicated in many regards and will probably give yet another 
reason for the White House to veto this.
  Let me state where I think we are with respect to this legislation. I 
supported willfully, happily, and with a sense of pride the securities 
reform legislation. Senator Dodd was a leader on that, and I voted for 
it and voted to override the veto of the President because I thought it 
was important to address what was an egregious overreach

[[Page 12056]]

within the legal community where we saw a pattern of abuse. We took 
action as a result of that. I think it was the right action.
  In addition, I also voted for tort reform with respect to the 
aircraft industry, because Senator Kassebaum appropriately brought 
legislation to the Senate that made it clear that liability issues with 
respect to manufacturers--and she represented a State which is the home 
base for Cessna, among other aircraft manufacturers--and we made an 
appropriate change in liability law in the capacity of lawyers to bring 
these so-called dreaded lawsuits that we hear a lot about on the Senate 
floor. I voted for that and we changed it. It was for the better.
  I say that because I want to make it as clear as I can in an 
atmosphere where people are quick to try to paint Members into a corner 
or sweep Members into one position of ideology or another. I am 
approaching this from a perspective of what I hope is common sense and 
fairness.
  I heard the distinguished Senator from Arizona--who is a great 
personal friend of mine and a man for whom I have enormous respect and 
a great relationship--say a few minutes ago, and I will certainly pass 
it off merely as rhetoric, that the amendment I will offer is ``form 
over substance'' and it is designed to ``protect the income stream of 
the trial lawyers.'' It is exactly that kind of polarization in the 
rhetoric that is preventing Members from looking at what the Senate may 
or may not do here, what the Congress may or may not do, and what may 
happen to the American citizens that we represent.
  I challenge my colleagues to show me one piece of language in the 
amendment that I will submit that makes it easier for a lawyer to bring 
a lawsuit. There is not one. In point of fact, every point raised by 
the high-technology community that they wanted Members to address is 
addressed in their favor--in favor of the high-tech community. They 
wanted a period to cure; we provide a period to cure. They wanted 
mitigation; we put a responsibility on plaintiffs to mitigate. They 
wanted economic loss and contract preserved; we preserve contract law. 
Finally, they wanted proportionality; all we require for them to 
qualify for proportionality is that they act as a good citizen and do 
two things: We ask they identify the potential in the product they make 
for a Y2K failure, and having done so, we ask that they let their 
purchasers, their clients, know of that potential.
  That is all we ask. We don't ask that they fix it. They have a duty; 
they have a period of cure within which they can fix it. If they fix it 
within the duty, a period of cure, as the McCain bill, they would be 
free from any lawsuit.
  That doesn't help plaintiffs. That is not a plaintiff's bill. That is 
not an effort to maintain the revenue stream for lawyers.
  Let's talk about the reality of what is happening here. The reality 
is that an industry is coming to the Congress for the first time in 
American history and asking for prospective anticipatory relief from 
liability for something they make--the first time ever.
  What would happen if Ford Motor Company came in here and said: Gee, 
we produced a car that instead of turning right while turning the wheel 
right, turns left. Forgive us. We will fix it. Don't worry.
  There are similar ways in which companies could come to a Senator and 
say they don't want to be held liable because they ``kind of overlooked 
something.''
  As the Senator from South Carolina said a little while ago, 20 years 
ago people knew about this. The founder and executive director of RX 
2000 Solutions Institute said:

       I am a former computer programmer who used two digits 
     instead of four to delineate the year. Granted, this was more 
     than 20 years ago, but even then I was aware of the anomaly 
     posed by the year 2000. When I expressed concern to my 
     supervisor, he laughed and told me not to worry.

  The Y2K bug is not something that just fell out of the sky. The Y2K 
bug is not a freak occurrence that happened as a God-given act. The Y2K 
problem is a result of conscious choices that people made or didn't 
make, deliberate decisions made to delay fixing a problem. They have 
led us to where we are now.
  I represent high-technology companies, and I am very proud of them. I 
have had the support of high-technology CEOs, workers, and employees. I 
truly have a respect for the entrepreneurial capacity and the 
extraordinary path they are leading us on that is second to nobody in 
the Senate, and I understand the nature and complexity of this Y2K 
problem that suggests we don't want to have a wholesale slug of 
lawsuits that clog the courts, that create the capacity for small 
companies to tie up their capital, to diminish further entrepreneurial 
effort, to reduce creativity.
  I understand all of those arguments. Together with Senator Robb, 
Senator Daschle, Senator Reid, Senator Mikulski, and Senator Akaka, I 
am offering a compromise. It is not everything that the Chamber of 
Commerce wants, and it sure isn't everything the lawyers want. However, 
it is common sense, and it will be signed by the President of the 
United States into law. The bill that is being offered by Senator 
McCain and others will not in its current form be signed into law.
  If Members are really concerned about the Y2K problem and want to do 
something about it, we have an opportunity to legislate on the floor of 
the Senate in a way that is fair, that makes sense, and that will help 
the companies deal with Y2K, and at the same time, it doesn't turn 
around and ignore common sense about how to leverage good behavior 
within the community.
  People ask, What are the real differences between this bill and 
Senator McCain's bill? I will get to that. I will explain that. Two of 
the most important are on the issue of proportionality. That takes a 
little bit of explanation. Not everybody in the Senate is a lawyer. 
There are 55 Members who are, but even among lawyers there has always 
been a great tension on this issue of joint and several liability 
versus proportional damages.
  Under the bill that Senator McCain, Senator Dodd, and Senator Wyden 
are offering the Senate, a company will automatically get proportional 
liability. They don't have to be a good citizen. They don't have to go 
out and remediate, even though they say that remediation is the purpose 
of their legislation. There is no leverage in getting out of joint and 
several liability that encourages them to remediate. They automatically 
get proportional damages. The bill gives it to them right up front--
automatic. So they could display the most negligent, the most reckless 
behavior, and still they get it. Is that possible? Some people will sit 
here and say no, that is not going to happen.
  Look at the instance the Senator from South Carolina talked about. 
Ford Motor Company is historically recorded as having made a conscious 
business decision to measure how much it cost them to move the gas 
tanks and fix the gas tank problem versus the potential of damages. 
They chose not to move it and ultimately it caught up to them in a 
famous, famous case and they paid the price. That is why we have had 
something called punitive damages.
  Punitive damages are not, as the Senator from Arizona said, simply to 
deter. Punitive damages are punitive. They are to punish in addition to 
deter. The deterrence is not just as to the behavior of the entity that 
is creating the problems. The deterrent is as to other potential 
entities, in the future. The reason we have the potential of punitives 
within the legal system is not just to deter behavior among a 
particular set of actors engaged in a particular behavior at a 
particular time. It is to say to other actors at a future time: If you 
do not heed the warning that the products you make could subject you to 
particular kinds of damages, then you, too, may be subject to them in 
the future. That is why, today, young kids have pajamas that don't 
catch on fire. That is why, today, people have all kinds of products in 
their homes where people are sensitive to what the impact of that 
product may be on a user.

[[Page 12057]]

  My colleagues come in here and say we don't want punitives. These 
outrageous lawyers are going to come in and maybe get a punitive damage 
verdict. Let me tell you what my colleagues, either inadvertently or 
willfully, are doing. They are protecting companies from a requirement 
that the behavior they engage in has to be--let me make this very 
clear. Punitive damages are only awarded if a plaintiff can show the 
defendant acted in the worst activity possible, worse than mere 
negligence. We are talking about a defendant who has to commit either 
an intentional tort or otherwise here, because in their bill they have 
a very narrow limitation as to who will qualify for joint and several, 
very narrow. The fact is, they will exempt anybody who acts willfully, 
wantonly, maliciously, recklessly or outrageously.
  I ask a simple question: What is the public policy rationale for 
coming in here and saying that a company that acted maliciously, 
willfully, recklessly, outrageously should somehow be completely 
exempted from the potential of joint and several liability and have a 
blanket exemption even before the fact? I do not understand that. I do 
not understand the public policy. Just because we do not like lawyers, 
just because on a few occasions there have been a couple of bad jury 
verdicts of punitive damages--which in every occasion, I say to my 
friends, have been reduced by the court on appeal. Those never get 
paid. They are great for headlines. They are wonderful for bad 
reputations for lawyers. But they don't get paid because the courts 
reduce them.
  So I do not want to come here to the floor of the Senate and battle 
phantoms. I don't want to battle dragons that do not exist. I want to 
deal with the real problem of Y2K, and we deal with the real problem of 
Y2K because we make it tougher for lawyers to bring cases. I agree with 
what my colleague, the Senator from Connecticut, said a few minutes 
ago. He said we, in a litigious society, do not want a lot of frivolous 
lawsuits. We do not want to be caught up in court with a whole lot of 
lawsuits that are inappropriate.
  I agree with that. I was outraged when I heard about lawyers 
automatically triggering lawsuits by computer when stocks changed and 
so forth. That is an abuse of the system. We ought to do everything in 
our power to require that the Federal courts, through the rules that 
are available to them, hold lawyers accountable so that frivolous 
lawsuits are denied and so forth. But we go farther than that. In my 
amendment, on Y2K we in fact lay out a series of requirements that make 
it much tougher for any lawyer to bring a case. Just like the 
legislation of Senator McCain, ours is a 3-year bill. But ours is a 3-
year bill that does not harm consumers. Ours is a 3-year bill that has 
a fair balance between this interest for remediation or mitigation and 
what we are prepared to contribute to the well-being of the whole 
industry, to blanket the whole industry.
  Let me be specific about what I mean by that. The Y2K bill of Senator 
McCain and company provides you automatically get proportionality, 
proportional damages. Ours says you have to do two things. You have to 
make the effort to identify the potential for a Y2K failure and then 
put out the information to the people you have dealt with about that 
potential.
  The purpose of this legislation is to get companies to fix the 
problem ahead of time. In order to get a company to fix the problem 
ahead of time, you want to have the maximum incentive to the company. 
So if you say to the company: Look, you can have the lower standard. 
You can have what you want--which is you can get out from under joint 
and several; you can have proportional liability--but we want you to do 
something so you will encourage the very remediation and mitigation we 
are looking for. We want you to look at your products and see what the 
potential is for one of them to have a Y2K failure. When you find the 
potential, we want you to be a good citizen and tell the people who 
bought the things from you about it.
  Why is that better than Senator McCain's bill? It is better because 
of the Pinto principle. Some companies may look at the situation and 
say: Hey, the Senate just gave us proportional liability and we don't 
even have to worry about paying the full 80 percent if we think we have 
only 20 percent liability because we don't have to do anything. They 
gave it to us. It is cheaper for us not to fix it and wait and see if 
anybody comes after us. And when they do come after us, all we are 
going to have to do is do the 20 percent, not the 80 percent. I ask my 
colleagues, how is that an incentive for the good fixing of the problem 
beforehand that we are seeking?
  The answer is, it is not. It will have exonerated people before the 
fact from the very thing we are trying to encourage, which is the 
incentive to fix it.
  I find it very hard to believe that my colleagues in the Senate want 
to vote against asking companies to be good citizens. I find it hard to 
believe that my colleagues are unwilling to say a company ought to just 
look for the potential of failure. We do not require that they 
absolutely find it. We do not require that they identify it. They have 
to make a good-faith effort to look for it.
  Every company with whom I have talked tells me they have already done 
that. Most companies tell me they qualify today and they would accept 
that standard. I am proud to say that a company--I have a letter 
received today from Brian Keane who is co-president of the Keane 
Company headquartered in Boston, MA. It is a $1.1 billion information 
technology corporation and has over 12,000 employees located in 26 
States. I quote from part of the letter, which I ask unanimous consent 
be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                                  Keane, Inc.,

                                         Boston, MA, June 8, 1999.
     Hon. Senator John Kerry,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kerry: Keane, Inc. is a publicly traded, $1.1 
     billion information technology corporation with over 12,000 
     employees located in 26 states. As you know, Keane is 
     headquartered in Boston, Massachusetts.
       We are encouraged by your leadership role in the ongoing 
     debate over the Y2K liability legislation. Keane is concerned 
     that this important legislation is being used as a 
     ``political football'' and would encourage all parties 
     engaged in the debate to work together to craft legislation 
     that will not only pass the Senate and the House, but also be 
     signed by the President. Y2K liability legislation is a 
     matter of great importance to Keane because, over the past 
     three years, Keane has worked with literally hundreds of 
     American companies to help them solve the Y2K problem.
       Keane believes the most recent draft of the Kerry language 
     is a politically viable solution, because it serves the 
     purpose of protecting against frivolous Y2K litigation and 
     would be signed by the President.
       Opponents of the Kerry bill argue that it does not 
     adequately address the distribution of damages to responsible 
     parties. However, Keane believes that the proportional 
     liability language in the Kerry bill addresses this issue. 
     Specifically, your staff has assured us that your language 
     would protect defendants who demonstrate that the plaintiff 
     restricted access to or failed to notify the defendant about 
     any function(s) that could corrupt other Y2K vulnerable 
     systems and defendant's who (1) performed a reasonable 
     assessment with a defined methodology for resolution of the 
     plaintiff's Y2K vulnerability prior to implementing a 
     solution; or (2) implemented the Y2K solution with 
     coordinated-comprehensive testing and quality assurance 
     processes; or (3) secured, after completion of the 
     remediation or testing, a formal acceptance agreement from 
     the plaintiff. With such protections, Keane can endorse the 
     Kerry language without reservation.
       We appreciate your attention and leadership on this very 
     serious matter and look forward to working with your office 
     in the future.
           Sincerely,
                                                      Brian Keane,
                                                     Co-President.

  (Mr. BUNNING assumed the Chair.)
  Mr. KERRY. It says:

       Keane believes the most recent draft of the Kerry language 
     is a politically viable solution, because it serves the 
     purpose of protecting against frivolous Y2K litigation and 
     would be signed by the President.
       Opponents of the Kerry bill argue that it does not 
     adequately address the distribution of damages to the 
     responsible parties. However, Keane believes that the 
     proportional liability language in the Kerry bill addresses 
     this issue. Specifically, your staff has assured us that your 
     language would protect

[[Page 12058]]

     defendants who demonstrate that the plaintiff restricted 
     access to or failed to notify the defendant about any 
     function that could corrupt other Y2K vulnerable systems and 
     defendants who (1) performed a reasonable assessment with a 
     defined methodology for resolution of the plaintiff's Y2K 
     vulnerability prior to implementing the solution, or, (2) 
     implemented the Y2K solution with coordinated comprehensive 
     testing and quality assurance processes. . . . Keane can 
     endorse the Kerry language without reservation.

  I believe that is reasonable, and I believe it is reasonable because 
they have looked at the reality of the language we have put forward. I 
want to go through a little bit of this now.
  The McCain bill does not protect the individual consumer. They are 
requiring the individual person to go through the same hoops and the 
same requirements as a corporation. Again one has to ask: What is the 
public policy rationale for asking one--let's say one of these people 
sitting up in the gallery is assured, when they buy an alarm system for 
their house, that the alarm system is Y2K compatible. But they leave to 
go on vacation, the alarm system fails in the year 2000, their house is 
robbed, and they want recoupment.
  They have to go through every hoop of a large corporation. They 
cannot go right in, file their suit, and get redress. They are going to 
have to be treated like the other corporate entities, and they cannot 
even get the discovery. They are left as powerless as, unfortunately, 
the average consumer is in our society today.
  Again, when one looks at public policy rationale, it is hard to 
discern, and this is the main reason: Most of the Y2K problems that 
people are envisioning are corporation to corporation. We are talking 
about contract law. Most of this is contract law, and what we are 
talking about are companies that are going to have an interest 
conceivably in suing another company because the product they bought 
from that company does not do what the company that sold it to them 
said it would do.
  Maybe under their warranties, just under the contract, it will be 
taken care of. But what the McCain bill wants to do is say to every 
American consumer: You are going to have to wait 3 months; you are 
going to have to wait the 30 days for the filing; you are going to have 
to refile if you were not filing with pleadings that were specific 
enough, according to what the corporation had to go through.
  It is a remarkable thing, in my judgment, to thrust that kind of 
burden on a lot of situations that would be very difficult. Let me give 
you an example. This is very specific, and I apologize, it will take a 
minute, but I want to go through it.
  Let's take a Mrs. Barnes who owns a home several streets away from 
the Acme Chemical Company. There are 85 million Americans who live or 
work within a 5-mile radius of one or more of the 66,000 facilities 
that handle or store high-hazard chemicals. Let me repeat that: 85 
million of our fellow citizens live in homes near a chemical company.
  On January 1, 2000, let's assume Acme's safety system fails and 
hazardous chemicals are released into the air and on to the land in the 
neighborhood. It forces Mrs. Barnes and others to evacuate their homes. 
People are allowed back into their homes after 2 days, but Mrs. Barnes' 
property is contaminated, including her well. She retains an attorney 
and she files a tort claim for recovery.
  Acme Chemical claims that a Y2K computer failure was partially at 
fault for the safety system malfunctioning. Mrs. Barnes did not know 
that Y2K was a defense, of course, because most average citizens will 
not know this.
  Under the new law, the Acme Company will treat the complaint as the 
notice. She has to wait 30 days for Acme to respond. In 30 days, they 
respond by saying: We can't pay for the cleanup and lost value. But she 
has to wait another 60 days to refile her lawsuit, notwithstanding that 
they tell her that.
  Now the average American consumer is out 90 days and does not know 
where they are going, because we have protected the entity. All 
discovery is stayed during this period. There is not anybody in our 
system of justice who does not know what happens when you stay 
discovery for 90 days.
  In 2 months, Mrs. Barnes refiles her suit. She refiles it against the 
company that installed the safety system. Under the McCain bill, she 
has to plead her case with a particularity in the complaint. She can 
state her damages as required, but she is going to have a lot of 
trouble specifying the materiality effect because she will not know 
what that is because there has been no discovery. The case is dismissed 
because the complaint failed to meet the pleadings requirements.
  Assume somehow she can meet the pleadings requirement. She comes 
back, she finds other information to survive another motion to dismiss, 
and finally gets her day in court.
  After hearing the case, the jury finds both defendants acted 
recklessly and outrageously for not identifying and fixing the problem, 
and it awards her $300,000 compensation for the property and the need 
to replace her water supply. They may find that Acme is 70 percent 
responsible and the safety system 30 percent liable under the 
proportionality. The total amount of her award might be $1.3 million, 
with the compensatory and punitive adjusted and reduced by the number 
of people according to the cap, because they only have 40 people who 
work for them. Under the cap in S. 96, that would be an adjusted award 
of $550,000.
  We find that Acme cannot pay for all of the damage and files for 
bankruptcy. The safety system pays Mrs. Barnes $90,000 under their 
percentage, but that is not enough to clean up her property. She cannot 
get a new water supply, especially after she pays the legal bills. She 
tries to collect from Acme but without success. In the end, under the 
State law she would have received her $1.3 million, but because we are 
going to take that away, at the end, because of the Senate bill that is 
contemplated being passed here that does not protect this individual 
consumer, she will be left with only $135,000--not nearly enough to 
compensate for her loss, pay her legal fees, replenish her well and 
make her whole.
  What is the public policy here? That is literally how this bill would 
work. That is taking us step by step through the requirements that are 
being put on the average American here, even though what we are really 
talking about doing here is protecting companies from lawsuits by 
companies.
  To the degree that my colleagues say: Wait a minute, Senator. We know 
about those naughty things called class actions, and we don't want to 
have a class action brought against us, I say to my colleagues, I 
agree. We want to have a tough standard for the potential of any class 
action.
  So we have put in our bill something lawyers do not like; we have put 
in our bill a materiality requirement that means they have to show that 
very specificity of defect, and it has to be specifically material to 
the impact on that particular damage that took place for that person. 
The majority of the people who make up the class have to have the same 
linkage to the materiality. That makes it very hard to go out and just 
construct a class. So I think class actions would, in fact, be 
seriously reduced and impacted in an appropriate way, I might add. So 
we are raising the bar. We are raising the standard.
  Our bill, therefore, in my judgment, protects consumers. The McCain 
bill would apply all of its procedural burdens and damage limitations 
to individual consumers. I know that this is one of the things that the 
White House, the President, is particularly concerned about. We need to 
try to find some kind of reasonable compromise. We have not. And that 
begs a veto.
  In addition, I have talked about the proportionality issue. It is 
hard to believe that colleagues would not be willing to vote that a 
company ought to engage in good citizen behavior of a two-step effort 
to identify mere potential--I underscore that mere potential; the 
company does not have to find the problem; the company does not have to 
cure the problem--they have to find the mere potential that something 
that they have created may have done it; and, two, let people know that 
they

[[Page 12059]]

have done that. It is hard to believe that we would not vote to do 
that.
  In addition to that, we impose an additional duty on the plaintiff. 
My colleague from Arizona said this is to keep the revenue stream 
going. We impose an additional duty on the plaintiff because existing 
State law generally requires plaintiffs to mitigate their losses in the 
case of a breach of contract. S. 96 puts on the plaintiff an additional 
burden to mitigate that isn't part of additional contract law, which 
allows a defendant to argue that the plaintiff should have avoided the 
damages based on information that was in the public domain.
  So what we have done, to encourage information sharing and in order 
to encourage the remediation that we want, we leave the existing State 
law duties in place, supplementing them with an additional mitigation 
requirement if the defendant itself made the information available.
  Why is that good policy? Because, again, it encourages the good 
behavior that our colleagues are saying everybody is going to engage in 
but for which there is no certainty and there is no leverage.
  Here you have an additional burden on the plaintiff if the company 
undertook to share the information. What does that do? That means that 
the company is going to say: Oh, boy, if we go out and get the 
information and we put it out to the people we have sold it to, they 
are going to have the burden of showing that we somehow did not do what 
we were supposed to. We have shifted the burden to the people who then 
would be the plaintiffs. It makes it harder to bring a case. It also 
does more to encourage the mitigation that we want to get in this 
particular effort.
  I want to make it very clear, I think it was back in April the 
Senator from Arizona, the chairman, put a letter in the Record from 
Andy Grove of Intel. The letter that was part of Mr. Grove's 
communication to the chairman. I will read the relevant portion of it:

       Dear Senator McCain . . . The consensus text that has 
     evolved from continuing bipartisan discussions would 
     substantially encourage [bipartisan] action and discourage 
     frivolous lawsuits.

  He cited several key measures that are essential to ensure fair 
treatment of all parties under the law.
  One was procedural incentives, the requirement of notice and an 
opportunity to cure defects before a suit is filed.
  Senator McCain has that in his bill. We have that in our bill: The 
same procedural requirement to cure, the same procedural effort to have 
alternative dispute resolution. We both encourage alternative dispute 
resolution and mitigation.
  Second point: A requirement that courts respect the agreements of the 
parties on such matters as warranty obligations and definition of 
recoverable damages.
  Senator McCain does that; we do that. We provide the exact provision 
of contract protection except where there is an intentional--
intentional--injury to a party. I ask my colleagues, what is the public 
policy rationale for exempting a company from an intentional wrongdoing 
to an individual that is not a specific intent to that individual but 
nevertheless fits under the concept of a reckless, willful, or wanton 
act?
  Third, Mr. Grove said he wanted threshold pleading provisions 
requiring particularity as to the nature, amount, and factual basis for 
damages and materiality of defects. We do the same thing. Senator 
McCain does that; we do that.
  Finally, appointment of liability according to fault, on principles 
approved by the Senate in two previous measures. That is the securities 
reform bill. I have already spoken to that.
  Senator McCain gives it to them no matter what, forget it. You just 
get it because you are who you are. We give it to them if they take two 
steps: Identify the potential for a Y2K problem, which is what this 
bill is all about, and let the people they have dealt with know about 
that potential.
  Again, we do not require that they fix it. We do not require with a 
certainty that they find it. We require that they just say there is a 
potential. That is what they have to go out and fix.
  The fact is that is a minimalist standard that most companies ought 
to be prepared to live by. Every company I have talked to tells me they 
are doing that. Of course, they are going to do that. They would have 
no reason to be concerned about that.
  So the real fight here, I suppose, is over punitive damages and over 
the breadth of reach that some people are making with respect to some 
other efforts which I can go into later as they arise in the course of 
the debate.
  We have a consumer carveout. We have a duty to mitigate. We have 
proportionate liability.
  The McCain bill also creates jurisdiction for almost all Y2K class 
actions in Federal court. We do not do that. First of all, the Federal 
bar has told us they cannot handle it. They do not have room for 
whatever that might mean. Secondly, I cannot think of anything less 
respectful of States rights, of the States' abilities to manage their 
own affairs with respect to how they want to proceed. There is no 
showing that that is, in fact, necessary. So the reach of the bill, in 
fact, goes further than that which is necessary to fix Y2K.
  I want to emphasize that I still hope maybe we can find some medium 
where people will come together. It may be that the Senate isn't in the 
mood to do that right now, so it will just go ahead and pass S. 96--it 
will go to conference, come back, and then go to the President, and he 
will veto it, and we will come back. Or maybe when the President gets 
into the negotiations in the conference committee, the very things I am 
talking about will be resolved, and it will come back to us in a way 
that people of good conscience can say: This is good public policy 
because it protects consumers even as it creates a fair process for the 
avoidance of frivolous suits and the avoidance of the burdening of an 
industry that we all respect and care about.
  I think our bill does that. I think our bill justifiably protects the 
capacity of companies to be free from frivolous lawsuits. It increases 
the pleading requirements. It provides a cure period. It provides a 
duty to mitigate. It shifts a greater duty to the plaintiffs, and it 
does so, I think, in a reasonable and fair-minded way.
  I regret that, unfortunately, this debate has been so caught up in a 
larger agenda of entities that are very forceful outside of the Senate.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Voinovich). The Senator from Arizona.
  Mr. McCAIN. Mr. President, I continue to respect the views of the 
Senator from Massachusetts. He makes some very persuasive arguments.
  I strongly recommend to the Senator from Massachusetts that he put 
his objections in the form of an amendment or amendments and we vote. 
We have been through, I think the Senator from Massachusetts would 
agree, literally weeks, if not months, of negotiations with the Senator 
from Massachusetts. At no time have we been able to agree. I strongly 
recommend that he just propose an amendment, and we have a vote on it. 
The Senate will be on record. We will be then able to move forward, as 
is the legislative process.
  I will make a parliamentary point. I have asked the Democratic side 
to try to get an agreement within about an hour or so on remaining 
amendments that will be proposed of the 12. We now have about 6 or 7. I 
think the same is true on the other side. We want to give everybody 
ample opportunity to propose their amendments. Then I will also ask 
that we get those amendments in so we can start negotiating time 
agreements. I see no reason why we can't finish this bill by tomorrow 
evening.
  I urge my colleagues, again, if you have an amendment on either side 
of the aisle, tell Senator Hollings or me so we can get those 12 nailed 
down on either side so we can start negotiating.
  I think it is very important to recognize that there has been amazing 
solidarity shown on the part of big, medium, and small business on this 
legislation, including the parts of it that were just addressed by the 
Senator from Massachusetts. They do not accept his remedy. I strongly 
admire the

[[Page 12060]]

knowledge, the information, and the incredible tenacity that Senator 
Kerry has shown on this issue.
  The reality is--and every once in awhile we have to face reality, I 
say to my friend from Massachusetts--we are going no further. However, 
if we are going no further in the process of negotiation, that does not 
change in the slightest the fact that the Senator from Massachusetts 
can propose 1 of these 12 amendments, or 2 or 3 or 4 of them, I think 
there is room, and we can debate and vote on them.
  I yield for the Senator from Oregon.
  Mr. WYDEN. I appreciate the chairman yielding. I will be brief.
  I think what the chairman of the Commerce Committee is suggesting is 
a practical way to get at it. This Member of the Senate believes, with 
all due respect to my friend from Massachusetts, that the Kerry 
amendment would be a lightning rod for additional frivolous lawsuits 
with respect to Y2K. I think, for example, some of the language is so 
vague--this question of identifying the potential for Y2K failure.
  Mr. KERRY. Will the Senator yield for a question?
  Mr. WYDEN. As soon as I have made this point, because it is the 
chairman's time.
  I think that is so vague that it is going to ignite a litigation 
derby. That is No. 1.
  No. 2, we have had a kind of mixing of the concept of punitive 
damages and proportionality by the Senator from Massachusetts that I 
think is just not borne out by the bipartisan bill. Our punitive damage 
limitation applies only to small business. It has nothing to do with 
reckless behavior or careless behavior.
  On proportionality, we are saying that you can hold everybody liable 
for exactly what they contribute, whether they are a small business or 
anything else.
  Finally, on the example of the person, I believe it was Mrs. Barnes, 
and the chemical plant, she has all her existing remedies with respect 
to personal injury and wrongful conduct under negligence law. That is 
all outlined on page 10.
  I appreciate the chairman of the Commerce Committee yielding me the 
time to briefly make a response to the Kerry amendment. As I say, I am 
a Senator who agrees with the Senator from Massachusetts on so many 
things. I do share his view that I hope by the time we are done with 
this legislation, we can have something that gets upwards of 70 votes. 
But suffice it to say, this Senator believes, with all due respect, the 
proposal of the Senator from Massachusetts will be a lightning rod for 
a variety of frivolous lawsuits.
  I thank the chairman of the committee for yielding.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, I intend to send my amendment to the desk. 
It is more inadvertence than anything else, and enthusiasm. I am not 
going to delay it whatsoever. I agree with him. We want to get on with 
this and make an effort.
  Let me just make a couple of comments and address this. First of all, 
with respect to what the Senator from Oregon just said, the woman in 
the hypothetical I used would be precluded from the very kind of 
damages, because your bill limits it to physical injury. She is not 
physically injured. The fact is, the property damage and other damage 
would, in fact, not be subject to it.
  Secondly, under the economic losses in the bill from the Senator from 
Arizona--and I think this is important for the Senator from Arizona to 
understand--data processing would not be included in the definition 
that you have with respect to economic loss. You speak to the question 
of property and you allow certain kinds of property, but you don't 
include in the definition of ``property'' intellectual property.
  What happens if a company has a loss as a consequence of an entire 
software system that went down and their data being lost and, 
therefore, they do not provide a service to somebody? You could have a 
huge economic interruption as a result of that, and you don't include 
that as an economic loss. I will give you the precise language. There 
are serious, real consequences here.
  Secondly, the Senator from Oregon just said that we are just 
precluding small businesses from punitive damages. Again, I just spoke 
at a graduation of a law school. I hate to say it, I had to stand up 
and say in front of the graduates of the law school, welcome to the 
most hated profession in America. They understood what I was saying.
  You can't come to the floor of the Senate and quote me defending 
lawyers. That is not what I am doing. I am defending a principle. I am 
defending a cherished notion within America about how we redress 
problems.
  I know people do not like being hauled into court. I almost laughed 
when I heard the Senator from Arizona say that all the big businesses 
and all the business community are united behind this bill. Of course, 
they are. Big surprise. They are about to get out from under an 
accountability system that suggests to them that they ought to behave 
some way.
  The Senator from Oregon has just said to me, small businesses will 
only be held accountable for the proportion that they are liable. OK. 
What happens in this example? The small businesses in Oregon and the 
people served are in Oregon, but they are only 20 percent of the 
problem. The people who sold them the hardware and the rest of the 
equipment are in Japan. You cannot reach them, because you are a small 
lawyer and you don't have the long reach. You don't have jurisdiction, 
and you cannot get them conceivably. There are a lot of companies out 
there right now operating like that. So all you have is 20 percent of 
the person being made whole.
  The theory of law for years, under joint and several, has been that 
in America we care first about the victim, and we are going to make the 
victim whole. Then the companies that have the power and the clout will 
sort out between each other who gets what. That has been a very 
efficient and effective distribution system. It is efficient.
  What we are now saying is, sorry, average American, sorry, we are 
going to give the power back to the corporate entities and you, the 
little average person, you are going to have to go to Japan and chase 
them, or you are going to have to just stomach your loss.
  Small businesses are most of the business in the country. I am also 
pretty sensitive to that, because I am the ranking member of the Small 
Business Committee. I take great pride in the things that I have done 
to try to further small business efforts. I believe in it. I am the 
only Senator I know who has a zero capital gains tax bill here for 
targeted investments in the high, critical technologies. I would love 
to empower small business to do better. But all that punitives apply to 
are willful, wanton, reckless, destructive, irresponsible, unacceptable 
behavior. And what my colleagues are doing is coming to the floor, as a 
matter of public policy, and saying the Senate ought to go on record 
saying that we don't care how you behave. We are going to take away the 
capacity to make the average citizen whole, and we are going to give it 
to the corporate entity.
  Now, I love these corporations. Look, I represent them and I respect 
the leaders of them. They are doing great work for America. We have 
created 18 million jobs in the last 10 years or so because of their 
virtues and capacities. I will come back here and labor on their behalf 
on encryption and a host of other things. But, fair is fair. Fair is 
fair. Are you telling me we should not have these companies do two 
simple things?
  My colleague said the language is too vague on those two simple 
things. Well, let's talk about that for a minute. The bill says 
``identify the potential.'' What does that mean, ``identify the 
potential''? Does anybody have trouble with that? It means to identify 
whether the product the defendant made or sold had the potential for 
Y2K failure. How would you know that? You know you have an embedded 
chip in it. You know whether or not in the digitalization process you 
use two or four digits. I am

[[Page 12061]]

not technically competent enough to tell you all of them, but there are 
people who are; they are running around the country fixing these 
things.
  The IRS has invested $1.3 billion and several years of effort in 
order to be Y2K compliant, and they are today. How did they get there? 
They got there because they asked this very question. Do we have the 
potential for failure? And if we do, what are we going to do to fix it?
  My colleagues come to the floor and they are trying to tell us that 
this bill is to encourage people to fix it. But what do they do? They 
let them right out from underneath it, give them an upfront, blanket 
exemption saying: We are not going to require that you be subject to 
joint and several; you don't have to do anything; you just walk. And 
that is wrong as a matter of policy.
  All we ought to ask them to do is the very thing this bill's purpose 
is about: Look and see if you have the potential for failure and tell 
the people you sold it to. If we can't ask them to do that, then we are 
not standing up for the average citizen in this country. It is that 
simple.


                 Amendment No. 610 to Amendment No. 608

   (Purpose: To regulate interstate commerce by making provision for 
  dealing with losses arising from Year 2000 Problem-related failures 
 that may disrupt communications, intermodal transportation, and other 
                 matters affecting interstate commerce)

  Mr. KERRY. Mr. President, I send an amendment to the desk and ask for 
its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Massachusetts [Mr. Kerry], for himself, 
     Mr. Robb, Mr. Daschle, Mr. Reid, Mr. Breaux, Mr. Akaka, and 
     Ms. Mikulski, proposes an amendment numbered 610 to Amendment 
     No. 608.

  Mr. KERRY. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. McCAIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.
  Mr. McCAIN. Mr. President, again, I find the logic of my friend from 
Massachusetts somewhat tortured. He maintains that these ``two simple 
things'' will meet the approval of the high-tech community. Yet, it 
doesn't. So in his mind, of course, clearly it should. But the fact is, 
it doesn't.
  So we are in a very interesting kind of hyperbole here that the 
Senator from Massachusetts keeps saying the high-tech community 
supports this and this is perfectly acceptable to them. Yet, they don't 
support it or agree with it--and for good reason--because these ``two 
simple things'' are directed at the high-tech defendants, not the rest 
of the business community that will be defendants. When a wholesaler 
fixes their systems within their company, yet it leases a trucking 
group to deliver whatever that product is, and then they are subject to 
joint and several liability, then, of course, it opens the floodgates.
  The Senator from Massachusetts seems surprised that, or somehow casts 
doubt about the motivation of business in supporting this legislation. 
Of course they are supporting it, because they don't want to be subject 
to a flood of litigation. That is the whole purpose of the legislation. 
The whole purpose, I tell my friend from Massachusetts, is to stop a 
flood of litigation.
  Mr. KERRY. Will my colleague yield for a question?
  Mr. McCAIN. In a second. The Progressive Policy Institute of the 
Democratic Leadership Counsel says:

       Despite the number of lawsuits avoided during a 90-day cure 
     period, or the number of disputes settled through ADR, the 
     cost of Y2K litigation will remain exorbitantly high as long 
     as opportunities remain for people to abuse our legal system. 
     However, there are a number of Y2K-specific reforms that can 
     be enacted to curb that abuse and the subsequent costs. To 
     begin with, responsibly strengthening pleading standards 
     would keep many baseless suits out of the systems. Plaintiffs 
     seeking money awards for damages should be required to state 
     the particular nature and effects of material Y2K defects and 
     how they figured into calculating those damages. In addition, 
     to insure fairness, rejected plaintiffs should be allowed to 
     refile their suits with the required specifics in order to 
     protect legitimate claims that are not initially apparent. 
     Furthermore, legislation should deny awards for damages that 
     could reasonably have been avoided.
       Class action suits are normally the most expensive and 
     wasteful of product liability lawsuits and often contain 
     enormous numbers of groundless complaints. Legislation should 
     insure that the majority of members in class action suits 
     have truly experienced Y2K-related failures and deserve 
     redress. By reducing the number of invalid claims, waste and 
     fraud could be significantly eliminated from the adjudication 
     of class action suits.
       The effects of abusive litigation could be further curbed 
     by restricting the award of punitive damages.

  That is what this legislation does. That is where the Senator's 
amendment will open a loophole wide enough to drive a truck through.
  Punitive damages are meant to punish poor behavior and discourage it 
in the future. However, because this is a one-time event, the only 
thing deterred by excessive punitive damages in Y2K cases would be 
remediation efforts by businesses.
  I say again to the Senator from Massachusetts--and we have had this 
dialog for hours on the floor, and for hours in the committee, and I 
will continue because of the enormous affection I have for the Senator 
from Massachusetts. We will continue this dialog. We are in fundamental 
disagreement on the interpretation of the Senator's proposed amendment. 
It is as simple as that. So I would be----
  Mr. WYDEN. Will the chairman yield briefly?
  Mr. McCAIN. The Senator from Massachusetts has asked me to yield 
first.
  Mr. KERRY. I am happy to let my colleague go first, and I will come 
back.
  Mr. McCAIN. I yield to the Senator from Oregon for a question.
  Mr. WYDEN. I thank the chairman.
  It seems to me that on the basis of everything we have gone through 
in terms of the committee, there is a reason that the high-tech 
community is overwhelmingly opposed to the Kerry amendment. As far as I 
can tell, there is this company the Senator from Massachusetts has 
talked about, and I will acknowledge that. But the high-tech community, 
as far as I can tell, is overwhelmingly opposed to this Kerry 
amendment. As far as I can tell, the reason they are is that the Kerry 
amendment introduces vague, ill-defined terms that are going to trigger 
more litigation. On the basis of everything we went through in the 
committee, is it the chairman's judgment that that is the reason the 
high-tech community is overwhelmingly opposed to the Kerry proposal now 
before the Senate?
  Mr. McCAIN. That is my understanding.
  Obviously, I would like to include the Senator from Massachusetts in 
this dialog. Under his amendment--and I will be glad to respond to his 
question--isn't it true that defendants who are in the middle of the 
supply chain may be sued for a breach of contract caused not by the 
failure of the defendant's computers but by those elsewhere in the 
supply chain? That is the fundamental problem we have with Senator 
Kerry's amendment.
  I yield to the Senator from Massachusetts.
  Mr. KERRY. Mr. President, let me respond to that because it is very 
important. May I also respond by saying this, and, again, I say this 
with great respect and affection for both of my colleagues. But to be 
on the floor of the Senate using as a justification the passage of 
something that does somebody a lot of good, the fact that they like 
that it does them a lot of good, is kind of a strange argument. If the 
fox is there to guard the chicken coop and you are going to put a big 
fence around the chickens, and you ask the fox, ``Do you like it?'' and 
he says, ``No,'' that is no surprise. It is the same thing here. Who is 
going to be surprised that the companies are going to say: Of course, 
we support your bill, because it gives us more than we really properly 
ought to get.
  Having said that, let me say to my friend that our bill does 
everything the Senator from Arizona just said.

[[Page 12062]]

  We could do all of the things the Senator listed. The only difference 
is, we asked them to identify the potential for the failure and provide 
information that is calculated to reach the people. We don't even 
require that it reach the people.
  My colleague just said this is going to open up a whole lot of 
litigation.
  I ask my colleague, has he asked companies? Does he know of a company 
that isn't trying to identify their Y2K failure? Does he know of a 
company that, having done that, would not tell the people to whom they 
sold it?
  Mr. McCAIN. First of all, my response to the Senator from 
Massachusetts is that these companies and corporations that are in 
favor of this legislation--did the Senator from Massachusetts forget 
that half of them could be plaintiffs? Why is it that so many of them 
who could be plaintiffs are in support of this legislation? They are 
not just the defendants, they are the plaintiffs.
  The fact is that we are helping business all over America. I have to 
tell my friend from Massachusetts that I came here to help business all 
over America. I came here to help entrepreneurs. I came here to stop 
the flood of litigation that has so distorted the business system in 
America. I came here with a clear campaign to say, look, we have too 
many frivolous lawsuits in America; we have too many class action 
suits; we have too many lawyers and not enough business people.
  I am unashamed and unembarrassed to tell the Senator from 
Massachusetts that I am here in behalf of defendants who, if I took a 
poll tomorrow, would number 90 percent. I don't know the percentage 
that are lawyers, but I know it grows bigger by the day. But all of 
those who are lawyers would say: Yes, please, Senator McCain, help 
business get off this terrible burden where we are paying so much, 
where we have become a litigious society in America and so many 
terrible things have happened as a result.
  As I pointed out, Mr. Tom Johnson--a man who is becoming famous here 
on the floor of the Senate, I might add--is bringing these lawsuits 
against honest, hard-working people, especially small and medium-sized 
businesses.
  If the Senator from Massachusetts is astonished--and I include the 
Senator from Oregon in the category--at trying to help businesses, 
small, medium, and large, from the incredible burden of litigation 
which has flooded the United States of America--guilty as charged. 
Guilty as charged.
  The second aspect of this issue is clearly what I, as a business 
owner, would tell people. It is that I, as a business owner who 
distributes my product, would not be able to vouch for other people and 
other businesses that are also part of this distribution chain of my 
product.
  That is again where I get back to the point that I do not know of any 
business in America that doesn't want to fix the Y2K problem. I know 
lots of business people who don't know, because of the distribution 
system--both through distributors and retailers--that they can vouch 
for those persons' willingness or ability to fix the Y2K problem, which 
then opens up that flood.
  I hope I answered the Senator's question.
  Mr. KERRY. Mr. President, I hate to say this. I say it again with 
affection and respect. But the Senator didn't actually completely 
answer the question, because he didn't tell me of any company in the 
country that wouldn't do what I have said or that hasn't done what I 
have said.
  Mr. McCAIN. My answer is, I know of no company or corporation in 
America that would not want to have the problem fixed.
  Mr. KERRY. That is precisely the point. The Senator has just 
acknowledged precisely the point I am making. I come back to it.
  I am not serving on the Banking Committee and the Commerce Committee 
and the Small Business Committee because I don't care about business. I 
have the same desires as the Senator from Arizona to see business 
succeed. He came here for the same purpose--to create jobs and to make 
the country better for all of our citizens.
  But this bill is not going to make lives better for all of our 
citizens in its current structure. Yes, it is wonderful for those 
corporate entities to be singled out to get the benefits of it. I agree 
with the Senator. Everything in the amendment I have offered does the 
exact same thing--to protect those companies, as his does, with one 
exception. We are fighting here over one big exception right now. This 
is the exception. The very thing the Senator from Arizona just 
acknowledged--he said yes, every company ought to want to find that, 
and I don't know of any company that isn't trying to.
  That is the precise standard that we are trying to be sure companies 
embrace--to have a guarantee that we are doing the most to encourage 
mitigation, to fix the problem, inadvertently or otherwise.
  The Senator's bill gives them automatic entry into the 
proportionality of damages, without the guarantee that they tried to 
make that effort. Why is that important? It goes to the Senator's 
question to me. It is important because some companies may conceivably 
choose the cheaper road, which is to not necessarily pay for the fix up 
front but wait and see what the damage might be and not engage in the 
very mitigation we have encouraged.
  If that company is the midline company that the Senator just referred 
to, under his proposal they would automatically be subject to get the 
proportional level of their damage. But they could have weighed on an 
economic basis whether the bottom line of that proportional damage was 
such that they would rather wait and see, or weigh that rather than fix 
the problem and avoid whatever the consequences may be to consumers 
generally.
  I don't think that is good public policy. Maybe we differ on that. I 
think there is a fair way to provide all of these companies with the 
protection that we want them to have, and we want them to have an 
appropriate level of protection.
  But, again, my colleagues can't show me why it is unreasonable to 
suggest that a company can't identify the potential for a Y2K failure. 
How can you not do that? All you have to do is sit down with your 
design people, have a meeting, document the meeting, and ask a couple 
of questions: Do we have a Y2K problem? Do we have any invented 
processors? What products do we have them in? Whom did we sell them to? 
Whoops. Let's send a letter to those people and tell them.
  Is that asking too much?
  The purpose of this bill is to encourage people to fix the problem. 
If you do not ask people to do that, how can you say you are really 
exhausting all of the possibilities of how you are going to fix the 
problem? I don't understand that. I say to my colleagues that that is 
one thing we are fighting about.
  The other thing is the question of dealing with damages. I know I 
have said it before. Some people do not like dealing with damages. But 
the standard you have to get over to have punitive damages apply--I 
don't know of anyone in the high-tech industry, I can't imagine a 
company in the high-tech industry, that would be subject to that. Any 
CEO I have met has as much public conscience as anybody in the Senate 
and is engaged in a bona fide effort to make their company work. I 
don't know anybody who is not.
  But if there is some junk artist out there who is just hungry for the 
bottom line, trying to gamble on all of the Internet success and 
everything that has happened with high-tech stocks, who started out 
fly-by-night, who wanted to go out there and make a quick hit, if that 
person did it, and willfully, wantonly, recklessly, outrageously 
impacted the life of an American citizen, I want that American citizen 
to be able to have redress for that. I don't think it is right to deny 
them that.
  Mr. WYDEN. Will the chairman yield?
  Mr. McCAIN. If I could respond very quickly about one aspect of this, 
I have confessed with great pride and sometimes with pleasure that I am 
not a member of the legal profession. But I

[[Page 12063]]

am afraid the Senator from Massachusetts does not quite comprehend what 
we are dealing with here.
  This is a book, ``Year 2000 Challenge, Legal Problems and 
Solutions,'' from the National Legal Center for the Public Interest. 
Let me quote for the Senator what we are facing so we can really put 
this in the proper perspective.

       The unfortunate fact is there is no ``silver bullet'' 
     solution to the year 2000 problem in any organization, and 
     the risks and difficulties in any Year 2000 project of even 
     moderate size and complexity can be enormous. None of the 
     remediation techniques described above is without 
     disadvantages, and for many IT users the time and resources 
     required to accomplish Year 2000 remediation far exceed what 
     is available. Most major remediation programs involve finding 
     and correcting date fields in millions of lines of poorly 
     documented or undocumented code. There is no single foolproof 
     method of finding date fields, no assurance that all date 
     fields will be found, corrected, or corrected accurately, and 
     no assurance that corrections will not produce unintended and 
     undesirable consequences elsewhere in the program. In many 
     cases it will be necessary to rely on information or 
     assurances from third party vendors regarding the Year 2000 
     compliance of their products, even though experience teaches 
     that many such representations are inaccurate or misleading. 
     Comprehensive end-to-end system testing of remediated systems 
     in a simulated Year 2000 ``production'' environment is often 
     impractical or impossible, and less intensive testing may 
     fail to detect uncorrected problems. And even where an IT 
     user succeeded in making its own systems Year 2000 ready. 
     Year 2000 date handling problems in external systems (such as 
     the systems of customers or suppliers) can have a devastating 
     effect on internal operations.

  With all due respect to my friend from Massachusetts, this is what we 
are trying to get in our legislation and this is what the Senator's 
amendment basically prevents us from doing.
  Here is the problem. I don't claim to have the expertise that the 
Senator does on punitive damage or on joint and several liability. I 
know the problem pretty well. We have had extensive hearings in the 
Commerce Committee, and we have talked to all the experts. This is 
really what we are trying to take care of--not as the Senator from 
Massachusetts asked me, in good faith, do I believe there is any 
company or corporation that is not trying to fix a problem. I don't 
know of any.
  I think what I read to the Senator from Massachusetts explains how 
difficult and enormously complex solving this problem is. This is why, 
although I respect and admire the Director of the FAA who will fly all 
day long on January 1, the year 2000, I intend to remain at home that 
day. However, I encourage others, as the Senator from Massachusetts, to 
fly around the country.
  I say seriously to my friend from Massachusetts, I hope this explains 
to him the complexity of the problem. We not only can take care of the 
individual manufacturer, but all the systems and subsystems that are 
connected with it are not addressed, in my view, adequately, in the 
Senator's amendment.
  Before I yield to both Senators, could we agree to some time on this 
amendment?
  Mr. KERRY. Mr. President, I want to cooperate. I cannot agree at this 
particular instant, because I need to canvas the cosponsors to figure 
out who desires to speak. We have no intention of prolonging this.
  Mr. McCAIN. If the Senator from Massachusetts and his staff will work 
on that, I appreciate that.
  I yield the floor.
  Mr. KERRY. Mr. President, let me come back to the remarks of the 
Senator from Arizona, because I appreciate everything he just read. I 
would like to be associated with putting it into the Record. However, I 
don't associate myself with the notion that the consequences of what he 
just read ought to be automatically given a bye, a pass, if you will, 
without some duty to make the determination of what he just read.
  Any company that is going to be subject to what the Senator from 
Arizona just read would answer the standard I have put forth about a 
potential for failure in the affirmative in 10 seconds. The Senator 
from Arizona has acknowledged that. We are almost fighting about a 
difference that is not a huge distinction here, but it is significant 
enough because of what we want to do to achieve the mitigation we want 
to get out of this bill.
  There isn't a company in good standing in this country that cannot 
answer affirmatively the two-step qualification for proportional 
damages. To suggest that we will give every company an automatic bye 
without requiring them to do that is to actually adopt a bill that 
doesn't go as far as it can to achieve the purpose that the Senator 
from Arizona states we are trying to achieve.
  That is why there is a fundamental difference here.
  The PRESIDING OFFICER (Mr. Brownback). The Senator from Oregon.
  Mr. WYDEN. Mr. President, I will be very brief. I want to respond to 
the point the Senator from Massachusetts made with respect to the 
standard that he would apply in identifying the potential for Y2K 
failure.
  I believe that using language that vague virtually ensures that a 
significant number of frivolous cases are going to end up going to 
juries--exactly what we fear. What will happen, companies will attempt 
to defend themselves, the judge will be offered a motion to dismiss, 
and the company will say: It is frivolous; we move to dismiss the case. 
The judge will look, and if this were the standard that were actually 
adopted, he would say: I don't know whether they identified the 
potential for Y2K failure. And we would, in fact, be igniting an 
additional round of frivolous lawsuits.
  A motion to dismiss under this standard will get by because it is so 
vague.
  With respect to the economic losses the Senator from Massachusetts 
has talked about and believes are inadequately addressed under our 
bipartisan legislation, in this bill we keep State contract and tort 
law in effect. We keep State contract and tort law in effect. The 
problem is that there are some who disagree, some who would essentially 
like to create torts out of these contractual rights where no torts 
exist.
  Finally, with respect to punitive damages, the Senator from 
Massachusetts said again that our bipartisan bill would hollow out, for 
example, protections that are needed for consumers. We ensure our 
standard of evidence with respect to this is in line with State 
requirements. Again, we are trying to take a balanced approach.
  I hope my colleagues will oppose the Kerry amendment. I think it 
ensures we will see a significant number of frivolous suits not being 
dismissed where they ought to be but essentially ending up going to 
juries and causing great economic duress early in the next century.
  I yield the floor.
  Mr. McCAIN. Mr. President, for the purpose of proposing some 
amendments, I ask that the pending Kerry amendment be set aside for 
that purpose, with the proviso of returning immediately to the Kerry 
amendment.
  I send to the desk two amendments by Senator Murkowski, an amendment 
by Senator Gregg, an amendment by Senator Inhofe, and two amendments by 
Senator Sessions, and I ask for them to be numbered.
  The PRESIDING OFFICER. Without objection, the amendments will be 
numbered and laid aside.
  Mr. McCAIN. Mr. President I ask unanimous consent we return to the 
pending Kerry amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCAIN. One of the irate staff just came over here. I saw no harm 
associated with that process. If there were an objection, I would be 
glad to remove those amendments. They were simply amendments to be 
numbered in case when we get an agreement on both sides of the aisle.
  I ask unanimous consent to withdraw those amendments, and we will 
leave everything as it was before.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCAIN. Regarding the Kerry amendment, I want to mention that a 
company that has made no effort to prevent failure or fix its systems 
will undoubtedly be found more responsible for a plaintiff's injuries 
under the terms of S. 96 in liability already proposed, without the 
hazard of making a

[[Page 12064]]

company that can't control the entire chain of distribution liable for 
the entire damage awarded the plaintiff. Our opposition to the pending 
Kerry amendment is almost that simple.
  I note that the Senator from California is waiting to speak. I hope 
by the time the Senator is finished, perhaps we could have some 
agreement for a vote on this amendment so we could move forward, as 
well as agreement on the other side for resolving the remaining 12 
amendments on both sides.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from the great State of 
California.
  Mrs. FEINSTEIN. Mr. President, I rise to support the underlying 
McCain-Dodd-Wyden-Lieberman-Feinstein bill, because I believe this bill 
is a once in a millennium, 3-year law. Without it, I believe we could 
see the destruction or dismemberment of America's cutting-edge lead in 
technology. We all know that the year 2000 is rapidly approaching and 
with it there comes a wide variety of possible disruptions relating to 
the so-called Y2K problem.
  It is true, though, that no one really knows how big the problem will 
be or how small it will be, so government organizations, businesses 
large and small, and private individuals are all scrutinizing the area 
from their own particular perspective. The area that has received the 
most attention is concern over a possible flood of lawsuits that could 
clog courts and distract businesses from solving these problems early 
in the next millennium. Several well-known consultants and firms, 
including the Gartner Group, have established that Y2K litigation could 
quickly reach as high as $1 trillion. So concerned Members of Congress, 
including Senators McCain, Hatch, Dodd, and others, have been working 
for many months in an attempt to craft a solution to what has recently 
been described as this trillion-dollar headache.
  The genesis of the bill now pending on the floor was a request by 
literally dozens of companies and more than 80 industry groups--
including the Semiconductor Industry Association, the National 
Association of Manufacturers, the Chamber of Commerce, the Information 
Technology Association--to develop legislation to prevent frivolous and 
baseless lawsuits that could jeopardize companies moving to quickly 
solve Y2K problems. The trick was not at the same time to prevent the 
suit with merit.
  I began working on a similar bill with Senator Hatch almost 6 months 
ago, because I became convinced that the Congress did need to intervene 
in order to ensure that Y2K problems are quickly and efficiently 
solved. Now, after several months of negotiating and a combined effort 
among a number of different Senators, I believe we have reached a fair 
compromise. This bill is especially important to California where over 
20 percent of the Nation's high-tech jobs are located. The problem 
actually extends even beyond high-tech companies to the lives of 
employees, stockholders, and customers in a wide range of American 
businesses.
  One of the first indications I had of the depth of the concern was 
when groups of consultants began to come to us saying they refused to 
become involved in helping companies solve Y2K problems for fear that 
they would open themselves up to being sued later on. Instead, they 
would rather just not get involved. One such group was the American 
Association of Computer Consulting Businesses that represent 400 
companies and more than 15,000 consultants. They told me personally 
that they were going to refuse to enter into any Y2K consulting 
contract until they had some kind of additional protection. So it 
became very clear to me that, indeed, we do have a real problem. I 
believe the underlying bill crafts a real solution.
  I think it is important to say, and say again and again, that nothing 
in this bill is permanent. It is simply a 3-year bill, limited to 
specific cases. The bill applies only to Y2K failures and only to those 
failures that occur before January 1, 2003. Let me quickly go over the 
provisions as I see them.
  The 90-day cooling off period during which time no suit may be filed 
enables businesses to concentrate on solving Y2K problems rather than 
on fending off lawsuits.
  The bill provides for proportionate liability in many cases, so that 
defendants are punished according to their fault and not according to 
their deep pockets. I am not an attorney and I have always felt this 
was the most fair way to go, except in certain situations, and the bill 
does provide for those certain situations. I would like to go into this 
in greater detail.
  The bill also encourages parties to request and use alternative 
dispute resolution at any time during this 90-day cooling off period. 
For Y2K class actions, the bill requires, in order to qualify, that a 
majority of plaintiffs must have suffered some minimal injury. That 
would avoid cases in which thousands of unknowing plaintiffs are lumped 
together in an attempt to force a quick settlement.
  For small businesses, the bill limits punitive damages to $250,000, 
or three times compensatory damages, so as to deter frivolous suits. It 
prevents the ``tortification'' of contracts with several provisions 
that require businesses to live up to their agreements rather than 
turning to the courts in the hopes of avoiding their responsibilities.
  These are not the only provisions in the legislation, but these 
provisions represent the basic premise of a bill that does not seek to 
prevent the truly injured from recovering damages, but will hopefully 
prevent the frivolous lawsuit and keep companies from solving problems 
without delay.
  There is much that is not in this bill, and there have been many 
changes made in the bill, certainly since I became involved in it. I 
would like to just indicate a few of them.
  All caps on attorney's fees have been removed. Punitive damage caps 
for large businesses have been eliminated. Punitive damage caps for 
small businesses have been increased from three times actual damages to 
three times compensatory damages. All government regulatory or 
enforcement actions have been exempted from the bill, and three 
exceptions to the elimination of joint and several liability are 
provided in order to protect smaller plaintiffs and those who cannot 
recover from every defendant. The caps on liability for officers and 
directors have been removed, and the bill has been changed to provide 
that per suit there is only one 90-day cooling off period.
  I think the cooling off period is probably very well known and 
probably very well accepted, so let me dispense with any further 
explanation on that point. But let's go to one of the more 
controversial parts, proportionate liability.
  One of the reasons this bill is important to the affected companies 
is that it prevents plaintiffs from forcing quick settlements from 
innocent defendants who should be trying to solve Y2K problems. 
Additionally, under the system of joint and several liability, a 
defendant found to be only 20, 10, or even 1 percent at fault can 
nonetheless be forced to pay 100 percent of the damages. This system, 
as we all know, encourages plaintiffs to go after deep-pocket 
defendants first in order to force that quick settlement. It is my 
basic belief that this is fundamentally unfair, and the bill eliminates 
joint and several liability in some Y2K cases.
  Under the new system, for this brief 3-year period, defendants will 
be responsible only for that portion of damage that can be attributed 
to them. The bill does have, as I have said, three specific exceptions 
to the elimination of joint and several liability, and those were taken 
from the Private Securities Litigation Reform Act recently passed 
overwhelmingly by the Congress and signed into the law by the 
President.
  First, any plaintiff worth less than $200,000 and suffering harm of 
more than 10 percent of that net worth may recover against all 
defendants jointly and severally. This exception in the bill protects 
those plaintiffs with a low net worth but will not unduly injure 
defendants, because the damages recovered will not be that great.
  Second, any defendant who acts with an intent to injure or defraud a 
plaintiff loses the protections under this bill and is again subject to 
joint and several liability. The bill does not protect those acting 
with an intent to harm.

[[Page 12065]]

  Finally, the bill provides a compromise for those cases in which 
defendants are judgment-proof. In cases where a plaintiff cannot 
recover from certain defendants, the other defendants in the case are 
each liable for an additional portion of the damages. However, in no 
case can a defendant be forced to pay more than 150 percent of its 
level of fault.
  These proportionate liability provisions offer a more fair and, I 
truly believe, rational approach to the system of damages in Y2K cases. 
Without this more balanced system, a few large companies will soon be 
forced to bear the entire brunt of Y2K litigation regardless of fault, 
and that is the problem. That is what will destroy the cutting edge of 
American prominence in this area, and that will result in jobs being 
lost.
  Under the system of proportionate liability, this bill holds 
defendants responsible for the extent of their fault and no more, with 
the exceptions I have just mentioned.
  Another area that I think deserves a little bit of clarification is 
the class action area. Under the class action section of this bill, a 
year 2000 class action suit cannot proceed unless the defect upon which 
the action is based is material to a majority of class members. This 
section is very important. Essentially, this clause prevents the type 
of ``strike suits'' we saw in the securities litigation area.
  In the Y2K context, this provision will stop overly aggressive 
plaintiffs from searching out small defects in computer programs, 
gathering together thousands of software users who do not even know 
they have been injured, and trying to force a quick settlement out of 
the software manufacturer.
  Once this bill passes, if a class action suit alleges that software 
does not function properly, the action can proceed only if the alleged 
defect affects a majority of the class members in some significant way. 
Trivial defects that would not even be noticed by most class members 
would not be cause for a class action. Again, plaintiffs with good 
cause may still proceed, but frivolous suits would be stopped. That is 
the purpose of the provision and the purpose of the bill.
  There has been a lot of discussion in this Chamber about punitive 
damage caps. The Dodd-McCain compromise caps punitive damages, for 
small businesses only, at the lesser of $250,000 or three times 
compensatory damages.
  The idea of capping punitive damages is one of the most controversial 
issues in this or any other bill dealing with changes to our system of 
civil justice. In this case, I believe reasonable and carefully drafted 
caps on punitive damages can deter frivolous suits. Additionally, 
capping punitive damages reduces the incentive to settle meritless 
suits because companies will not be at risk for huge, unwarranted 
verdicts.
  I recognize that this is a controversial issue and that intelligent, 
well-meaning people may disagree over whether this is the time or the 
place to address punitive damages. But I have continually emphasized 
that this bill is not about punitive damages, and the compromise 
dramatically limits the punitive damage caps compared to earlier 
versions.
  In summary, this $1 trillion litigation headache is approaching. This 
Congress can provide thoughtful, preventive medicine and some 
anticipatory pain relief in the form of reasoned, fair, and thoughtful 
compromise. I think the bill sets forward clear rules to be followed in 
all Y2K cases. I believe it levels the playing field for all parties 
who will be involved in these suits. Companies and individuals alike 
will know the rules and will know what they have to do. Most important, 
there is an element of stability that can come from this bill which 
will allow companies to prevent Y2K problems when possible, fix Y2K 
defects when necessary, and proceed to remediate damages in an orderly 
and fair manner.
  It is true that some plaintiffs may have to wait a little bit longer 
to file a suit for damages, but their rights will not be curtailed and 
recovery will not be prevented. In fact, the waiting period in the bill 
will make it far more likely that problems will be solved quickly, 
allowing potential plaintiffs to get on with the activities that were 
disrupted by the Y2K problem at issue.
  This bill has been through a tortuous legislative drafting process 
with criticisms, suggestions, and changes made from every side and by 
every sector of our society. I hope we can pass this bill and send it 
to the President, and let us show the Nation that the Y2K crisis will 
not cripple our courts, will not disrupt our economy, and will not slow 
our progress toward a 21st century world.
  I thank the Chair, and I yield the floor.
  Mr. HOLLINGS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative assistant proceeded to call the roll.
  Mr. DODD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 610

  Mr. DODD. Mr. President, I am grateful to Senator Kerry of 
Massachusetts for offering his amendment, which allows us now to have a 
full debate on what is a comprehensive amendment. It covers a whole 
series of provisions which are included in the pending bill before the 
Senate.
  Let me try, if I can, to take each of the critical provisions in the 
amendment, address them, and explain why I believe, despite the good 
intentions of its author, it would do significant damage to the 
underlying purpose of the bill that Senator McCain and Senator Wyden 
and myself and others have offered to the Senate for its consideration.
  I said at the outset of my remarks earlier today that this bill is 
very narrow in scope, very narrow in duration, and limited to a fact 
situation which most Americans, I think, have a growing awareness of 
today.
  In 204 days the millennium clock will turn, and there is a very 
serious set of issues that could affect many Americans and many people 
outside of our shores: that is the so-called Y2K glitch or bug in 
computers based on information that is included in embedded chips and 
other items within these computers which would read the date of the 
year 2000 incorrectly.
  I am, of course, simplifying the situation. I think the Senate is 
well are aware of the danger inherent in the Y2K problem. That problem 
could, of course, create serious disruptions in a variety of mission-
critical functions in telecommunications, transportation, medical care, 
Federal services, and the like.
  Over the last year and a half the Senator from Utah and I, as 
chairman and vice chairman of the Y2K Special Committee, have conducted 
some 21 hearings to examine where we were with the Y2K problem, what 
the Federal Government was doing, what State governments were doing, 
what local municipal governments were doing, and what the private 
sector and nonprofits were doing in order to remediate the problem; to 
fix the problem as soon as possible; and, where that may not be 
possible, to have contingency planning to avoid the kind of potential 
disruptions that those who are most knowledgeable about this issue 
suggest could occur.
  Over that period of time we have seen significant improvement in the 
remediation done by the private and public sector, State and local 
governments, all across this country. In fact, we are at the point 
where we believe, as of this date, in June, with some 204 days to go, 
the country is by and large in good shape. We should not anticipate or 
be worried about any major disruptions here in the United States. There 
could be exceptions to that but, by and large, we think that is the 
situation today.
  One of the things we are trying to do is see to it that when January 
1 arrives, the best effort of a business--small, medium, or large--does 
not go for naught as a result of its inability to detect problems with 
embedded chips that ultimately result in Y2K-related failures.
  Last year we passed a bill on disclosure to encourage the various 
sectors

[[Page 12066]]

of our society to share as much information as possible with each other 
so that we could contribute to the remediation effort and avoid the 
kinds of problems some are anticipating will occur after January 1. 
That bill created a safe harbor provision, which allowed for the 
sharing of information--not sharing of lies and knowingly false 
information, but sharing as much knowledgeable information that 
businesses had--without worrying that someone would come around later 
and say, ``what you said in June of the year 1999 was not exactly 
right,'' and, therefore, you would be subject to litigation.
  That bill was passed overwhelmingly by this body and the other body 
and signed into law. It is making, we think, a significant contribution 
to avoiding the kinds of problems that we could have had after January 
1 of the year 2000. But it does not eliminate all the problems. In 
fact, no one can pass a piece of legislation that will eliminate all 
the difficulties.
  We realize with those problems that may emerge that you could have 
disruptions as a result of the failure to detect such things as faulty 
embedded chips. So this legislation before us is designed to be a 
complementary piece of legislation to the disclosure act of last year, 
a complementary piece of legislation to the efforts of Senator Bennett, 
myself, and others who have worked on that committee, who strived to 
encourage, jawbone, do whatever we could, to minimize the kind of 
difficulties Americans could face.
  We do not claim we have achieved all of that yet. But with the 
adoption of this bill, a 3-year bill, a 36-month bill, we say to 
potential plaintiffs and defendants: If, in fact, a problem arises that 
under any other circumstances might give rise to a lawsuit, we want you 
to try to avoid that lawsuit, if you can. We want you to try to work 
out the problem. We want you to spend your time, your money, and your 
efforts to fix the Y2K problem, not to run to the nearest courthouse 
and then spend weeks and months, potentially years, at the cost of 
millions of dollars, litigating an issue and not solving the underlying 
problem which is causing the kind of disruptions this issue can 
potentially cause.
  That is the purpose of this bill. That is the rationale behind it: to 
try to avoid rushing to the courthouse.
  We are a litigious society. We love lawsuits. Most Americans are 
painfully aware of this. There is nothing wrong with going to court to 
try to solve your problems. But I think most would agree that if you 
can avoid going to the courtroom to solve your problems, you can get 
better results in many instances.
  So this legislation is designed specifically to avoid rushing to the 
courthouse for 36 months--not for a lifetime, not for eternity, but for 
36 months--during the critical period where this issue is upon us, to 
see if we can't work out these difficulties. We only do that for 36 
months with issues directly related to the Y2K issue, not any matter 
that comes up, but specifically the Y2K issue. We do so in a very 
limited way.
  Specifically, we do not prohibit lawsuits. We merely are trying to 
see if we cannot come up with an alternative vehicle to solve the 
problems.
  Mr. President, what Senator Kerry of Massachusetts has done is 
offered a series of ideas that he and those who have joined him believe 
will enhance the underlying legislation. They state --and I believe 
them--that they are desirous of making this a better bill, of making it 
less likely that we are going to have a race to the courthouse.
  As you analyze what they have proposed, despite their good intentions 
it would appear they are doing just the opposite of their intentions. I 
can accept, although I do not entirely understand, those who are just 
fundamentally opposed to what we are trying to do, and then offering a 
series of provisions which would gut our very underlying intent. I do 
not support it. I vehemently oppose it. But I can't understand how a 
rationale could be made for you to oppose the idea of trying to avoid 
litigation for 36 months, if you can, on this Y2K issue.
  Let me take, if I can, some of the provisions included specifically 
in the Kerry proposal and explain why I think those provisions directly 
undercut the underlying intent of the McCain-Wyden-Dodd proposal.
  One deals with the bill's proportionate liability provisions. As I 
read the legislation, the Kerry bill, on page 13 of this proposal, 
states that notwithstanding the proportionate liability sections, the 
liability of a defendant in a Y2K action is joint and several if the 
defendant fails to demonstrate by a preponderance of the evidence that 
prior to December 31, 1999, the defendant identified the potential for 
Y2K failure, and then, in paragraph two, provided information 
calculated to reach persons likely to experience Y2K failures. Consider 
what those two provisions would do. Those are findings of fact, not 
findings of law. So even if a defendant has made some effort to 
identify potential Y2K failures, and made efforts to provide 
information calculated to reach the likely persons, you know very well 
that those are questions of fact, not of law. I would be hard pressed 
to identify a judge that was not going to say that questions of fact go 
to a jury.
  As a result, there will be litigation on the very issue upon which my 
colleague from Massachusetts is trying to avoid litigation. Again, I 
can understand why some may disagree with the proportional liability 
provisions of the bill. They do not like the idea of having 
proportional liability. But I think it is only fair and just, under 
these fact situations. Otherwise what you get, very clearly, is 
attorneys who will go shop around for some company that is 
infinitesimally involved but simultaneously has deep pockets, and that 
becomes your defendant. They will then try to get that fractionally 
involved defendant as becoming totally responsible and culpable for the 
Y2K failure.
  That is directly contrary to what we are trying to do here in this 
bill, directly contrary to what we are trying to do with the 90-day 
cooling off period, directly contrary to our saying that you have to go 
after the people responsible for the injury. By suggesting here that if 
they would just identify the potential Y2K problems and provide 
information to reach the persons likely to experience these failures, 
it seems to me that you have undercut entirely the desired goal in the 
underlying bill by avoiding the proportional liability provisions of 
the legislation. It is these provisions that we think will do a great 
deal to minimize the rush to the courthouse.
  These matters just do not end up in court miraculously. It takes an 
energetic and aggressive bar that wants to pursue them. That would be 
the case, in my view, if this amendment were adopted.
  Again, these are findings of fact, not of law. No judge that I know 
of would dismiss a case where there are findings of fact to be 
determined. Those should go to a jury. Therefore, your motion to 
dismiss fails. Therefore, you are in court. Therefore, you have 
destroyed what we are trying to accomplish with this 36-month bill, 
just to deal with a Y2K issue, where the issue ought to be to try to 
resolve the problems the American public faces.
  As a practical matter, we have 204 days left before the millennium 
clock turns. If you adopt these provisions here over the next 204 days, 
instead of remediating the problem, setting up your contingency 
planning, which is what you ought to be doing at this point, we will 
have people running around here trying to figure out ways to meet some 
standard here so they can avoid the joint and several liability 
provisions.
  I can see them suggesting that we ought to be spending resources here 
to identify potential Y2K failures and provide information to persons 
likely to be subjected to those failures. With 204 days to go--if my 
colleague from Utah were here, I think he would echo these comments--we 
need everyone in this country involved in this issue spending every 
available moment of time and every bit of resources fixing these 
problems instead of trying to avoid the kind of legal hurdles placed in 
the way that the Kerry amendment would require, if his amendment were 
to be adopted.
  An excellent point that should be made is that this proportional 
liability

[[Page 12067]]

section would also encourage results where U.S. companies could end up 
paying for the wrongs of foreign companies, non-U.S. companies. It has 
been stated over and over again, and I can tell you that it is true 
based on our information, that Y2K remediation efforts abroad are 
lagging. If a U.S. plaintiff can't recover against a non-U.S. company, 
he is going to try to recover against the closest deep pocket in this 
country. So you end up having U.S. companies that have made a 
significant remediation effort having to bear all the burden because a 
foreign manufacturer has not done the job as well. The plaintiff has a 
hard time reaching that potential defendant, so he races to the most 
fractionally involved U.S. company in order to get their full 
compensation. That is just not fair.
  The amendment's contracts preservation section does not preserve 
contracts. Although it is essential that Y2K contract rights be fully 
enforceable, the bill's formulation allows contractual provisions to be 
set aside, even by vague State common law rules. This approach would 
give State court judges the power to throw out contract provisions they 
don't like.
  One thing that has been sacrosanct is, when there is a contractual 
relationship, that is what prevails. If the parties enter into a 
contract, then the contract rules. If you are going to allow, as you 
would if the Kerry amendment is adopted, State court judges to undo 
contracts, because you don't like contract law but you want tort law, 
then you are expanding an area of the law that we have never done. 
Where there is a contract in place, the contract rules. If you are 
going to allow State courts to undo that and then allow attorneys to 
shop around the country until they find a State jurisdiction where they 
have avoided these contracts, you have just gutted this bill.
  If you want to gut the bill, gut the bill. If you want to destroy 
this effort, destroy the effort. But do not stand up simultaneously and 
tell me you are trying to enhance what we are trying to do and then 
allow State courts to gut contract law in this country.
  The Kerry amendment also makes liability for economic losses more 
expansive than current law. Under current law in most jurisdictions, 
plaintiffs who are in a contractual relationship with the defendant 
cannot circumvent the contract by trying out the tort idea.
  I understand lawyers want to do this. We don't like the contract my 
client entered into, so let's try going to the tort idea here. Not 
terribly clever, not terribly unique, pretty commonplace. But we are 
not going to all of a sudden say that contracts are no longer valid 
here.
  In essence, if you adopt this amendment, at least this part of it, 
that is what you are doing. If there is a good contract, then the 
contract rules. The idea you can circumvent that contract by seeking to 
bring a tort suit to recover your economic losses permits all 
intentional torts to go forward, whether or not the parties have a 
preexisting relationship. Whatever else you may like about this 
amendment, that provision alone ought to cause it to be overwhelmingly 
defeated.
  The amendment's carveout for noncommercial suits, in my view, will 
permit a huge range of abusive actions. The Kerry proposal carves out 
suits by individuals from most of the provisions of this bill. I 
believe that abusive class actions on behalf of consumers are one of 
the greatest dangers in the Y2K area, because such suits are easily 
created and controlled by plaintiffs' lawyers. That also was the case 
in the securities area prior to the enactment of the securities 
legislation, a bill that we adopted several years ago.
  Again, in this area, the McCain-Wyden-Dodd bill does protect class 
action lawsuits. They are not done away with here. We simply try to 
tighten up the rules under which class actions can be brought, and I 
think wisely so. We don't want to be going back and saying basically 
that in these areas you can file vague complaints where no one can 
determine what the charges are against you. Remember, in this area of 
Y2K--unlike securities litigation where clearly the defendants are 
going to be securities firms and the like--a small business can be a 
plaintiff and a defendant very quickly. It is not going to be as clear 
as to who the consumers are here.
  Is one going to suggest to me that a small business where there is a 
computer glitch that all of a sudden gets sued is a nonconsumer, in a 
sense? I think we are trying to draw lines here that don't apply in the 
area of law that we have crafted with the McCain-Wyden-Dodd bill.
  So by suggesting that all the other provisions of law are OK here is 
to basically just say this bill has been defeated. If that amendment is 
offered as a single freestanding amendment, we may as well not take the 
time of the Senate to go further. I will recommend that you pull the 
bill down because, frankly, then you have said this proposal here has 
no merit.
  So I am not suggesting these are all the provisions of the Kerry 
amendment, but they are the ones I think are most egregious and which I 
think would do the most damage to the underlying effort that the 
Senators from Oregon and Arizona, and others, have tried to craft here.
  Again, this is a bill for 36 months, that is it. We have 204 days 
left to do something to minimize a serious problem. I hope we have no 
problems come January 1 and February, and that all of the talk about a 
serious Y2K problem turns out to be wrong. Then we can look back and 
say maybe we didn't need this bill. But I would rather be standing here 
and have that happen than to be sitting around in January and all of a 
sudden watch serious problems occur, people racing to courtrooms all 
over the country because this body didn't think 36 months set aside in 
this area was a worthy exercise to defend against a potential problem 
that could cause Americans a lot of difficulty.
  For once, this body, the Congress, is taking action in anticipation 
of a problem. What we normally do is wait for the problems to happen 
and then scurry around trying to fix them. Here in June we are trying 
to do something to avoid potential catastrophes in January. I commend 
my colleagues again--those who have been involved in this--for having 
the wisdom to step up and try to take meaningful action here.
  Do we have a perfect bill? No, I can't tell you that. We realize we 
are sailing in uncharted waters here. But we think we are on the right 
side of this and our footing is strong--36 months, narrow in scope and 
time--to try to avoid the millions, if not billions, of dollars that 
ultimately taxpayers and consumers may end up paying for a lot of 
worthless lawsuits to satisfy the appetites of a few narrow members of 
the bar. I think it is a risk worth taking. I think in the long run the 
American public will support our efforts. With all due respect to my 
colleague from Massachusetts, for whom I have a great deal of 
admiration, we fundamentally disagree. Were his proposal to be adopted, 
I believe it would do significant, if not irreparable, damage to the 
McCain-Wyden-Dodd approach we have drafted and submitted for our 
colleagues' consideration.
  I yield the floor.


                      Unanimous Consent Agreement

  Mr. McCAIN. Mr. President, I ask unanimous consent that the following 
amendments on this side be in order and these amendments only:
  Senator Murkowski, two amendments; Senator Inhofe, one amendment; 
Senator Gregg, one amendment; Senator Lott, one amendment; Senator 
Sessions, two amendments.
  Although it may be redundant, I add to that the amendments that were 
already agreed to in yesterday's Congressional Record: Senator 
Hollings, three amendments; Senator Kerry, one amendment; Senator 
Boxer, one amendment; Senator Feinstein, one amendment; Senator 
Feingold, one amendment; Senator Graham of Florida, one amendment; 
Senator Leahy, one amendment; Senator Dodd, one amendment; Senator 
Edwards, two amendments; Senator Daschle, one amendment.
  Would it be agreeable to Senator Hollings if that is included in the 
unanimous consent agreement?

[[Page 12068]]


  Mr. HOLLINGS. Yes. I thank the distinguished Senator. The Feinstein 
and Dodd amendments are now cared for. As listed in the calendar for 
today, it is correct. We agree.
  Mr. McCAIN. I ask unanimous consent that those amendments be the only 
ones in order in consideration of the bill.
  Mr. HOLLINGS. The Senator from Florida, Mr. Graham, has switched with 
the Senator from New Jersey, Mr. Torricelli.
  Mr. McCAIN. The amendment under Senator Graham will now be listed 
under Senator Torricelli.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. McCAIN. Mr. President, I also want to mention that I think the 
Senator from Massachusetts wants to discuss this amendment again. We 
are prepared to enter into a time agreement with the Senator from 
Massachusetts when he returns to the floor for his further discussion 
of the amendment. Perhaps we can enter into an agreement at that time. 
I will also be contacting Members whose amendments are still listed as 
relevant to reach time agreements with them so that perhaps by the 
close of business this evening we could have time agreements allocated, 
if possible. If not, we will just proceed with the amending process 
tomorrow.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. BROWNBACK. Mr. President, I rise to speak in support of the Y2K 
Act. I commend Senator McCain for the leadership he has provided the 
Senate on an issue that is of critical importance to small businesses 
across this country. I do not know if we have highlighted enough the 
cost of the Y2K problem on small business. That is what I would like to 
briefly address. I also thank the Chamber of Commerce for the effort 
they have made to bring this problem to the attention of the Congress 
and to the public.
  I support protecting businesses from unnecessary and frivolous 
litigation that will arise from the Y2K problem. While businesses are 
hard at work trying to fix potential problems arising from the Year 
2000, others are trying to exploit it through excessive and expensive 
litigation. It has been reported in that the cost of litigation in the 
U.S. arising from this problem will range from $200 billion to $1 
trillion. It is just incredible. The Senate Commerce Committee has 
reported that up to 48 lawsuits relating to the Y2K problem have 
already been filed. What has been described as a ``tremendous new 
business opportunity'' for lawyers is done at the expense of the 
private business sector, in particularly small businesses. Small 
businesses are most at risk from Y2K failures because many have not 
begun to realize the potential problem and they do not have the capital 
to remedy any Y2K difficulties.
  This bill goes a long way toward preventing litigation from the Y2K 
problem by establishing punitive damage caps, alternative dispute 
resolution, and proportional liability. While this bill will limit the 
amount of frivolous litigation, it will not prevent those who are 
blatantly negligible in becoming Y2K compliant or have caused personal 
injuries as a result of their noncompliance from escaping their 
responsibilities. They will still be held responsible.
  Although I believe S. 96 will prevent and limit any litigation 
arising from the Y2K problem, I am still concerned that the greatest 
beneficiaries of the Year 2000 computer problem will be the trial 
lawyers. I am disheartened that there is no provision in this bill that 
places a reasonable cap on attorneys' fees. An attorney fees' cap will 
help prevent excessive litigation against small businesses by creating 
a financial disincentive for trial lawyers. Unlike the big corporations 
who have millions to spend on solving the Y2K problem and defending 
themselves in any Y2K civil action, the small businesses do not have 
the financial resources and are therefore the primary targets of any 
potential Y2K litigation. A reasonable and fair attorney fees' cap will 
decrease the amount of excessive and frivolous litigation arising from 
the Y2K problem. But without a reasonable cap, I am concerned that the 
Y2K problem could become a boondoggle for the trial lawyers at the 
expense of small businesses. However, in the interest of passing this 
legislation, I will not be offering an attorney's fee amendment at this 
time. I do hope that the Senate will be able to consider and debate 
this issue in the future.
  That having been said, I ask that the Senate move quickly to pass 
this legislation and protect small businesses from potential Y2K 
litigation.
  Thank you very much, Mr. President.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, as one of the original cosponsors of both 
S. 96 and the bipartisan amendment that now constitutes the base bill 
before the Senate, I am, of course, strongly in support of that 
proposal and opposed to the Kerry amendment, even including all of the 
changes, almost all of which are constructive, that have been added to 
it during the course of its development.
  But in reflecting on both my support of the base bill and my 
opposition to the Kerry amendment, I wish to reflect on the fact that 
most, though not all, of the major actors in this bill have been 
Members of the Senate for a decade or so. Each of them can remember 
that it is a decade or less ago that one of the constant refrains on 
the floor of the Senate--and for that matter, throughout our society--
was our deep concern about American competitiveness.
  Volumes of the Congressional Record are filled with speeches about 
the fact we were losing ground to many of our competitors, most 
particularly the Japanese, because of their work ethic, because of 
their educational system, or for a half dozen other reasons. Probably 
the last such speech was made on the floor of this Senate more than 
half a decade ago.
  It is obvious that the United States, whatever its problems then, has 
had a magnificent recovery and dominates the economic and technical 
world by as great a margin as it ever has had during the course of the 
20th century.
  While all kinds of American geniuses are responsible for this change, 
I think it is safe to say that the extraordinary, imaginative, 
entrepreneurial work of the men and women whose companies make up the 
Year 2000 Coalition supporting this legislation have the greatest 
responsibility and deserve the greatest amount of credit for changes in 
the nature of our economy and of our society and the way in which we 
live, the way in which we communicate with one another and the way in 
which we preserve and enhance knowledge. These factors have changed as 
much in this last decade as in the previous century.
  It is, therefore, the very people and the very companies that have 
done more to enhance the quality of life in the United States and the 
quality of life around the world who have done more to break down 
barriers between people and regions and nations. It is these people who 
seek the modest relief proposed in this bill, these people who are so 
responsible for our economic success.
  I have been handed a letter to the distinguished junior Senator from 
Massachusetts from the Year 2000 Coalition. I ask unanimous consent 
that letter be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                          Year 2000 Coalition,

                                                     June 8, 1999.
     Hon. John F. Kerry,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Senator Kerry: The Year 2000 Coalition, a broad-based 
     multi-industry business group, is committed to working with 
     the Senate to enact meaningful Y2K liability legislation. We 
     fully support S. 96 sponsored by Senators McCain and Wyden, 
     with amendments to be offered by Senator Dodd. This is also 
     supported by Senators Hatch, Bennett, Gorton, Feinstein and 
     others. S. 96 is the most reasonable approach to curtail 
     unwarranted and frivolous litigation that might occur as a 
     result of the century date change.
       While we appreciate any effort that further demonstrates 
     the bipartisan recognition of the need for legislation, the 
     Coalition does not support the amendment to S. 96 that is

[[Page 12069]]

     being circulated in your name. We urge you to support S. 96 
     and to not introduce an amendment to it. Your vote in favor 
     of cloture is important to bring the bill to the floor and 
     allow the Senate to address the challenge of Y2K confronting 
     all Americans. A vote in favor of S. 96 is a vote in favor of 
     Y2K remediation, instead of litigation.
       This letter was also sent to the following Senators: Robb, 
     Daschle, Reid, Breaux, and Akaka.
           Sincerely,
         Aerospace Industries Association, Airconditioning & 
           Refrigeration Institute, Alaska High-Tech Business 
           Council, Alliance of American Insurers, American 
           Bankers Association, American Bearing Manufacturers 
           Association, American Boiler Manufacturers Association, 
           American Council of Life Insurance, American 
           Electronics Association, American Entrepreneurs for 
           Economic Growth, American Gas Association, American 
           Institute of Certified Public Accountants, American 
           Insurance Association, American Iron & Steel Institute, 
           American Paper Machinery Association, American Society 
           of Employers, American Textile Machinery Association, 
           American Tort Reform Association, America's Community 
           Bankers, Arizona Association of Industries, Arizona 
           Software Association, Associated Employers, Associated 
           Industries of Missouri, Associated Oregon Industries, 
           Inc.
         Association of Manufacturing Technology, Association of 
           Management Consulting Firms, BIFMA International, 
           Business and Industry Trade Association, Business 
           Council of Alabama, Business Software Alliance, 
           Chemical Manufacturers Association, Chemical 
           Specialties Manufacturers Association, Colorado 
           Association of Commerce and Industry, Colorado Software 
           Association, Compressed Gas Association, Computing 
           Technology Industry Association, Connecticut Business & 
           Industry Association, Inc., Connecticut Technology 
           Association, Construction Industry Manufacturers 
           Association, Conveyor Equipment Manufacturers 
           Association, Copper & Brass Fabricators Council, Copper 
           Development Association, Inc., Council of Industrial 
           Boiler Owners, Edison Electric Institute, Employers 
           Group, Farm Equipment Manufacturers Association, 
           Flexible Packaging Association.
         Food Distributors International, Grocery Manufacturers of 
           America, Gypsum Association, Health Industry 
           Manufacturers Association, Independent Community 
           Bankers Association, Indiana Information Technology 
           Association, Indiana Manufacturers Association, Inc., 
           Industrial Management Council, Information Technology 
           Association of America, Information Technology Industry 
           Council, International Mass Retail Council, 
           International Sleep Products Association, Interstate 
           Natural Gas Association of America, Investment Company 
           Institute, Iowa Association of Business & Industry, 
           Manufacturers Association of Mid-Eastern PA, 
           Manufacturer's Association of Northwest Pennsylvania, 
           Manufacturing Alliance of Connecticut, Inc., Metal 
           Treating Institute, Mississippi Manufacturers 
           Association, Motor & Equipment Manufacturers 
           Association, National Association of Computer 
           Consultant Business.
         National Association of Convenience Stores, National 
           Association of Hosiery Manufacturers, National 
           Association of Independent Insurers, National 
           Association of Manufacturers, National Association of 
           Mutual Insurance Companies, National Association of 
           Wholesaler-Distributors, National Electrical 
           Manufacturers Association, National Federation of 
           Independent Business, National Food Processors 
           Association, National Housewares Manufacturers 
           Association, National Marine Manufacturers Association, 
           National Retail Federation, National Venture Capital 
           Association, North Carolina Electronic and Information 
           Technology Association, Technology New Jersey, NPES, 
           The Association of Suppliers of Printing, Publishing, 
           and Converting Technologies, Optical Industry 
           Association, Printing Industry of Illinois-Indiana 
           Association, Power Transmission Distributors 
           Association, Process Equipment Manufacturers 
           Association, Recreation Vehicle Industry Association.
         Reinsurance Association of America, Securities Industry 
           Association, Semiconductor Equipment and Materials 
           International, Semiconductor Industry Association, 
           Small Motors and Motion Association, Software 
           Association of Oregon, Software & Information Industry 
           Association, South Carolina Chamber of Commerce, Steel 
           Manufacturers Association, Telecommunications Industry 
           Association, The Chlorine Institute, Inc., The 
           Financial Services Roundtable, The ServiceMaster 
           Company, Toy Manufacturers of America, Inc., United 
           States Chamber of Commerce, Upstate New York Roundtable 
           on Manufacturing, Utah Information Technology 
           Association, Valve Manufacturers Association, 
           Washington Software Association, West Virginia 
           Manufacturers Association, Wisconsin Manufacturers & 
           Commerce.

  Mr. GORTON. This letter was signed by companies or groups too 
numerous for me either to name or to count. They explicitly state 
support of the Year 2000 Coalition for S. 96 in the form in which it 
finds itself now, explicitly opposing the Kerry amendment to that bill.
  Personally, I think that letter deserves great weight and our most 
solemn consideration without regard to any of the details of the debate 
on the differences between S. 96 with its bipartisan amendment and the 
Kerry amendment. When one goes into the details of those differences, 
the justification for this letter becomes even more apparent.
  My long-time friend and distinguished rival in this matter, the 
Senator from South Carolina, and I have differed on a substantial 
number of legal concepts that go far beyond Y2K legislation. He knows, 
as does the distinguished occupant of the Chair, that my own personal 
preference--and I suspect the preference of the Year 2000 Coalition--
would be to abolish the concept of joint liability in its entirety. The 
concept of joint liability is one pursuant to which a person, a group, 
a defendant, only partially or even marginally responsible for a given 
legal wrong, nonetheless can be held responsible for all of the damages 
caused by all of the defendants against whom a judgment is entered.
  On its surface and beneath its surface, such a concept is 
extraordinarily difficult to justify.
  In the case of potential Y2K litigation, it is even more difficult to 
justify, as in any typical Y2K lawsuit there may well be dozens of 
defendants--the manufacturers of all of the elements of what can be an 
extremely complicated software and hardware production, its 
distributors, both wholesale and retail, and perhaps many others. The 
risks to companies, whether sophisticated or unsophisticated in the 
nuances of the law, the panic created in them, the disruption of their 
priorities, both in the development of new technology and dealing with 
potential Y2K litigation, is impossible to overestimate.
  At first, this bill, or any bill that has seriously been considered 
here on subjects like this, abolishes in its entirety the concept of 
joint liability. Even though I prefer the original S. 96 to this 
proposal, it is a matter that has been worked out very carefully by a 
group of Republicans and Democrats--one of the most important of whom 
is the Senator from Connecticut who is present on the floor--to be a 
result that has broad support not only in this Chamber but around the 
country as a whole.
  Just as the Senator from Connecticut and many of his colleagues have 
compromised on some elements they wish like to have in the bill, so 
have we on our side, and we have with respect to joint liability. There 
are some very real limits on it and S. 96, as it appears before the 
Senate now, and there are a few in the Kerry substitute, but they are 
largely illusionary.
  A second field in which there are differences in this bill has to do 
with punitive damages. How anyone even in this isolated Chamber could 
come up with a proposition that software companies, members of this 
Year 2000 Coalition, are so indifferent to the problems of Y2K that 
somehow or another they deserve to be punished--not in a criminal court 
but by the potential loss of unlimited punitive damages--is difficult 
for me to imagine. It is clear by the vehement opposition to limits on 
punitive damages that there are those in the legal profession who at 
least hope for the bonanza of huge punitive damage awards, however 
difficult it is to imagine the justification for such awards as we 
debate this matter. Or perhaps it would be more accurate to say they 
hope they can force settlements, even on the part of companies they 
believe have not been negligent at all, because of the threat, the mere 
possibility of a very large punitive damage award.

[[Page 12070]]

  I represent one of the handful of States in the United States of 
America that does not permit punitive damages in civil litigation, that 
believes that punishment should be a part of the criminal law and not 
the civil law. I have not noticed, in a long career, that justice is 
unavailable to plaintiffs in the courts of the State of Washington on 
that account. I believe we would have a more responsible legal system, 
a more fair and more just legal system, if the concept of punitive 
damages in civil litigation was abolished across the country. It is not 
going to be. It was not even in the product liability legislation of 
which I have been a sponsor in the past. It was not in the original 
form of this bill, and it is not in the form that appears before us 
now.
  But there are some distinct limitations on punitive damages for 
relatively small companies, companies that could obviously be 
bankrupted by punitive damage awards--a bankruptcy that, I submit, in 
almost every case would not benefit the economy or the people of the 
United States. Yet, for all practical purposes, even those minor 
limitations are removed from this bill in the Kerry amendment.
  Finally, the Kerry amendment allows for the single form of litigation 
that may most disturb the members of the Year 2000 Coalition, class 
actions on the part of consumers, actions in which almost invariably 
the plaintiffs are nominal plaintiffs, actions in which many of the 
plaintiffs often do not even know they are plaintiffs, actions that 
very frequently have been far more on behalf of the lawyers who bring 
them than on the nominal class of plaintiffs themselves. To allow such 
actions seems to me to be a serious mistake and seriously to undermine 
the entire goal of Y2K relief.
  In summary, I do not think S. 896, as modified, is a terribly strong 
bill. I think it provides a degree of appropriate relief to a 
fundamentally vital element of the American economy and the advancement 
of our own standard of living in a fashion which is important to that 
industry and in a fashion that is beneficial to that industry. But I do 
not think it goes far enough. Others think it goes too far. I do 
believe, however, we have now reached a conclusion that will be 
supported by a significant majority of the Members of the Senate, 
members of both parties.
  I can no longer say, with the changes that have been made in it, that 
the Kerry amendment is useless, that it provides no relief at all. It 
does include in it some constructive elements, some which may be 
appropriate for consideration during a conference subcommittee meeting 
between the House and the Senate as we put this bill in final form. But 
in comparison with the base bill before us, it does not provide 
appropriate relief. It does not meet the minimum needs of the year 2000 
Coalition. It does not meet the minimum needs of a standard of 
reasonable justice with respect to a single problem that will go away 
shortly after the beginning of the new millennium in a piece of 
legislation that will not become a part of the permanent law of the 
United States, because it will not be needed.
  So, I return to the remarks with which I began. The members of this 
coalition, the signatories to this letter, have done an extraordinary 
service, not only to themselves, not only to the American people and 
the American economy, but to the entire world and to the task of 
building bridges among people in the entire world. They have asked for 
help for a single specific problem that faces them and that faces us 
and will for a few short months and for a relatively short period of 
time thereafter. They deserve that relief. They deserve it as promptly 
as we can possibly pass it. And they deserve it with our enthusiastic 
support.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. ROBB. Mr. President, as a Senator from Virginia, with one of the 
most vibrant high-tech communities anywhere in the country, I am 
acutely aware of the problems the Y2K bug presents. And I want a bill. 
I have worked with the high-tech community in Virginia, particularly 
Northern Virginia, but throughout the State since my days as Lieutenant 
Governor and as Governor.
  During the time I was Governor, I created a task force on high 
technology and they came up with 44 recommendations, the most prominent 
of which was to create a Center for Innovative Technology, which, for 
the benefit of our colleagues, is housed in that funny-shaped building 
very close to Dulles International Airport. Colocated with it was the 
Software Productivity Consortium, because we wanted to be able to 
provide a central point for consideration of all the issues and 
concerns of the technology industry and a way to broker the release of 
the scientific work on technology-related projects.
  So, I come with a lengthy background of working with the high-
technology community and a specific interest in getting legislation 
that will address the Y2K problem.
  The potential wave of litigation which could accompany the turn of 
the century could, in fact, be crushing, and many businesses have 
indicated that the threat of litigation could keep them from devoting 
the necessary resources to addressing their own Y2K problems. A 
reasonable bill, which would weed out frivolous lawsuits and encourage 
parties to remediate their Y2K disputes outside the courtroom, would be 
to everyone's benefit. But while there is general agreement that some 
sort of bill should pass, regrettably, we do not yet have consensus on 
exactly what language should be in this bill.
  Passage of almost any legislation requires some elements of 
compromise. We have seen that process ongoing. Indeed, I entered this 
debate several weeks ago--actually, now months ago--to help find the 
necessary consensus on this issue. Given the rapidly approaching new 
year, as well as the dwindling number of legislative days left in the 
Senate, it is important for us to act on this legislation now. Further 
delay will only make it more difficult to reach the consensus most of 
us are looking for.
  With the tight timeline we are facing, I am concerned with the 
direction the debate still seems to be taking. Notwithstanding my own 
misgivings about certain provisions in S. 96, the administration 
strongly objects to the bill in its current form, and the President has 
promised that if Congress sends S. 96 to the White House without 
significant modifications, he will veto it. Thus, we are presented with 
a dilemma. If we want a bill that will solve a legitimate problem, we 
need a bill that the President will sign or at the very least will not 
veto, or we need 67 hard votes in order to override a veto. Otherwise, 
we are just playing with politics. I regret to say I am afraid that is 
where we are now. We do not at this point, on this language, have the 
necessary 67 hard votes.
  The President has promised to veto this bill if it comes to him in 
its current form. So we are going through an exercise to polarize and 
politicize an issue instead of providing a solution to an issue.
  I appreciate the very hard work that my distinguished colleague from 
Massachusetts has put in trying to find the necessary language that 
would provide the relief that is legitimate and on which virtually 
everyone in the Chamber can agree and still get the President to sign.
  If we continue to approach this legislation with a vehicle we know 
the President has already promised to veto, we are not giving the 
industry the relief they so critically need. All we are doing is 
scoring political and debating points, but we are not coming up with a 
solution. We have that dilemma.
  I am, therefore, a cosponsor of the legislation offered by my 
distinguished friend, the Senator from Massachusetts, because the White 
House has indicated they will sign that particular legislation if these 
changes are made. It has line-by-line changes to certain provisions, 
and they are relatively limited at this point.
  I applaud the good will that has prevailed on both sides to this 
point in reaching this particular position, but we are still not there. 
For this reason, I hope that our colleagues will support the amendment 
that has been drafted

[[Page 12071]]

and negotiated by my distinguished partner from Massachusetts because, 
at that point, we will have a bill. It will not be a perfect bill, but 
it also will not be a vetoed bill.
  It is inconceivable to me, given the many demands that have come to 
this Chamber from all of the interests that are involved, that we could 
ever come up with a perfect bill, but at least we will have protection 
from the kinds of lawsuits that the industry is most concerned about, 
and we will have it in time to make decisions to remediate some of the 
problems they could otherwise deal with if they were free from the 
threat of litigation in this particular area.
  I thank my colleague from Massachusetts for his patience in working 
out the amendment which is now before us, and I urge my colleagues to 
pass this particular amendment.
  I yield the floor.
  The PRESIDING OFFICER. Who seeks time?
  Mr. DODD. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. KERRY. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 610

  Mr. KERRY. Mr. President, I know my colleagues on the other side are 
anxious to know how we will proceed. Senator Daschle intends to speak, 
and I suspect that may be it on our side. I am sure our colleagues on 
the other side will be thrilled to hear that, and we can move forward.
  I want to say a couple of things about what has been said in the last 
hour of debate. Some of my colleagues have mentioned the ``vagueness'' 
of the standard that is being applied to ask whether or not a company 
ought to determine if they have a potential for Y2K liability. First of 
all, there is no vagueness whatsoever in any company's capacity to 
determine on its own, through its technological knowledge, whether or 
not it has a potential of liability, and that is because of the nature 
of the problem.
  We are talking about inventing chips with time-sensitive 
digitalization on ``00'' and its capacity for interpretation. People 
can run through their programs and run through the demand list, so to 
speak, on that program and pretty thoroughly test it to make the kind 
of determination about potentiality. Anybody who has sufficiently done 
that is going to qualify automatically for proportionality.
  To the degree that my colleagues complain and say, well, gee, they 
are coming in here with this standard that might have to go to jury--
the Senator from Connecticut is worried about a standard that goes to 
the jury--turn to their bill, page 28, Section 9: Duty to Mitigate.

       Damages awarded in any Y2K action shall exclude 
     compensation for damages the plaintiff could reasonably have 
     avoided in light of any disclosure or other information of 
     which the plaintiff was, or reasonably should have been, 
     aware, including information made available by the defendant 
     to purchasers. . . .

  So there is an issue for the jury. There is an issue. They have no 
problem putting the responsibility on the plaintiff. They have no 
problem at all finding a vague standard, so to speak, using their 
terminology. I do not believe our standard is vague, but they have no 
problem at all requiring the jury to determine the reasonableness of 
what the defendants have done. And the plaintiff is going to have to 
prove it.
  So that is part of the imbalance of this bill. Every step of the way, 
there is a shifting, a change in tort law, a requirement for a higher 
standard that goes beyond the original purpose.
  I have heard my colleagues say the purpose of this bill is to help 
technology companies that are an important part of the American 
mainstream, economic bloodline, if you will, for all of our country. I 
agree with that. I absolutely agree with that. I do not want frivolous 
lawsuits. I do not want lawyers lining up for some kind of constructed 
settlement process that is based on a fiction.
  But our bill does not provide for that. Our bill is very clear in the 
way in which it requires a period of cure, just as S. 96 does, a period 
of mitigation, just as S. 96 does. It requires the same underlying 
relationship with contract law, with one exception--where you have an 
intentional, willful, reckless action by a company. No one for the 
other side has been able to answer the public policy question of why 
any entity that acts recklessly, with wanton, willful purpose, ought to 
be exonerated from a standard that holds them accountable. I do not 
think any American, average citizen, who is subjected to the 
consequences of those kinds of actions would believe that is true.
  Finally, on proportionality, the argument was just made by the 
Senator from Washington that you ought to have this proportionality 
available to a company. I agree with him. But it ought to be available 
to a company that has at least made a de minimis effort, a de minimis 
effort to determine whether its own product might have the potential to 
have a Y2K problem.
  I think our colleagues are going to have a hard time explaining why a 
company should not have to at least show that it inventoried its own 
products to determine that. It would be irresponsible, in the context 
of a bill that is supposed to encourage mitigation and encourage remedy 
and cure, to suggest that companies should not be encouraged to go out 
and determine what they may have done wrong. It is just inconsistent.
  So I believe our effort is a bona fide effort to do precisely what 
the sponsors of S. 96 want to do. I believe it achieves it in a more 
fair and evenhanded way. I believe that, as a consequence of the White 
House agreement with our position, ultimately we are going to have to 
adjust.
  I say to my friends in the high-technology industry, I hope they will 
carefully read the language in our proposed amendment. If one of them 
wants to come to me and suggest language that is clearer, to suggest 
how they could conform in a reasonable way that they are not afraid of, 
I will adopt that language.
  If any one of them wants to show me a reasonable way to have a 
standard here that makes them a good citizen or qualifies them as such, 
I am all for it. I have not yet found a CEO of a company who has been 
able to suggest to me anything except wanting to not be sued as a 
rationale for why, from a public policy perspective, we should change 
the law of this country prospectively in an anticipatory fashion to 
change a longstanding relationship. And I do not think that case will 
be made.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. Who seeks time?
  Mr. HOLLINGS. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. WYDEN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WYDEN. Thank you, Mr. President.
  I would like to take just a few minutes, as we wait for the minority 
leader to address some of the concerns that have been raised by the 
Senator from Massachusetts, to describe why I and the Democratic leader 
of the Y2K efforts, Senator Dodd, believe that the Kerry amendment, 
though certainly sincere, is really a glidepath, an invitation, to 
frivolous lawsuits with respect to this Y2K matter.
  I come today to say we know we are going to have problems early in 
the next century. That has been documented on a bipartisan basis by the 
Y2K committee. What we are concerned about is not compounding the 
problem with frivolous lawsuits. Regrettably, the Kerry proposal is 
going to do just that.
  What the Senator from Connecticut and I have tried to do is to talk 
first about the vagueness of the language in the Kerry proposal. This 
notion that

[[Page 12072]]

you would simply have to identify ``potential'' with respect to the Y2K 
issue and Y2K problems is just going to be a lawyers' full employment 
program. What is going to happen is, you are going to have frivolous 
cases brought; you will very quickly have companies, particularly small 
business defendants, move to dismiss those cases because they are 
patently frivolous.
  Because the Kerry standard is so vague, a judge is going to have 
really no alternative other than to send that to a jury. So I think 
that provision, identifying ``potential,'' is a real lightning rod for 
frivolous lawsuits. That would be our first concern.
  The second, it seems to me, is that the Senator from Massachusetts 
has, to a great extent, mixed together, commingled, the principles of 
punitive damages and proportionality. I would like to try to step back 
for a minute and see if I can clarify that.
  The Senator from Massachusetts has spoken repeatedly, he has come to 
the floor repeatedly, and said that under the bipartisan legislation, 
if defendants are engaged in reckless, irresponsible, wanton conduct, 
there is going to be no remedy for the plaintiff in those situations.
  The fact of the matter is, under proportionality--clearly laid out in 
our legislation--you are liable to the extent that you contributed to 
the problem. That is true if you are a small business, if you are one 
of the Fortune 500 businesses--it is true no matter who you are. Under 
our language, with respect to proportionality, you are liable for what 
you contribute. It is just that simple.
  With respect to punitive damages, besides keeping in place the State 
evidentiary standards on punitive damages, what we in fact say is the 
only people we are really going to try to protect are those who are 
such a key part of the technology engine for our country, and that is 
the Nation's small businesses.
  Finally, colleagues, I think there is some confusion with respect to 
this issue of economic losses as well. The Senator from Massachusetts 
has said that in some way the bipartisan proposal we bring has narrowed 
the availability of coverage for economic losses. We very specifically, 
in our legislation, make clear that existing State contract and tort 
law is kept in place.
  What the dispute is all about is that the Senator from Massachusetts, 
and perhaps others, is in effect trying to tortify existing contract 
law. They would like to try to create some torts for 36 months in the 
Y2K area where those torts do not exist today in existing law.
  My reputation, my background is as a consumer advocate. That is what 
I was doing with the Gray Panthers for 7 years before I was elected to 
the Congress, what I have tried to do for 18 years in both the House 
and the Senate. I feel very strongly about protecting consumers, and 
there are areas where it is appropriate to create new torts. Certainly, 
I have created a few causes of action during my years of service in the 
Congress.
  If I can just finish, then I will be glad to yield to the Senator 
from Massachusetts. I think it would be a mistake, given the 
extraordinary potential for economic calamity in the next century, to 
change the law with respect to economic loss. We are neither broadening 
it nor narrowing it. We are keeping it in place. I know that those 
State laws with respect to economic loss do not do a lot of the things 
that the Senator from Massachusetts thinks are important, but that is, 
in fact, what we do in our legislation.
  I want to be clear, our legislation does nothing, absolutely nothing, 
to limit remedies that are available to plaintiffs when, in fact, they 
are victims of a personal injury or wrongful death. So if an 
individual, early in January of the next century, is in an elevator, 
for example, and the computer in the elevator breaks, and the 
individual tragically falls to his or her death or suffers a grievous 
bodily injury, all existing tort law remedies apply in that kind of 
instance.
  The bill that is before the Senate now is a very different one than 
the one that was voted on on a partisan basis by the Senate Commerce 
Committee. In fact, in the Senate Commerce Committee, I joined the 
Senator from Massachusetts in saying that it was wholly inadequate in 
terms of protecting the rights of consumers. I happen to think the bill 
the House of Representatives passed is wholly inadequate.
  The legislation that we have now is a balanced bill. The defendants 
have strong obligations to cure defects. The plaintiffs have an 
obligation to mitigate damages. I think our failure to pass this bill, 
which has now included 10 major changes to favor consumers and 
plaintiffs since the time it left the Commerce Committee, our failure 
to pass this bill, I think, is a failure to meet our responsibilities 
as it relates to this technology engine that is driving so much of our 
Nation's prosperity.
  I think when we look at the potential for calamity early in the next 
century, I don't think there is any dispute that we are going to have a 
significant number of problems. The question is, does the Senate want 
to compound those problems by triggering a round of unnecessary and 
frivolous litigation?
  I hope we won't do that. I urge my colleagues to oppose the Kerry 
amendment.
  I yield the floor.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, the comments of the Senator from Oregon now 
have highlighted the sort of difference between what they say they do 
and the reality of what is done here.
  I am not going to ask the reporter to read back the comments, but let 
me just quote the Senator. He can tell me if I have said differently. 
The Senator just said on the floor of the Senate that the Kerry bill 
seeks to create new torts. Am I correct? Am I stating what the Senator 
said?
  Mr. WYDEN. Mr. President, if the Senator will yield, I am happy to 
engage him.
  I am saying that our proposal protects State contract law with 
respect to economic losses. It seems to me that the gentleman's 
proposal, in wanting to change existing State contract law, is clearly 
moving us in a different area which legal experts have come to 
describe, pretty arcanely, as the notion of tortifying contract law 
doctrine, yes.
  Mr. KERRY. Let me say to my colleague, he has just confirmed what I 
said. He is insinuating that we are creating a new tort.
  I want to make it very clear, what the Senator and Senator McCain and 
others are doing is taking away the right of State law, with respect to 
existing contract law, to be applied. They are saying that if a State 
allows a particular tort with respect to economic loss, they can't do 
it.
  I will be very specific about it. My provision with respect to 
economic loss does exactly what the provision of the Senator from 
Oregon and the Senator from Arizona does. We are both trying to hold on 
to contracts, to avoid contract limitations on liability, and not to 
have people move into tort. Neither of us want contract law to become 
tort. So we both prevent that.
  Here is the distinguishing feature. What we do that Senator McCain 
and company do not do is, we say the following: If the defendant 
committed an intentional tort, you are not going to void the contract 
law, except--and this is the only exception--where the tort involves 
misrepresentation or fraud regarding the attributes or capabilities of 
the product that is the basis of the underlying claim.
  Mr. WYDEN. Will the Senator yield on one point?
  Mr. KERRY. In a moment I will yield.
  Mr. WYDEN. Is that available under current law?
  Mr. KERRY. I want to make this clear, Mr. President. Under the McCain 
bill, if a party is induced by fraud to enter into a contract, they 
can't recover damages for that. So what if in a conversation they say 
to the salesperson of the company: Is your product Y2K compliant? And 
the person says: Oh, absolutely, our product has been Y2K compliant. We 
are terrific, blah, blah, blah.

[[Page 12073]]

  If they intentionally were to induce them into the contract on 
misrepresentation and they lose business as a result of that, they are 
being denied the ability to sue for that by S. 96.
  I think that is wrong. I don't know, again, what public policy 
interest is served by suggesting that fraud and misrepresentation ought 
to be protected. Why should they be protected?
  Mr. WYDEN. Will the Senator yield?
  Mr. KERRY. I will yield for an answer to the question. Why should 
fraud or misrepresentation be protected?
  Mr. WYDEN. We apply State contract law to these economic losses. What 
we say is, you get your economic loss under current law if your State 
law lets you. The Senator from Massachusetts is absolutely right. There 
is a sincere difference of opinion here. We are saying economic losses 
should be governed by State contract law. The Senator from 
Massachusetts says that he would like to go with a different concept. 
That is the difference of opinion here.
  Mr. KERRY. Let my say to my colleague, with all due respect, that he 
is dead wrong. He is even more so dead wrong, because moments ago they 
adopted an amendment by the Senator from Colorado, the Allard 
amendment, which makes it very clear that State law is superseded. That 
is the amendment they adopted. So State law takes precedence, period, 
end of issue. You cannot protect people from misrepresentation or 
fraud, and there is no public policy rationale for that.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, with consent across the aisle, I believe, 
I ask unanimous consent that there be 1 hour equally divided on the 
Kerry amendment No. 610, followed by a vote on or in relation to the 
amendment, with no amendments to the amendment being in order prior to 
the vote, but that the vote will take place at a time to be determined 
by the managers.
  The PRESIDING OFFICER. Is there objection?
  Mr. REID. Reserving the right to object, I wonder if my friend from 
Washington could hold that unanimous consent request for a few minutes. 
We have to make a couple calls.
  Mr. GORTON. I will withdraw the request for the moment.
  The PRESIDING OFFICER. Who seeks time? The Senator from Nevada.
  Mr. REID. Mr. President, I am here to speak as one of those who is a 
cosponsor of the amendment now pending, the Kerry amendment. People 
have spent a tremendous amount of time coming up with the various 
proposals that are now before the Senate. I commend and applaud those 
who have worked so hard on this issue. I see on the floor my friend 
from Oregon. He has spent not hours and days, but weeks on this 
legislation. I commend him for the efforts he has made.
  I do, however, say that in addition to the work he has done as a 
principal author of the bill, the junior Senator from Massachusetts has 
also spent a tremendous amount of time on this issue--as much if not 
more than my friend from the State of Oregon. The problem we have with 
this legislation--and we all recognize that it is extremely important--
is that we have 204 days left until Y2K. We don't have time to play 
partisan politics and wait until the next session to produce a bill.
  With 204 days left, we have to get to some serious legislation here 
and get something that is not perfect, but doable. I suggest that the 
amendment I am cosponsoring, which the chief author, the Senator from 
Massachusetts, has spoken at some length on, is legislation that the 
President will sign. We have to take that into consideration.
  In the last several months I have traveled around the country meeting 
with high-tech companies, small businessmen and women, and individuals 
who have done so much to help this robust economy in which we are now 
involved. These individuals who run these companies want a bill. They 
don't want or expect a perfect bill, but they want a bill. They want a 
bill that would become legislation. They want a bill that would meet 
the demands they have. These small business men and women are 
successful enough, and certainly smart enough, to realize that with 204 
days left there is a lot that has to be done. They would much rather 
have something signed into law than nothing at all.
  We have to make sure that whatever we do is reasonable. The Kerry 
amendment is reasonable. The amendment now pending before this body is 
reasonable. We reward people for making an effort to address the Y2K 
problem. We also discourage frivolous lawsuits. I hope this amendment 
will receive a resounding vote.
  I submit to this body that what we are doing is offering an amendment 
to the underlying bill that would make the legislation something the 
President would sign. We hope that when this bill, with this amendment, 
gets out of here, it will go to conference, and at the conference the 
differences will be worked out.
  As it now stands, the underlying bill simply will not be signed by 
the President. I submit to my friend from the State of Oregon, who has 
worked so hard on this, that his legislation will not be signed. They 
have amended the McCain legislation, but the President of the United 
States will not sign this legislation. He has said this orally and he 
has said it in writing.
  So I think, we have to push something through, in good faith, to help 
this problem that we have, something that would be signed by the 
President. I hope that people of good will on both sides of the aisle 
will join together and offer support for the underlying amendment.
  Mr. GORTON. Mr. President, I ask unanimous consent that there be 1 
hour equally divided on the Kerry amendment No. 610, followed by a vote 
on or in relation to the amendment, with no amendments in order prior 
to the vote, with the vote to take place at a time to be determined by 
the managers.
  The PRESIDING OFFICER. Is there objection?
  Mr. KERRY. Reserving the right to object. I actually didn't hear it.
  Mr. GORTON. It provides for 1 hour equally divided, with no more 
amendments while that hour is going on, and that the time for the vote 
will be determined by the managers of the bill.
  Mr. KERRY. The managers, plural?
  Mr. GORTON. Yes.
  Mr. KERRY. I have no objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The PRESIDING OFFICER (Mr. Sessions). Who yields time?
  Mr. LAUTENBERG. Mr. President, I ask unanimous consent that I be 
permitted to talk as in morning business for up to 10 minutes, and that 
it not be charged to either side.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. Lautenberg pertaining to the introduction of S. 
1193 are located in today's Record under ``Statements on Introduced 
Bills and Joint Resolutions.'')


                           Amendment No. 610

  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, I thought our colleagues might find it 
worthwhile to know that there are literally dozens of organizations, 
representing a significant percentage of the gross domestic product of 
this country, that endorse the McCain-Wyden-Dodd legislation, the Y2K 
bill. Beginning with the aerospace industry organizations, running 
through to the Wisconsin Manufacturers and Commerce Association, the 
West Virginia Manufacturers Association, Valve Manufacturers, Service 
Masters--all of the high-tech organizations, many of the State 
organizations--the North Carolina Electronic and Information Technology 
Association, Technology of New Jersey--it just goes on down this long 
list. My colleagues may want to have some idea and sense of the people 
we have worked with mostly now for many months to try to craft this 
legislation in a timely fashion.
  This list represents almost 70 percent of the gross domestic product 
of the United States and thousands and thousands of working men and 
women in this country who would like to see Congress come up with some 
answer of

[[Page 12074]]

how to solve the Y2K problem and yet not create a cost and an action 
that doesn't solve the problem but ends up with more costs and without 
resolving the very serious issue that Y2K poses. I ask unanimous 
consent that list be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                          Year 2000 Coalition,

                                                     June 8, 1999.
       Dear Senator: The Year 2000 Coalition hand-delivered the 
     attached letter to Senators Kerry, Robb, Daschle, Reid, 
     Breaux, and Akaka, who have prepared a staff working draft of 
     a proposed amendment to S. 96, The Y2K Act. The Coalition 
     supports passage of S. 96 with incorporated amendments to be 
     offered by Senator Dodd. We have urged the Senators that are 
     working on the staff draft to support S. 96.
           Sincerely,
       Aerospace Industries Association; Airconditioning & 
     Refrigeration Institute; Alaska High-Tech Business Council; 
     Alliance of American Insurers; American Bankers Association; 
     American Bearing Manufacturers Association; American Boiler 
     Manufacturers Association; American Council of Life 
     Insurance; American Electronics Association; American 
     Entrepreneurs for Economic Growth; American Gas Association; 
     American Institute of Certified Public Accountants; American 
     Insurance Association; American Iron & Steel Institute; 
     American Paper Machinery Association; American Society of 
     Employers; American Textile Machinery Association; American 
     Tort Reform Association; America's Community Bankers; Arizona 
     Association of Industries; Arizona Software Association; 
     Associated Employers; Associated Industries of Missouri; 
     Associated Oregon Industries, Inc.; Association of 
     Manufacturing Technology; Association of Management 
     Consulting Firms; BIFMA International Business and Industry 
     Trade Association; Business Council of Alabama; Business 
     Software Alliance; Chemical Manufacturers Association; 
     Chemical Specialties Manufacturers Association; Colorado 
     Association of Commerce and Industry; Colorado Software 
     Association; Compressed Gas Association; Computing Technology 
     Industry Association; Connecticut Business & Industry 
     Association, Inc.; Connecticut Technology Association; 
     Construction Industry Manufacturers Association; Conveyor 
     Equipment Manufacturers Association; Copper & Brass 
     Fabricators Council; Copper Development Association, Inc.; 
     Council of Industrial Boiler Owners; Edison Electric 
     Institute; Employers Group; Farm Equipment Manufacturers 
     Association; Flexible Packaging Association; Food 
     Distributors International; Grocery Manufacturers of America; 
     Gypsum Association; Health Industry Manufacturers 
     Association; Independent Community Bankers Association; 
     Indiana Information Technology Association; Indiana 
     Manufacturers Association, Inc.; Industrial Management 
     Council; Information Technology Association of America; 
     Information Technology Industry Council; International Mass 
     Retail Council; International Sleep Products Association; 
     Interstate Natural Gas Association of America; Investment 
     Company Institute; Iowa Association of Business & Industry; 
     Manufacturers Association of Mid-Eastern PA; Manufacturer's 
     Association of Northwest Pennsylvania; Manufacturing Alliance 
     of Connecticut, Inc.; Metal Treating Institute; Mississippi 
     Manufacturers Association; Motor & Equipment Manufacturers 
     Association; National Association of Computer Consultant 
     Business; National Association of Convenience Stores; 
     National Association of Hosiery Manufacturers; National 
     Association of Independent Insurers; National Association of 
     Manufacturers; National Association of Mutual Insurance 
     Companies; National Association of Wholesaler-Distributors; 
     National Electrical Manufacturers Association; National 
     Federation of Independent Business; National Food Processors 
     Association; National Housewares Manufacturers Association; 
     National Marine Manufacturers Association; National Retail 
     Federation; National Venture Capital Association; North 
     Carolina Electronic and Information Technology Association; 
     Technology New Jersey; NPES, The Association of Suppliers of 
     Printing, Publishing, and Converting Technologies; Optical 
     Industry Association; Printing Industry of Illinois-Indiana 
     Association; Power Transmission Distribution Association; 
     Process Equipment Manufacturers Association; Recreation 
     Vehicle Industry Association; Reinsurance Association of 
     America; Securities Industry Association; Semiconductor 
     Equipment and Materials International; Semiconductor Industry 
     Association; Small Motors and Motion Association; Software 
     Association of Oregon; Software & Information Industry 
     Association; South Carolina Chamber of Commerce; Steel 
     Manufacturers Association; Telecommunications Industry 
     Association; The Chlorine Institute, Inc.; The Financial 
     Services Roundtable; The ServiceMaster Company; Toy 
     Manufacturers of America, Inc.; United States Chamber of 
     Commerce; Upstate New York Roundtable on Manufacturing; Utah 
     Information Technology Association; Valve Manufacturers 
     Association; Washington Software Association; West Virginia 
     Manufacturers Association; Wisconsin Manufacturers & 
     Commerce.

  Mr. DODD. Mr. President, again, I listened to the debate on the Kerry 
amendment. Again, as I stated earlier, I went down the various points 
of the proposal. The amendment basically is designed to open up the 
McCain legislation to the kinds of unbridled litigation that can occur 
in this area.
  As I said earlier, we have not argued that we have crafted a perfect 
bill. It is our fervent hope that this legislation will become 
unnecessary, because the problems that many anticipate we hope will not 
occur. But if they do occur, if, as some claim, we are going to face 
serious problems in this country, then we think it is the wiser course 
of action for Congress to enact legislation that would encourage the 
resolution of the Y2K problem.
  That is what we have attempted to do with this bill. We have had to 
compromise it, because it asks for compromise. Senator Wyden, our 
distinguished colleague from Oregon, is responsible for at least 11 or 
12 changes, that I know of, in this bill from its original crafting. I 
worked on three or four of the ones dealing with the punitive damages 
and directors' and officers' liability in the States in this bill. We 
have compromised slightly. But every day you have to move the goal post 
to serve yet another constituency.
  We would like to have a bill that everyone would support. It would be 
wonderful to have a piece of legislation that 100 Senators would get 
behind. But candidly, you have a handful--really just a handful--of law 
firms that are opposed to this, it is a total misstatement to suggest 
that the trial bar in general is opposed to this bill. It is a couple 
of law firms in this country that are opposed to this bill. That is the 
fact of the matter. Because of a couple of law firms, we have an 
amendment that I am confident these law firms are very attracted to, 
like, and support for the obvious reasons. It basically makes this bill 
meaningless or worse; it actually expands an area of the law that 
didn't exist prior to the consideration of this bill. It is one thing 
if you want to change the bill. It is another matter to take existing 
law and create yet new opportunities. That is what the Kerry amendment 
does. When you allow State law to obviate contract law, you are not 
only disagreeing with our bill but you are disagreeing with existing 
law.
  For Members to come in and support this amendment, understand that if 
it carries and ends up being adopted, it will encourage the adoption of 
it. Then we are not only not dealing with the Y2K problem, we are 
expanding areas of litigation that do not presently exist. Whatever 
disagreements you have with the underlying bill, if you want to vote 
against that bill, fine; but don't expand areas of litigation.
  With all due respect to my colleague from Massachusetts, clearly his 
amendment does that. I think it would be a tragedy, as we are trying to 
shut down and reduce the proliferation of litigation, that we find we 
are expanding those opportunities.
  Again, a lot of compromise has been involved in this and a lot of 
time and a lot of effort to bring it to this point.
  Again, I have a great deal of respect for those who disagree with 
this work product. They have a different point of view--one that I 
disagree with, but I respect. To come in and to somehow suggest that we 
are improving this legislation and that we are in fact minimizing the 
possibility of further litigation with the adoption of the Kerry 
amendment is just not the case. You are expanding the opportunities for 
litigation.
  For those reasons, the high-tech communities of this country feel 
strongly about this amendment, and for good reason.
  When the amendment comes up for a final vote, I urge my colleagues to 
reject it and to let us move along and try to pass this legislation, 
and send a message that we care about this issue and want to minimize 
the problems the Y2K issue can present.
  I do not know if there is any more time. I know there is some talk 
about other Members who wish to come over. I urge them to do this. This 
has been going on for 6 hours now. We have 21

[[Page 12075]]

other amendments to consider. My hope is that we can get this completed 
fairly quickly and at least have one or two votes today before we 
adjourn.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, we are now under controlled time, are we 
not?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. KERRY. How does that stand? How much time does each side have at 
this point?
  The PRESIDING OFFICER. The Senator from Massachusetts has 26 minutes 
50 seconds, and the opposition has 23 minutes 53 seconds.
  Mr. KERRY. I yield myself 5 minutes.
  I listened to the Senator from Connecticut. I must say that I am a 
little disappointed, from what I heard, for a simple reason. I haven't 
come to the floor of the Senate and talked about the Chamber of 
Commerce. I haven't come to the floor of the Senate and talked about 
specific companies and interests that are represented or the dynamics 
this raised. I think to suggest that somehow what I have put on the 
floor represents the interests of just a few law firms really is an 
insult to the legislative effort that has taken place here. There is 
nothing in here that lawyers like. There is a restraint on plaintiffs 
almost every step of the way. This has been negotiated with many 
different people. I have sat with high-tech people at great length.
  I have tried to do the bidding of the high-tech community to the 
greatest degree possible. I have listened to them. I have talked to 
Andy Grove three or four times. In his letter to the committee 
chairman, he stated that of his four interests, each had been met in 
this legislation.
  We do exactly what the McCain bill does on cure. We do exactly what 
the McCain bill does on the mitigation. We do exactly what they do with 
respect to contract preservation. The one distinction in the four 
ingredients is a requirement that a company be a good citizen by 
looking over its inventory and making a determination as to what it did 
or didn't put out into the marketplace that might have the potential 
for creating a problem.
  My colleagues come to the floor say again and again: We want 
remediation; we want to make it get better; we don't want lawsuits. I 
don't, either. We want the same remediation.
  But if you ask a company to investigate its inventory, in my 
judgment, you are doing a better job of encouraging them to remediate 
than if you give them a blanket ``out'' from under one of the great 
leverages of our judicial system, which is the joint and several 
liability. They get it no matter what they do. How that is an 
invitation to fixing the system and making it better is beyond me.
  I think we need to be very clear here. Moreover, we have been told we 
are changing contract law. We are not changing contract law. We are 
suggesting contract law ought to be respected, and we are very clear 
about that. In fact, we uphold the contract law as it is, State for 
State.
  No one has answered this question: Why should a company be able to 
escape responsibility for an intentional, willful, wanton, reckless or 
outrageous, willfully committed fraud against an individual when it 
creates economic loss? If you have economic loss under the provision of 
S. 96, you are not permitted to sue with respect to the intentional 
willfulness that took place. Why you want to protect a company that so 
behaves is beyond me. Another company may have a huge loss of 
intellectual property; they may drop their entire database; they may 
not be able to provide their contracts to other companies for months; 
they have economic loss; there was an intentional defrauding. And we 
are not going to hold them accountable for that.
  We should be clear as to what we are talking about. This is a very 
moderate, very legitimate effort, just as legitimate without any 
insinuations of who may be directing the interests of the other side 
and just as legitimate to legislate a sound approach to Y2K liability.
  I reserve the balance of my time.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. BENNETT. Mr. President, I am reluctant to get into this fight 
because, as I said before, I am unburdened with legal education. 
Occasionally when I hear these legal debates, it makes me grateful for 
the fact that I did not go to law school.
  However, I feel the need to stand and comment on some of the things 
that have been heard and some of the statements that have been made 
with respect to this particular amendment.
  It is my understanding that anybody who commits an intentional act of 
fraud has no relief as a result of this bill. If anybody can contradict 
that, I will be happy to hear it, because I do not want, in any way, to 
be part of supporting a bill that protects people from intentional 
fraud. That is not my purpose.
  I must stand, as the chairman of the Senate Special Committee On The 
Year 2000 Technology Problem, and tell my colleagues that this is a 
unique situation. This has the potential of creating a unique chain of 
events that requires a unique solution. That is the purpose of the 
McCain-Dodd-Wyden bill, and that is why the bill has a 3-year sunset in 
it. We are not changing the world forever. We are crafting, as 
carefully as we can, a piece of legislation to deal with the unique 
circumstance of the Year 2000.
  Mr. KERRY. Will the Senator yield?
  Mr. BENNETT. I am happy to yield.
  Mr. KERRY. I appreciate the Senator's comment enormously. I want to 
call the Senator's attention to the language of the bill. Section 121, 
Damages and Tort Claims:

       A party to a Y2K action making a tort claim may not recover 
     damages for economic loss involving a defective device or 
     system or service unless----

  And you have two conditions under which they could.
  No. 1, where the loss is provided in the contract; and, No. 2, if the 
loss results directly from damage to the property caused by the Y2K 
failure.
  I have a third, and the Senator's folks are opposed to it. Here is 
the third. The defendant committed an intentional tort. Except where 
the tort involves misrepresentation or fraud regarding the attributes 
or capabilities of the product. Does the Senator want to pass a bill 
without that, without the fraud and misrepresentation?
  It is in the bill.
  Mr. BENNETT. I see my colleague from Oregon wishes to respond to this 
and perhaps has a better legal handle on it than I do.
  My own layman's reaction would be not to sign a contract that didn't 
have a provision for fraud in it, as a businessman.
  Mr. WYDEN. I appreciate my colleague yielding.
  This goes right to the heart of the debate. We essentially say that 
State contract law will govern in these jurisdictions. The Senator from 
Massachusetts believes in a variety of instances that there should be 
other remedies. He is creating other remedies during this 36-month 
period where we are trying to present frivolous lawsuits.
  The key principle here and what is now being debated is that under 
what Senator McCain, Senator Bennett and Senator Dodd, the leader on 
our side on the Y2K issue, have said, we are going to protect State 
contract law with respect to economic losses. But we don't feel it is 
appropriate to try to create new remedies at this time when we are 
trying to prevent these frivolous lawsuits.
  I am very appreciative to the Senator from Utah for yielding to me. I 
hope our colleagues will see that on this point of economic loss, State 
contract law is fully protected.
  Mr. BENNETT. I yield to the Senator from Connecticut.
  Mr. DODD. Let me give a factual example to make the case. Assume you 
have two identical computer systems, system A and system B, sold by the 
same manufacturer. They prove to be defective and cause economic 
damages of $100 million and lost profits to each purchaser, A and B.
  System A crashed because of defective wiring, while system B crashed 
because of the Y2K bug. If Congress enacts the proposal suggested by my 
colleague from Massachusetts, that would

[[Page 12076]]

allow no recovery of economic damages in tort cases. Purchaser B in the 
example would be able to sue for economic losses under the Y2K 
legislation while purchaser A would not.
  There is no justification for such a result. In effect, the net 
result of the Y2K bill would be to expand liability in Y2K cases. 
Indeed, it would create an incentive for plaintiff's lawyers to look 
for any Y2K problem and then make that the predicate for legislation, 
exactly the opposite of the policy aim of the legislation.
  In the faulty wire case, you only get economic damages and you have 
to apply State law. Under the Y2K legislation as proposed by my 
colleague from Massachusetts, you are expanding this. We are not trying 
to expand law here; we are trying to at least follow a similar pattern. 
So there is a fundamental difference: the defective wire in one case, 
the defective Y2K problem in the other. You end up with completely 
different results and encourage, of course, groping around, looking for 
Y2K issues, rather than defective wire which may be the cause of the 
problem.
  I don't think that is the intent of our colleagues who are generally 
supportive of the very proposal we have before the Senate. That does 
expand existing law.
  Mr. BENNETT. I thank the Senator from Connecticut. I realize the 
Senator from Massachusetts wants to engage in this. I ask unanimous 
consent that such time as is taken up by the Senator from Massachusetts 
be charged to the time of the Senator from Massachusetts rather than 
charged against my time.
  With that understanding, I am happy to yield to the Senator further.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY. That is entirely fair. What I would like to do is just 
respond and then I will sit down and reserve the remainder of the time.
  Let me say to both of my colleagues, and I am glad we are getting to 
the nub of this, I say this gently and nicely: Both of the 
presentations that were made are incorrect with respect to what I said. 
The Senator from Oregon made a bold defense of contract law, and the 
economic loss argument that he made refers to the preservation of 
existing contract law. But economic loss is a tort claim. It is a tort 
claim. His argument is simply irrelevant when he says he is protecting 
the capacity of the contract law, so to speak, to be preserved within 
the framework of the economic loss argument. Here is why: My colleague 
from Connecticut just said we are trying to open this up to some broad, 
new thing, and the example he cited would not be, in fact, included. It 
absolutely would be included because our language includes both of the 
examples that he gave.
  If it is provided in the contract, the person would be made whole. Or 
if it is the result of a Y2K failure, the person would be made whole. 
Here is the only difference. We go one step further. We do not allow 
them a whole lot of intentional torts except--and I read from the 
language--``where the tort involves misrepresentation or fraud.'' That 
is the only ``new thing'' here. So, if the Senator from Connecticut is 
really concerned, what he is concerned about is that a lawyer might be 
able to lay out, according to the tough standards in both of our bills, 
sufficiently precise pleadings with a period to cure.
  You may never have a lawsuit because everybody is going to have a 90-
day period to cure, and we hope they are going to do exactly that. But 
if they do not do that and they do meet the sufficiency of the 
pleadings, and there also is a sufficiency of a showing of fraud or 
misrepresentation, they ought to get their economic losses. What we are 
saying is that under S. 96, under the current way it is written, you 
are denying economic losses if there is fraud or misrepresentation. 
That is the only ``new thing.''
  The Senator from Connecticut says we are going to open up some great 
Pandora's box, a whole lot of lawyers bringing cases. We have tough 
pleading requirements here, really tough. Even after you send in your 
first notice of a lawsuit, the company is going to get 90 days to fix 
it. Any company that does not fix it in 90 days probably ought to be 
held accountable for the fraud and misrepresentation. But your bill 
says no to fraud and misrepresentation. Ours says yes. I ask anybody 
which they think is more fair.
  I reserve the remainder of our time.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. BENNETT. Mr. President, again I witness this clash between great 
legal minds. Yet, I am informed by a number of other legal minds the 
Kerry amendment would, in fact, destroy the effect of the bill. As a 
businessman, I always ended up asking my legal team whether it was 
appropriate for me to sign a particular lease or contract. I had to 
learn to depend on good lawyers. I think we have hired good lawyers in 
this situation and I am accepting their advice. I am moved by the 
eloquence of my friend from Massachusetts, but I shall not vote with 
him.
  I want to once again focus on what it is we are doing here. We are 
dealing with a unique situation the likes of which we have never seen 
in international commerce and probably never will see again. That is 
why specific legislation is necessary.
  Let me go back to a statement made by my friend from Massachusetts in 
the earlier debate when he said: We want people to be driven to examine 
their inventory to make sure it is compliant, but if the liability is 
limited they will not do that. This is not a question of examining your 
inventory to make sure it is compliant. We are already getting examples 
of people who have done everything prudent and possible to make sure 
that things were compliant with Y2K, only to discover after they had 
done everything prudent that it still didn't work. There are bugs 
hidden in this kind of problem that cannot in reasonable fashion be 
discovered in advance. There is a presumption on the part of the 
Senator from Massachusetts that those bugs were there because of some 
misrepresentation or fraud. My concern is that there will be that 
presumption on the part of a lawyer bringing suit if those bugs occur 
in equipment that at one time or another has passed through the hands 
of a very wealthy corporation.
  This is where proportionality of joint and several liability comes 
in. If a corporation with deep pockets has at one time or another had 
its hands, figuratively, on a product where such a Y2K glitch occurs, 
there will be an obvious invitation to sue that corporation and then 
settle out of court for a large settlement because the corporation will 
decide, on business terms, it is cheaper to settle than proceed with 
the suit.
  I have had the experience as CEO of a company of settling a lawsuit 
where I felt the merits were firmly on our side but where the economics 
said you do your shareholders a better service by taking this 
settlement than you do by going to court. I have had personal 
experience with that. I know how those kinds of decisions are made. In 
a situation where there will be unforeseen consequences and products 
that have passed through many hands in order to finally get to where 
they go, the temptation to sue the deep pockets will be overwhelming 
unless we pass this legislation. Every lawyer that I have spoken to who 
has examined the legislation from that point of view has said you 
cannot adopt the Kerry amendment. It will gut the legislation. It will 
render the whole thing moot, as far as we are concerned.
  So I stand here not as a lawyer but as a businessman who has now, for 
3 years, immersed himself in the Y2K issue and, frankly, who feels he 
understands that issue fairly well. I call on my colleagues to defeat 
the Kerry amendment, to pass this legislation, and to give to American 
firms--not just high-tech --give to American firms that will be 
involved in products that will suffer from Y2K problems the ability to 
solve those problems without the specter of huge lawsuits and huge 
settlements hanging over them.
  Let me go back to one thing I said and repeat it. As I have been 
immersed in this issue for the period of time I have, I have come to 
realize that it is not strictly a high-tech issue. Yes, the high-tech 
community has been the most visible in pushing for this legislation. 
But they are by no means the

[[Page 12077]]

only part of the American economy that will be affected by this issue. 
There will be municipalities that can be sued. There will be cities 
around this country that will suddenly discover that essential services 
do not work, that will have done everything they thought reasonable to 
get there only to have some glitch that they were unaware of come out 
of the blue.
  Then the lawsuits will start. The question will be who was in the 
supply chain to produce whatever the device is that failed. Let's see 
who has the deepest pockets. It may not be a high-tech company at all. 
States are scrambling now to try to pass their own limited liability. I 
think that is a mistake. I think the Federal legislation makes a lot 
more sense. But let us understand, once again, we have a unique 
situation here. We already have anecdotal evidence that shows us how 
capricious it can be, in spite of the greatest effort to remediate and 
be in control. We do not want to turn this into a playground for 
plaintiffs' lawyers who want to take advantage of the class action 
circumstance, sue the deepest pockets, take a settlement, and walk away 
in a way that is of no advantage to anybody.
  If we are making a mistake in this bill, if as we draft it there is 
mischief, it is not permanent mischief because the bill is gone at the 
end of 3 years. Everything is over at the end of 3 years. No one--no 
one--will make any attempt to extend it. Certainly I will not. By 
virtue of what the voters of Utah did, I will be here 3 years from now, 
if I am still alive, and I will certainly oppose any extension of this 
bill. I would think everybody would oppose any extension if somebody 
were to bring it up.
  We are facing a unique situation. We have a piece of intelligently 
crafted legislation to try to deal with that situation, and we should 
not let ourselves get convinced that we are somehow changing the basis 
of American jurisprudence for all time as we try to take a prudent step 
in this particular circumstance.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. I yield myself such time as I use.
  Let me begin by paying tribute to both the Senator from Connecticut 
and the Senator from Utah. I know they have spent a huge amount of 
time, and they have done for the entire Senate and the country a great 
service in calling attention to and helping people understand the 
nature of this problem. I genuinely give both of them great credit for 
their leadership and their vision, understanding well over, what, 3 
years ago that it was a problem and we needed to address it.
  Our difference is not in good faith, in purpose, or intent. It is how 
we will or will not do something. I know my colleague from Utah is a 
very thoughtful and diligent student of these kinds of issues, and I 
share with him his own language with respect to the damages of 
limitation by contract, for instance. This is section 110, page 11, of 
the bill. It says:

       In any Y2K action for breach or repudiation of contract, no 
     party may claim, nor be awarded, any category of damages 
     unless such damages are allowed--
       (1) by the express terms of the contract; . . . .

  Mr. BENNETT. Will the Senator yield? Mr. President, I suggest the 
Senator is reading from an old version. There is no section 110 in the 
current----
  Mr. KERRY. I apologize, it is now section 11.
  Mr. BENNETT. I thank the Senator.
  Mr. KERRY. I am reading from the accurate language. The point I am 
making is that you only allow damages according to the express terms of 
the contract. That contract could be illegal. That contract could be 
unenforceable or enforceable under other circumstances under State law. 
The language we have added simply says ``unless enforcement of the term 
in question would manifestly and directly contravene applicable State 
law in effect on January 1, 1999.'' Here is a major difference. You 
would, in fact, allow the contract to supersede applicable State law 
even if the contract were illegal. That is the way it reads.
  There are serious implications in the language that is in the bill 
that would have a profound impact, and that is the kind of difference 
we have tried to address in pulling together our amendment.
  I reserve the remainder of our time.
  Mr. DODD. May I address----
  Mr. KERRY. On your time.
  Mr. BENNETT. I yield to the Senator.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized.
  Mr. DODD. Mr. President, we are getting arcane. If a contract is 
illegal, it is not a contract. Just to say we have a contract, if there 
is no consent, if all the principles necessary for it to be a valid 
contract are missing, if a contract is inherently illegal, two people 
who engage in a contract for illegal purposes is not a contract to be 
protected under State law.
  Mr. KERRY. With all due respect to my colleague, under the language 
in this bill, you will have given it life because you have, in fact, 
made it a contract that is binding.
  Mr. DODD. We do not protect illegal contracts in this legislation. If 
there is any question, let the legislative history confirm that. I do 
not think we need confirmation. Upholding an illegal contract by 
legislation would require herculean efforts that do not exist in this 
particular proposal.
  I yield the floor to others who may want to speak.
  Mr. KERRY. I yield myself 30 seconds. If there is an illegal 
provision in a legal contract, you have the same problem I just 
defined. I do not want to get arcane, either. But you have, in the 
language of this bill, superseded the capacity of that illegality to be 
either a defense or a problem. That is all we are saying. These ought 
to be curable issues. We are passing a bill where they have not been 
cured. I promise you, if you want to create litigation problems, there 
they are.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. BENNETT. Mr. President, with some trepidation, I am going to read 
some legal language. As a layman, I have a hard time with this, but I 
will do my best and I think it is fairly clear. Under section 4 of the 
act:

       (d) Contract Preservation.--
       (1) In general.--Subject to paragraph (2), in any Y2K 
     action any written contractual term, including a limitation 
     or an exclusion of liability, or a disclaimer of warranty, 
     shall be strictly enforced unless the enforcement of that 
     term would manifestly and directly contravene applicable 
     State law embodied in any statute in effect on January 1, 
     1999, specifically addressing that term.

  State law is preserved. State law is not overridden in this catchall 
provision, if you will, at this stage. At this point, I will quit 
trying to practice law.
  The PRESIDING OFFICER. Who yields time?
  Mr. BENNETT. Mr. President, I will make one additional comment. 
Mention was made of Andy Grove. The Senator from Connecticut and the 
Senator from Oregon and I, along with several other Senators, had 
breakfast with Andy Grove this morning.
  Just so the record is clear, the subject of the Kerry amendment came 
up in that discussion, and Mr. Grove, if I am quoting him correctly, 
said that his lawyers felt that the Kerry amendment would destroy the 
bill and leave it with no value. Indeed, my memory says he said that if 
the Kerry amendment was adopted, they would be better off without any 
bill. I ask the Senator from Connecticut if he has the same memory or 
if I am embroidering things.
  Mr. DODD. I say to my colleague, we had a very delightful meeting for 
an hour and a half with Andy Grove. Those were, as I recall them, his 
sentiments expressed to us. He is someone who has been quoted over and 
over in the last number of weeks, and we finally got to meet the man 
quoted endlessly and found out where he stood on this legislation. Four 
or five of us had the privilege this morning of spending an hour and a 
half with him and discussing a wide range of issues, including 
education policy. He was very clear, I thought, in his expression of 
concerns about this effort and the damage that can be caused by the 
adoption of this amendment.

[[Page 12078]]


  Mr. BENNETT. Mr. President, I suggest the absence of a quorum and ask 
that the time be charged equally against both sides.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered. The clerk will call the roll.
  The legislative assistant proceeded to call the roll.
  Mr. KERRY. I ask unanimous consent that the order for the quorum call 
be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY. Mr. President, how much time is remaining on both sides?
  The PRESIDING OFFICER. The Senator from Massachusetts has 14\1/2\ 
minutes, and the Senator from Utah has 5\1/2\ minutes.
  Mr. KERRY. I have no objection.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative assistant proceeded to call the roll.
  Mr. DASCHLE. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection it is so ordered.
  Mr. DASCHLE. Mr. President, I thank my colleagues for the opportunity 
to express the views of this Senator on a very important amendment.
  I think the biggest question facing the Senate today is not whether 
to support the Y2K liability reform. Most supporters, on both sides of 
the aisle, agree that we need to protect the high-technology companies 
from frivolous lawsuits.
  For more than a decade, this industry has been the driving force of 
our economy. Its well-being is extremely important to this country and 
to all of us.
  In South Dakota, Gateway computers is the largest private employer in 
the State today. I want a bill that provides Gateway--and every other 
member of this industry--with reasonable protections from frivolous 
Y2K-related lawsuits.
  Businesses need to be able to focus on fixing the problem--not 
defending against lawsuits.
  But the high technology industry is not the only group that faces 
potential difficulties as a result of this problem.
  Consumers and other businesses that use and depend on computers face 
potential risks as well.
  We need to protect consumers who might be hurt by the Y2K bug. We 
need to protect their right to seek justice in the courts.
  A major problem with the underlying bill, as we consider just how we 
do that, is an issue of great importance to many of us; that is, how we 
resolve the issue of capping punitive damages that go beyond what is 
needed to prevent frivolous Y2K-related lawsuits.
  The amendment offered by the Senator from Massachusetts, Mr. Kerry, 
and developed by him, and a number of our colleagues, corrects these 
problems.
  Before I describe the differences between our approach and the 
underlying bill, it is important to point out that--on most of the 
basic issues--the two proposals are identical to the pending bill.
  Both approaches encourage remediation by giving defendants 90 days to 
fix a Y2K problem before a lawsuit can be filed.
  Both approaches would discourage frivolous lawsuits by allowing 
either party to request alternative dispute resolution at any time 
during the 90-day waiting period.
  Both approaches require anyone seeking damages to offer reasonable 
proof--including the nature and amount of the damages--before a class 
action suit could proceed.
  Both approaches would permit class-action lawsuits to be brought only 
if a majority of the people in the lawsuit suffered real harm by real 
defects.
  Our approach addresses 95 percent--if not 100 percent--of what those 
in the high-technology community have asked for. It addresses all of 
the principles they have said are essential.
  But there are a number of important ways in which our approaches 
differ.
  Our proposal carefully balances the rights and interests of the 
industry, and consumers.
  It limits its remedies to problems that are truly, legitimately Y2K 
related.
  Our alternative offers high-tech companies more incentives than the 
underlying bill to fix the problem--now, while there is still time.
  We are concerned that the underlying bill may--perhaps 
inadvertantly--provide such blanket protection against all Y2K 
problems, including those that could have and should have been avoided, 
that companies will lose the incentive to fix problems now.
  For example, our amendment provides a balanced and reasonable 
solution to the issue of ``proportionality.''
  The underlying bill preempts State laws on this issue. It would grant 
defendants proportional liability in almost all Y2K cases--no questions 
asked.
  Our amendment, simply says that Y2K defendants would have to pass a 
simple test to quality for this protection.
  It is sometimes referred to as the ``good corporate citizen'' test. 
And I know my colleague from Massachusetts has discussed this in some 
detail this afternoon. All a company has to do to pass the test is to 
show that it has identified potential problems and made a good-faith 
effort to alert potential victims.
  This is a major concession. But we are willing to make it in this 
case because of the extraordinary circumstances.
  These are reasonable conditions. Every single high tech company we 
know of has already met it.
  If there are others that have not done so, they do not deserve 
special protection from Congress--plain and simple.
  There are a number of other ways in which our amendment improves on 
the underlying bill:
  It does not prohibit consumers from seeking justice in the courts for 
real and legitimate Y2K-related problems.
  The underlying bill would require consumers to meet so many 
conditions before bringing suit that it would effectively shut the 
courthouse door.
  Our bill establishes strict requirements for class actions to protect 
against frivolous suits.
  The underlying bill shifts virtually all Y2K suits to the Federal 
courts. This has two effects. In many cases, it makes it harder for 
consumers to bring a suit. It also increases the strain on an already 
backlogged Federal court system.
  This is strongly opposed by the Judicial Conference--not only because 
of the additional strain it would place on Federal courts, but also 
because it would upset the traditional division of responsibility 
between State and Federal courts.
  I might say, I am continually amused by those on the other side of 
the aisle who have expressed themselves as being advocates of States 
rights and the Constitution and the requirement that States be given 
the prerogative in matters of jurisdiction on this and so many other 
areas; but when my colleagues on the other side of the aisle find it 
convenient, it seems this shift to Federal responsibility comes so 
easily. This is just yet another example of that shift. There have been 
scores of those examples in recent years.
  Our alternative would not enforce illegal contract terms.
  The underlying bill might. It could enforce any and all contracts--
even those that are currently illegal under State and Federal laws.
  Our alternative does not protect defendants from liability for 
intentionally wrongful acts. It allows victims of such acts to sue for 
economic losses.
  The underlying bill protects companies even when they knowingly harm 
consumers, or use fraud to pressure someone into signing a contract.
  Finally, our bill does not include a cap on punitive damages.
  The pending bill would limit the amount of punitive damages that 
smaller businesses and municipalities could be assessed--regardless of 
whether they acted responsibly.
  The people who would benefit from a cap on punitive damages are bad 
actors who injure others.
  Ironically, many of those who would be hurt if this passes are 
themselves small businesses.

[[Page 12079]]

  In summary, our amendment is identical to the underlying bill in 
every important, necessary way.
  But, it does differ in ways that are critical to consumers, to 
businesses, and to the functioning of our courts.
  Perhaps the most important difference between our approach and the 
underlying bill is that our approach is the only version the President 
will sign. We know that. The administration has said so unequivocally 
on numerous occasions. Make no mistake, unless the improvements in this 
amendment are adopted, the President will veto this bill for going too 
far.
  So the choice is ours, and the year 2000 is fast approaching. Do we 
want to engage in an exercise that would be fruitless? Do we want to 
waste precious days debating a bill we know will be vetoed and then 
have to start all over? Do we want to limit frivolous Y2K lawsuits? 
This year is now more than halfway over. How much more time are we 
willing to let go before we agree to work together on a real solution?
  The bottom line is, we have the power to fix the Y2K problem today. 
We have before us now an approach that targets the real problem and can 
be signed into law.
  I urge my colleagues to join us in adopting the Kerry-Robb amendment.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Hutchinson). The clerk will call the roll.
  The legislative assistant proceeded to call the roll.
  Mr. BENNETT. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BENNETT. Mr. President, I will make one observation, and then I 
have a motion.
  We hear again on the floor the threat of a Presidential veto. We hear 
that increasingly, as if the President should write legislation and we 
should supinely accept whatever the President recommends, that our 
function is simply to listen to the President, pass legislation that he 
announces in advance is acceptable and, thereby, abdicate our 
legislative responsibilities.
  I am perfectly willing to risk a Presidential veto. I think that is 
the appropriate posture for a Member of the Senate.
  I ask consent that following the debate in relation to amendment No. 
610, the Senate proceed to an amendment to be offered by Senator 
Murkowski or his designee and no other amendments in order prior to 6 
p.m., and that at 5:50, there be 10 minutes for explanation followed by 
a vote in relation to the Kerry amendment No. 610.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BENNETT. Mr. President, I am prepared to yield back all further 
time on the Kerry amendment, if Senator Kerry is prepared to yield 
back.
  Mr. KERRY. Mr. President, I cannot do that. I think Senator Edwards 
wants to use a little time.
  Mr. BENNETT. Mr. President, how much time remains?
  The PRESIDING OFFICER. The Senator from Utah has 1 minute 13 seconds; 
the Senator from Massachusetts has 3 minutes 47 seconds.
  Mr. BENNETT. Mr. President, I reserve the remainder of my time.
  Mr. KERRY. Mr. President, I ask unanimous consent that I be permitted 
to yield back my time, with the understanding that if Senator Murkowski 
is not permitted to go forward, Senator Edwards can talk until he is, 
and if he has gone forward, that Senator Edwards would then be 
recognized to speak within the confines of the unanimous consent 
agreement just agreed to.
  The PRESIDING OFFICER. Is there objection?
  Mr. BENNETT. There is no objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY. Mr. President, I yield back the remainder of my time.
  Mr. BENNETT. Mr. President, I move to table the Kerry amendment, with 
the vote to occur at 6, and I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The yeas and nays were ordered.
  Mr. BENNETT. For the information of all Senators then, the next vote 
will occur at 6 in relation to the Kerry substitute.


                           Amendment No. 612

(Purpose: To require manufacturers receiving notice of a Y2K failure to 
    give priority to notices that involve health and safety related 
                               failures)

  Mr. BENNETT. Mr. President, earlier today Senator McCain filed an 
amendment No. 612 to the bill on behalf of Senator Murkowski. It is my 
understanding this amendment is acceptable to both sides. Therefore, I 
ask unanimous consent to call up the amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The legislative assistant read as follows:

       The Senator from Utah [Mr. Bennett], for Mr. Murkowski, 
     proposes an amendment numbered 612.

  The amendment is as follows:

       Section 7(c) of the bill is amended by adding at the end 
     the following:
       (5) Priority.--A prospective defendant receiving more than 
     1 notice under this section shall give priority to notices 
     with respect to a product or service that involves a health 
     or safety related Y2K failure.

  Mr. MURKOWSKI. Mr. President, as we consider S. 96, the Y2K bill, I 
want to point out an area of concern that will affect many northern 
states, especially my home state of Alaska. January 1, 2000, will 
arrive in the middle of winter. Unlike many states in the lower 48, 
where a power failure on the first of the year is a major 
inconvenience, a power failure in Alaska can have serious consequences 
if climate control systems fail.
  Earlier this year my home town of Fairbanks saw the thermometer 
plummet below 40 degrees Fahrenheit. While I do not doubt the 
industrious nature of my fellow Alaskans who have for so long used 
their ingenuity and determination to survive in Alaska's cold climate, 
any delay in resolving a health or safety related failure in Alaska 
cannot only be costly, but also deadly.
  Therefore, I am offering an amendment that would require that 
companies notified of a Y2K problem must first respond to requests 
where the Y2K failures affect the health or safety of the public.
  Mr. McCAIN. I thank my colleague from Alaska for offering his 
amendment. I point out that his amendment does not only protect 
Alaskans. If a consumer radio fails, it's an inconvenience. If a radio 
used by the Phoenix police department fails, not only does it put the 
life of the police officer carrying it in jeopardy, but it also 
jeopardizes the safety of the public he or she protects. A company 
should give priority in responding to the Phoenix police station's need 
for Y2K failure assistance.
  I am pleased to accept the amendment.
  Mr. MURKOWSKI. I thank my friend from Arizona for his attention to 
this issue.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. The Senator had two amendments. Is this one related to 
the safety and health conditions? Is that the Murkowski amendment? That 
is the one. OK. No objection.
  The PRESIDING OFFICER. Without objection, the amendment is agreed to.
  Mr. BENNETT. The Senator from Connecticut may have an objection.
  Mr. DODD. I was going to urge that it be set aside for 5 minutes or 
so. There is an item that I think might make that a bit stronger.
  Mr. BENNETT. Mr. President, I ask unanimous consent it be set aside 
for 5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BENNETT. Mr. President, under the previous order, I understand 
now that Senator Edwards will be recognized.
  The PRESIDING OFFICER. The Senator from North Carolina is recognized.
  Mr. EDWARDS. I thank the Chair.
  Mr. President, I will speak briefly to the McCain bill and to Senator 
Kerry's

[[Page 12080]]

amendment, which I think should be recognized as a real effort by 
Senator Kerry to cure some of the problems that exist with the McCain 
bill.
  From my perspective, I think what we are trying to accomplish here is 
to find a reasonable, moderate approach that both protects the rights 
and interests of consumers while at the same time ensuring that 
computer company manufacturers have the protection that they need and 
deserve.
  There has been a lot of talk today about frivolous lawsuits. The 
McCain bill has very little, if anything, to do with frivolous 
lawsuits. The two provisions in that bill that all of the Senators have 
spent a great deal of time on and that have caused the most controversy 
are joint and several liability and economic loss. Those two provisions 
have absolutely nothing to do with frivolous lawsuits.
  Speaking for myself, and, I think, speaking for Senator Kerry, both 
of us are opposed to any kind of frivolous lawsuit. I would be willing 
to support any provision that would provide protection against 
frivolous lawsuits. The two provisions that we are talking about, the 
elimination of joint and several liability and the elimination, from my 
perspective, of the right to recover economic loss, are both things 
that occur after a defendant has been found responsible. In other 
words, before you ever get to those two provisions, you have to first 
determine that there has been some irresponsible behavior on behalf of 
a defendant.
  The idea that those provisions, which are really the most 
controversial provisions in this bill, have anything to do with 
frivolous lawsuits just doesn't make any sense. They have absolutely 
nothing to do with frivolous lawsuits.
  For example, joint and several liability has to do with who you can 
recover against and what percentage or proportion of your damages you 
can recover, once a jury has determined that the defendant acted 
irresponsibly or in violation of a contract.
  The economic loss provision has to do with whether the small business 
owner or the consumer is allowed to recover for lost profits, lost 
overhead, out-of-pocket costs, once it has been determined that, in 
fact, the defendant is at fault. So the idea that this has anything to 
do with frivolous lawsuits is just misleading. The bill has very 
little, if anything, to do with frivolous lawsuits.
  If what we are concerned about is getting these cases resolved, 
creating incentives for consumers, small business people, people who 
have purchased computers, people who have a Y2K problem, to work with 
the computer manufacturers, with the people who manufacture the 
component parts of computers, I think that makes a great deal of sense. 
But this bill doesn't do that. Instead, what this bill doesn't do, in 
contrast to Senator Kerry's amendment, is strike a proper balance 
between providing reasonable protections for computer companies, while 
at the same time making sure we protect consumers. There has been an 
awful lot of discussion on the floor today about lawyers and the 
interests of lawyers. The reality is that lawyers and the discussion 
about frivolous lawsuits have little or nothing to do with this bill. 
Lawyers didn't make these computers; lawyers didn't have anything to do 
with the manufacture of these computer chips. And it is not lawyers who 
are going to be injured as a result of this bill. The people who are 
going to be hurt are consumers, the people who have purchased these 
computers.
  I think it is really important that we as Senators focus on the 
people who are most likely to be injured as a result of the passage of 
this bill. Now, there are two provisions in the McCain bill that I 
think Senator Kerry's amendment addresses that are critically 
important. The first, and the one I want to focus most of my attention 
on, is a provision about economic losses. This is under section 12 of 
the bill entitled ``Damages and Tort Claims.''
  What this provision does--and this is a provision of the McCain-Dodd-
Wyden bill--is it eliminates the right to recover economic losses by a 
small businessman if a computer or a computer chip manufacturer 
irresponsibly creates a Y2K problem. Let me give you an example, and I 
think this example is very important. A small businessman in 
Murfreesboro, NC, is in his business establishment one day and a 
computer salesman comes in the door and says: I have this great 
computer system I want to sell you that will make your operation more 
efficient. It will help you operate your cash registers. It will help 
with your accounting. It will help with your collections. The 
businessman heard about all these Y2K problems, but he was told by the 
salesman this system is totally Y2K compliant.
  This small businessman, believing what he was told, buys the computer 
system. Well, come the year 2000, he begins to have problems, and the 
problems shut down his cash registers, shut down his accounting system, 
shut down his ability to collect; and this business, which he and his 
family have been involved in all their lives, all of a sudden has no 
cash-flow. So they lose profit and they continue to incur overhead, and 
over a period of 2 or 3 months they essentially lose everything they 
have spent their lives working on--all as a result of a Y2K problem 
that, in my example, the computer salesman knew existed when he sold 
them the computer.
  In other words, when he made the statement to this businessman that 
this system was totally Y2K compliant, he knew full well what he was 
saying was not true. In fact, the evidence available to him indicated 
it was not Y2K compliant. So he made a fraudulent misrepresentation, a 
misstatement to this businessman.
  Under that example, under the terms of the McCain bill, this is what 
that businessman who has been put out of business for the rest of his 
life--a family business they spent their entire lives building up--is 
entitled to recover: The cost of his computer.
  So if he spent $3,000 on the computer as a result of this 
misrepresentation by the computer salesman, and he has been put out of 
business forever, under this bill--which will, by the way, control all 
of these cases regardless of what State law provides, and I want to 
talk about that in just a moment--this small businessman is out of 
business and what he can get back is the cost of his computer. So what 
the bill does, in essence, is it provides absolute immunity, with the 
exception of the cost of the computer.
  I want to be clear about one other thing. There has been a lot of 
discussion about punitive damages on the Senate floor. Punitive damages 
are damages that are awarded to punish a defendant for highly egregious 
conduct. But punitive damages have nothing whatsoever to do with what I 
am talking about now. We are now talking about a small businessperson 
being able to recover lost profits, having to shut down his or her 
business, having to continue to pay overhead in connection with the 
operation of that business. These are normal damages to be recovered 
without reference to punitive damages.
  What I am saying is a very simple thing. If this bill passes, then a 
negligent computer chip manufacturer, a computer salesman, or computer 
company that sells computers, that outright lies--I am talking about 
engages in a fraudulent misrepresentation in their sales--can only be 
held responsible for the cost of the computer. That is exactly what 
this bill provides.
  I respectfully disagree with what my colleague, Senator Wyden, said 
earlier today, that all Federal and State remedies for economic loss 
are left in place. I think exactly the opposite is true. In fact, what 
this bill does is eliminate, to the extent that a cause of action 
exists under State law, the ability to recover for economic losses.
  So what we have is a huge, huge problem. We have a provision in the 
bill where, prospectively, we are going to say to small and large 
businessmen and women around this country that if somebody has made a 
misrepresentation to you about the computer system you were buying, No. 
1, and No. 2, if they irresponsibly and recklessly sold you a computer 
system that was not Y2K compliant, i.e., they didn't act with 
reasonable care or they acted negligently, what we are going to let you

[[Page 12081]]

recover is the cost of your computer; and you cannot recover any of the 
costs associated with the operation of your business, your lost 
profits, and all of the costs associated with the day-to-day running of 
the business.
  I don't believe there is an American out there listening to this who 
would believe that is fair. It is not fair. Now, I might add, for 
Senators Wyden, McCain and Dodd, that there are provisions in this bill 
that I have absolutely no problem with. I think we want to create 
incentives for people to work together. We want to create incentives 
for manufacturers to solve this problem. I think a 90-day cooling off 
period is a good idea. I think the idea of having an alternative 
dispute resolution so that folks have a mechanism outside having to 
file a lawsuit and go to court is a very good idea. These are all very 
positive things.
  The problem is that, ultimately, there are going to be people across 
this country who, because of somebody acting irresponsibly or somebody 
misrepresenting something to them, are going to have problems with 
their business that will cause lost profits, lost overhead, which could 
ultimately lead to a shutdown of their business. And they will be able 
to recover absolutely nothing but the cost of their computer. I might 
add that later I intend to offer an amendment that specifically 
addresses this problem.
  I just don't believe that is what the American people would support. 
It is fundamentally unfair because what you have is a small 
businessperson who acted in good faith, innocently, in purchasing a 
computer system, and as a result of a law passed in this Congress, that 
person would be out of business, through no fault of his own. But the 
person who is at fault and is totally responsible for what happened to 
him is only responsible for paying for the cost of the computer. The 
bottom line is, if this guy gets hurt and they get caught, what they 
have to pay is the money they originally got from these folks, which is 
the cost of the computer. That is fundamentally unfair. It violates 
every principle of fairness and equity that exists in the law of this 
country and has existed for over 200 years. That alone is clearly 
enough that this bill should not be supported.
  Senator Kerry's amendment addresses that problem. It also addresses 
another problem that exists with this bill, which is the issue of joint 
and several liability. I have talked about this once before on the 
floor, but I think it is really important for the American people to 
understand what joint and several liability is. Essentially, it has 
existed in the law of this country for a couple hundred years now. It 
says that where you have an innocent--as in my example--small 
businessman and you have multiple parties on the other side who may be 
responsible for what happened, under joint and several liability the 
innocent party never has to pay for the loss, that the loss is shared 
in some way among the parties who are responsible for that loss. In 
this case, it may be the computer chip manufacturers; it may be the 
computer company that actually sold the entire system--a whole 
multitude of defendants. It is for them to resolve who pays what among 
themselves. In my case, the small businessman is innocent. And, as a 
result of the current law on joint and several liability, this innocent 
party is relieved of having to share the loss with guilty parties.
  That is the reason joint and several liability exists. It is the 
reason it has existed in law in this country for a long time.
  Senator Kerry's amendment sets up what I consider to be a very 
moderate, thoughtful approach--that responds to the computer industry 
and the high-tech industry's request for some protection against joint 
and several liability.
  What Senator Kerry says is basically, if you come in and show you 
have acted responsibly as a good citizen, you get proportionate 
liability; that is, you can never be held responsible for anything more 
than your fair share of the damages.
  It seems to me, although that is not the law in a great number of 
States in this country, that is a reasonable approach. It is a 
compromise. There is no question about that. We all recognize that, 
while I personally believe joint and several liability makes a great 
deal of sense, because it essentially says as a matter of policy we are 
going to always make people who are responsible for the loss share that 
loss, and never the innocent small businessman pay for the loss.
  Senator Kerry has attempted to fashion a compromise that provides 
protection for what I believe to be the great bulk of computer 
companies that are out there doing business, who have acted 
responsibly, who can show that they have been good corporate citizens, 
and when they do that, then they get proportionate liability, which is 
what they want.
  But there is still, I have to say, the most fundamental problem in 
the McCain-Wyden-Dodd bill, which is the provision about economic 
losses. Ultimately what it means is, if you can't recover anything but 
the cost of your computer, we are giving prospective absolute immunity 
to an industry, not knowing at this point what the losses are going to 
be for anything except the cost of the computer. It is something we 
have never done in the history of this country. It would be a 
remarkable thing to do now.
  I have to say in response to some remarks I heard from Senator Dodd 
earlier, whom I greatly admire and respect, that he talks at great 
length about this being a 36-month or a 3-year loss, that there is not 
some dramatic change in the law, that it is just 3 years.
  Here is the problem. That 3-year period is going to cover every Y2K 
loss that occurs because of the nature of this problem. These losses 
are going to come up quickly, and they are going to occur starting in 
January of the year 2000, or before. By the end of that 3-year period, 
the problems will have shown themselves, or they will be gone, or they 
won't exist at all.
  When Senator Dodd says it is just a 3-year provision, it is a 3-year 
provision that covers every single Y2K loss that is going to occur. It 
covers them all. We just have to recognize that when he talks about 
this being just a 3-year period of time that is being covered, that is 
what it is. It covers every Y2K loss that may occur.
  The bottom line is this: I think it makes great sense to have a bill 
that provides some reasonable protection for the computer industry. I 
think Senator Kerry's amendment works very hard at doing that.
  I think there are at least two huge problems with the McCain bill, 
the most dramatic of which, to me, is that no businessman, no matter 
what has been done to him, whether he has been lied to, whether he has 
been the victim of irresponsible conduct, whatever it is, all he or she 
can ever recover is the cost of the computer, even if he or she has 
been put out of business. I don't believe the American people would 
think that is fair.
  I yield the remainder of my time.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. WYDEN. Mr. President, on this point, Senator Edwards is such a 
magnificent lawyer and I am always reluctant to get into this, but the 
bottom line in this matter of economic losses is, whatever the 
plaintiff is entitled to get under State contract law with respect to 
economic losses is what our bill does. That is just the bottom line. 
Whatever the plaintiff is entitled to under State contract law is what 
they are going to get for economic loss--no more, no less. The bill 
keeps the status quo.
  I want to take a minute to go to one example. I want to take a minute 
to talk about the options available to the typical small business in 
these kinds of cases.
  Let's say we have a company that buys $10,000 worth of computers from 
another company, and they all crash January 3 of 2000. They lose $1 
million worth of business as a result. Obviously, they are unhappy. 
They write the computer company and they say that crash was the fault 
of the computer company, the Y2K failure, and they want it fixed, and 
they want their money, they want their $1 million. I want to take a 
second and describe what happens in those situations.

[[Page 12082]]

  The computer company has to get back to the small business within 30 
days. It has to make it clear. You have to move. They can say it was a 
Y2K failure. The computer company says, ``It is our fault. We will fix 
it the way the business wants--the restaurant. We will give you $1 
million.''
  That is that. They can say they will fix the Y2K problem, but they 
should not be responsible for the whole $1 million. They might say, 
``We will fix it, but we have to negotiate this out. We are liable for 
some. You are liable for some.''
  If the small business isn't satisfied with what the computer company 
does, they can basically go out and sue immediately in that kind of 
situation.
  The third kind of example would be, the computer company just stiffs 
the small businessperson, is completely unresponsive to what the small 
business needs. In that case, the plaintiff, the small businessperson, 
can go out and file a suit immediately against the computer company.
  Finally, we have raised the example of what happens if that computer 
company is bankrupt and insolvent. At that point, the small 
businessperson can name in their lawsuit anybody they think is a 
responsible party. They can name Intel; they can name Microsoft; they 
can name anybody they want. It is at that point the jury is going to 
decide what portion of the blame each potential defendant ought to 
bear.
  That strikes us as sensible. That is the principle of 
proportionality. We are saying that you ought to pick up the burden of 
the problem you actually produced, but if you did something 
intentional, if you ripped somebody off, if you engaged in egregious 
conduct, then joint and several applies.
  If we are talking about a low net worth of a defendant, it is the 
same sort of situation. So the plaintiff isn't left hanging.
  As we get towards the final vote, I ask my colleagues to remember 
that is what a typical small business is entitled to--those four kinds 
of situations, so that at the end of the day they are going to have 
their economic losses dealt with just as they would under State 
contract law--no more, no less.
  Really, we have what amounts to only a handful of real protections 
for this 36-month period. Yes, we do say that if a small business is 
operating in good faith, we would put some limits on punitive damages. 
I guess there can be a philosophical difference of opinion on that. 
Reasonable people can differ. But we think that if a small business 
acts in good faith, there ought to be some limit in terms of these 
punitive damages. There are only a handful of protections.
  Again, the 30-day period is a limitation on somebody's right to sue. 
That is why we say if you really think you are stiffed, you can go out 
and sue immediately. We think it makes sense for a 30-day period to try 
to cure these problems.
  On the proportionality issue, we are making a change to deal with a 
situation where we think that unless somebody engages in an egregious 
offense-type of conduct with a low net worth defendant, it is 
appropriate in this situation to say you are liable for what you 
actually produced.
  In addition to this being a bill that lasts for a short period of 
time, it does not apply to personal injury problems at all. If somebody 
is in an elevator and the computer system falls out and the elevator 
drops 10 floors and somebody is badly injured, all existing tort 
remedies apply.
  I am very hopeful we will have a significant number of our 
colleagues, particularly on the Democratic side of the aisle, 
supporting this. There have been 10 major changes made in this 
legislation since it left the Senate Commerce Committee. Our senior 
Democrat, the distinguished Senator from South Carolina, was absolutely 
right--the bill that came out of the Senate Commerce Committee was 
completely unacceptable in terms of the rights of consumers and the 
rights of plaintiffs. I joined him in opposing it.
  Since that time, we took out the items that were unfair. A lot of 
them happened to be in the House bill--which is completely unacceptable 
to me, as well.
  This bill is a balanced bill. It tells defendants they have to go out 
and cure problems; it tells plaintiffs they have to go out and mitigate 
damages. I hope our colleagues recognize that failure to pass a 
responsible bill in this area is just like hurling a monkey wrench into 
the technology engine that is keeping our economy humming. I hope we 
won't do that.
  The Senator from North Carolina asked me, before I went through that 
enlightening example of small business, to yield. I am happy to do so.
  Mr. EDWARDS. I appreciate the work of the Senator from Oregon. We 
have talked about this matter a good deal. I appreciate the time spent 
doing that.
  We do have a fundamental disagreement. My reading of Section 12 says 
that people cannot recover economic losses. I think if you can't 
recover economic losses as a result of the negligence or intentional 
acts or misrepresentations by a defendant, then essentially that means 
all you can ever get is the cost of the computer--even if you have been 
put out of business.
  I don't think anybody in America would think that is right, fair, or 
just.
  My first question is if, in fact, all the remedies for recovery of 
economic loss--that is lost profits, et cetera--are left in place under 
Federal and State law, why do we need a section, Section 12, on that 
matter at all in this bill?
  Mr. WYDEN. If the Senator will let me reclaim my time, I will read 
the precedence we are citing with respect to our opinion that our bill 
covers economic losses in line with State law and common law.
  Let me read to the Senator the precedent:

       The prevailing common law rule is that ``recovery of 
     intangible economic losses is normally determined by contract 
     law.''

  That is Prosser, 1984.
  Accordingly, the courts have essentially allowed plaintiffs to 
address these matters in State contract law by Clark v. Int'l Harvester 
Company, Chrysler v. Taylor, Inglis v. American Motor Company.
  Our position is that the economic loss rule in our bill is merely an 
explicit recognition of this sensible principle, which is in line with 
the legal precedence I cited, and also Prosser.
  Mr. EDWARDS. If the Senator will yield, the problem I have, if it is 
true that all State and Federal remedies for economic loss are left in 
place, it seems we would need to say nothing about that in this bill. 
We could say absolutely nothing and they would remain in place as they 
are under existing law, or we could have one sentence and that sentence 
would say ``economic losses are permitted as presently exist under 
applicable Federal or State law.''
  Instead, I have a 2\1/2\ page section on economic loss, and before it 
ever gets to mentioning Federal or State remedies for economic loss, it 
sets forth a long description of requirements that have to be met--
requirements that don't exist in any State or Federal law.
  The reality is this bill sets up requirements that are far more 
draconian than exist across this country. Then the amendment says if 
you can meet all of those requirements, and the recovery of these 
economic losses are permitted under State and Federal law, then you can 
recover economic losses.
  The truth of the matter is, if it were true that economic losses as 
they presently exist in the law and as they exist across this country--
which means people can recover, in my example, more than the cost of 
their computer; they can recover for lost profits, their overhead, and 
all the costs associated with that, things that most Americans would 
consider completely fair, reasonable, and just--if that were true, we 
do not need a provision about this at all. We sure do not need 2\1/2\ 
pages about it. Or we could do it in one sentence: Existing recoveries 
for economic losses are permitted under applicable Federal or State 
law.
  Instead, we have 2\1/2\ pages. We have a provision that essentially 
eliminates the right to recover economic losses, even in the case of 
someone who has had a fraudulent representations made to them about the 
product they are purchasing.
  Can the Senator show me the specific language that simply says all 
Federal

[[Page 12083]]

and State law remains in place, without any other requirements?
  Mr. WYDEN. I appreciate having the chance to look at any alternative 
language the Senator from North Carolina wants to pursue.
  The Senator raised the question of whether or not plaintiffs ought to 
be able to circumvent the provisions of State contract law by 
repackaging suits as tort claims. That has not been allowed by the 
courts.
  If the Senator is talking about something else, we are happy to look 
at this. What we have in our legal analysis, and I have cited the 
specific cases that back up our particular point, is an indication that 
we believe we are protecting plaintiffs and plaintiffs' rights to 
recover in line with State contract law on economic losses.
  If the Senator is not trying to ``tortify'' contracts, I am certainly 
willing to work with him on any kind of language.
  Mr. EDWARDS. Mr. President, I don't have any problem at all with the 
idea of protecting existing contracts. I think Senator Kerry's 
amendment does exactly that. I think the problem we are confronted 
with--and I have asked this question a couple of times--this 2\1/2\ 
pages on economic loss does not say that State remedies prevail.
  I might add, I believe your home State of Oregon allows the recovery 
of economic losses under the circumstances that I am describing where 
someone has acted irresponsibly. So we have a bill that will change 
laws not only in other places around the country but in your home 
State.
  Let me give you an example of what I am talking about.
  Mr. WYDEN. If I could reclaim my time to respond to the Senator, 
first, we made it very clear regarding economic losses. We want to see 
people recover in line with their State contract law.
  If the Senator can show me something in the 2\1/2\ pages that he is 
so alarmed about--he has referred to the 2\1/2\ pages now three or four 
times--if the Senator can show me something in those 2\1/2\ pages that 
indicates that a plaintiff could not recover through their State 
contract law economic losses, I guarantee myself, Senator Dodd, and 
Senator McCain are interested in working with the Senator on it.
  We cannot find anything. We have precedence and we have a legal 
analysis that backs up our point of view. If the Senator finds 
something in those 2\1/2\ pages that the Senator thinks indicates that 
a plaintiff cannot recover their economic losses according to State 
contract law, we will be very open to seeing it.
  Mr. EDWARDS. For just a moment, if I could just give an example of 
what I am referring to, let's suppose a computer has been sold by a 
computer company that sells a system. They have sold it to a small 
businessman. There is a Y2K problem and the small business is put out 
of business. They have lost millions of dollars over the course of 
several months. What we determine, when the investigation is done, is 
that what caused the problem is a chip, a computer chip that was sold 
by a manufacturer with whom this purchaser never had any interaction. 
Or it was some program that was loaded onto the computer. And the 
plaintiff never had any relation with the software manufacturer. Of 
course they would not; they bought the computer at a computer store 
from some computer salesman.
  Under the provisions of this bill, the person who was actually 
responsible, that is the manufacturer of the computer chip or software 
that was not Y2K compliant--you cannot recover against that responsible 
person for economic losses under the express provisions of this 
paragraph in Section 12. In fact, the Senator and I both know in 
reality that is what is most likely to happen. What most people are 
going to confront when they have a Y2K problem is some very isolated, 
discrete part of their computer system that caused the problem. It is 
not going to be the entire system. My point being there is no contract 
between the purchaser and that responsible party, that party in my 
example who is acting irresponsibly.
  What you are doing in this bill is you are absolutely cutting off the 
right of this innocent businessman to recover anything more than what 
he has lost, what he has lost out of his pocket, what he has lost as a 
result of not being able to make sales. This bill is very clear about 
that, I say to Senator Wyden. I don't think it can be interpreted in 
any other way.
  Mr. WYDEN. Our interpretation and our legal analysis, which I am 
happy to give, indicates the plaintiff can recover exactly what they 
are entitled to today. They are not going to get any more.
  I recognize what the agenda is here. I respect that we have a 
difference of opinion. But the bottom line is--I am happy to give our 
legal analysis--they can recover exactly what they are entitled to 
today.
  Mr. KERRY. If the Senator will yield for a moment on just a point 
further, the language in section 2 says ``such losses result directly 
from damage to tangible personal or real other property.''
  The economic losses my colleague is skillfully referring to may be 
the much larger losses that come from, say, the intellectual property 
failure.
  Mr. WYDEN. I think the Senator is talking about the tort section.
  Mr. KERRY. No, he is referring--excuse me, yes, I am, at this point. 
But that is a similar complication here of what the Senator is 
eliminating without being aware that is, in fact, being eliminated.
  Mr. WYDEN. Mr. President, if I can reclaim my time, there is a 
difference of opinion here on the matter of economic losses. In the 
2\1/2\ pages the Senator from North Carolina has cited, we believe 
every plaintiff is going to be able to recover exactly what they are 
entitled to recover today. If in fact there is some evidence to the 
contrary, we will certainly be happy to pursue that.
  Mr. HOLLINGS. Will the distinguished Senator yield?
  Mr. KERRY. Will the Senator yield?
  Mr. WYDEN. Let me yield, if I can, to Senator Hollings.
  Mr. HOLLINGS. When the Senator says ``exactly what he is entitled to 
under the contract,'' when I go buy a computer from you, under my 
contract I am not contracting for any economic loss or loss of 
customers, or wasted moneys for advertising because the business has 
closed down, or any of the other economic losses. When the Senator says 
``exactly under State contract law,'' the contract is only for the item 
itself. State contract law is not State tort law. I take it that is the 
difference. ``Exactly what he is entitled to,'' not under State tort 
law but under State contract law; isn't that the Senator's position?
  Mr. WYDEN. If I could refer the distinguished Senator from South 
Carolina to the specific section, I have been talking about section 11, 
contractual damages. I gather the Senator from North Carolina, who is 
getting us into this area, was largely talking about the tort section. 
That, of course, is the difference of opinion here. I believe it would 
be a mistake to try to ``tortify'' these contractual rights at this 
time when we are staring, early in the next century, at all of these 
liabilities.
  I have three good friends with whom I agree on probably the vast 
majority of issues that come up in this body who see it otherwise. I 
recognize that. But I want to, again, in the name of trying to work 
things out, make it clear if there is anything in the contract 
section--in the contract section--that would suggest a plaintiff cannot 
get the economic losses they are entitled to under State contract law, 
I am very certain Senator McCain and Senator Dodd and I will be happy 
to look at that. We do have a difference of opinion on this matter 
involving torts.
  Mr. HOLLINGS. How could they be entitled to anything, any economic 
losses under State contract law when it was not contracted for? You 
see, you just contract to buy the item. If I go into Circuit City, or 
whatever it is, and get the computer, I don't say: Now, wait a minute, 
if something goes wrong with this computer here 60 days from now or 
something else like that and my business is closed down for 90 days

[[Page 12084]]

or whatever, then I want the loss of customers, the loss of good will, 
and all these economic losses. I am only contracting for the item.
  So when you say ``exactly what he is entitled to under State contract 
law,'' it is saying in the same breath he is not entitled to any 
economic loss under tort law. Isn't that the case?
  Mr. WYDEN. The jurisdictions differ. But what we are trying to adhere 
to, with respect to economic losses and contracts, is the status quo. 
If there is some evidence we can be shown indicating otherwise, we will 
be happy to take a look at it.
  I have taken an awful lot of time. I yield the floor.
  Mr. EDWARDS. Can I ask Senator Wyden one last question?
  The PRESIDING OFFICER (Mr. Santorum). The Senator from North 
Carolina.
  Mr. EDWARDS. I want to make sure we are clear about this for purposes 
of our discussion. Does my colleague now concede that for any claim 
other than under contract, that economic losses are being completely 
eliminated by this bill? Does he concede that?
  Mr. WYDEN. No. Not at all. In fact, let me again read from our legal 
analysis:

       The economic loss rule is a widely recognized legal 
     principle that has been adopted by the United States Supreme 
     Court in the vast majority of States. It states a party who 
     has suffered only economic damages must generally sue to 
     recover those damages under contract law, not under tort law. 
     Tort law generally applies only where a party has suffered 
     personal injury or damages to property other than the 
     property in dispute.

  So we are having, I guess, a duel of legal analyses. But we are happy 
to share ours. We believe, again, the court precedents and the specific 
analysis I am citing make it very clear that recovery that is available 
today for economic losses under State contract law is not being altered 
in any way by this bill.
  The PRESIDING OFFICER. The Senator from North Carolina.
  Mr. EDWARDS. Mr. President, if I can respond just very briefly, there 
are two fundamental problems I respectfully disagree with Senator Wyden 
about. The first of those problems is he talks at great length about 
State contract law. I do not have any problem with State contract law 
being totally enforced. I believe the law generally ought to be 
enforced and that includes State contract law. The problem is in the 
real world, most of the time, as Senator Hollings pointed out, to the 
extent there is any written contract that contract is drafted by the 
manufacturers. It is not drafted by a small businessman who is buying a 
computer. So the Senator knows as well as I do it is a farce to say 
there is going to be a provision in the contract that provides for 
economic losses. It is not going to be anywhere in any contract, 
because the contracts have been written by teams of lawyers who drafted 
these contracts to protect the seller. They are the people who are in 
the position of economic power.
  So the reality is there is not going to be anything in the written 
contract if there is a written contract. That is one problem.
  But there is a second problem that is even larger than that, which is 
in many cases it is not going to be the contracted-with party who is 
responsible. The contract is between a purchaser and a seller. The 
seller is selling a computer system and the negligent or irresponsible 
party is not the seller who has included many computer chips in his 
computer system.
  The PRESIDING OFFICER. The Senator's time has expired. Under the 
previous order, the Kerry amendment is now up for 5 minutes of debate 
on each side, equally divided.
  Mr. EDWARDS. Mr. President, I ask unanimous consent for 1 more 
minute.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. EDWARDS. If I can finish this thought, the bottom line is in many 
cases--in fact, in the vast majority of cases--the computer company 
that is responsible for putting a small businessman out of business, 
for all the losses that the small businessman incurs is not going to 
have a contract. In fact, the only way the person who is ultimately 
responsible can be held accountable is through a cause of action for 
breach of warranty or breach of product warranty and negligence, and 
this bill eliminates the right of that small businessman to recover any 
of his losses other than the cost of the computer.
  The result of this discussion is Senator Wyden now recognizes that, 
and with all due respect, I do not believe the American people will 
find that fair.
  The PRESIDING OFFICER. Who yields time? If neither side yields time, 
time will be charged to both sides.
  Mr. SESSIONS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SESSIONS. Mr. President, this country is facing an unusual and 
very dangerous legal situation. I understand and appreciate the details 
given by the Senators as they have debated the nature of contracts and 
damages and economic loss rule and negligence as compared to contract 
law. It is pretty complex.
  Historically, we have created rules under which to file. For 
contracts, you have burden of proof. If you file under tort, you have 
another standard you have to prove. All of those are complex, and we 
ought to be openminded to make sure we are proceeding in a way so as to 
create a statute that is effective and will achieve what we want.
  It is time for us to face up to the fact that we do need some change 
in this Y2K computer problem. Our Nation is facing a real challenge. We 
could end up with massive litigation in every single county in America: 
lawyers on both sides filing lawsuits arguing over how much business 
was lost in this grocery store, how much this bank lost; arguing over 
punitive damages, standards of proof; the computer companies situated 
in one State are having to defend themselves against 50 separate State 
laws; sometimes individual judges within individual States, if they do 
not have guidance, may rule differently than one expects them to rule.
  Under the circumstances of this situation, as a person who does 
believe States ought to do those things they do best, and the Federal 
Government ought not to take over, when we are dealing with the 
computer industry--which is not only interstate but international and 
is a fundamental source of our productivity increases--that industry 
can be sued thousands of times throughout the country, and as a result, 
they will be weakened economically, they will be substantially less 
able to fix a problem that may occur and will spend more and more time 
with lawyers and on litigation than they need.
  We need to create a system which focuses on fixing the problem, and 
that does mean changing the way we have to do business for this one 
problem for a maximum of 3 years. This is what we need to do. We do not 
need to allow our Nation to assault from every possible venue that 
exists in this country the computer industry, which Alan Greenspan has 
indicated is one of the primary reasons for our productivity increases 
as a nation, why our Nation is doing better than other nations, and why 
we need to keep it that way.
  I see the distinguished Senator from Arizona has arrived. There may 
be some time remaining. I will be glad to yield the floor to him.
  The PRESIDING OFFICER. One minute 25 seconds remains.
  Mr. DODD. How much time remains on all sides?
  The PRESIDING OFFICER. The Senator from Massachusetts has 5 minutes; 
the Senator from Alabama has 1 minute 24 seconds. Who yields time?
  Mr. SESSIONS. I yield the floor.
  Mr. McCAIN. We reserve the remainder of our time.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, over the course of the day, there has been 
a lot of argument about what we seek to do and do not seek to do. I 
want to make it very clear. Both sides are seeking a fair and sensible 
way to address the Y2K problem. There is no argument that one side 
wants frivolous suits, the other does not. There is no argument that 
one side somehow wants to keep business from flourishing. We are all on 
the same side of the high-tech industry

[[Page 12085]]

and of the capacity of that industry to flourish.
  The question is, what is the fairest, most balanced way to 
effectively approach the question of how we will do that.
  Senator Edwards from North Carolina has very effectively demonstrated 
one of the real flaws in the bill as presented by the Senator from 
Arizona. The economic losses will be denied in a way, particularly in a 
situation where there is fraud or misrepresentation, that no American 
deems to be fair.
  Equally important, when you balance the fundamental components of 
this bill on the question of proportional damages and who gets them and 
when, there is a difference between us in what we assert is the 
appropriate qualification for businesses to merit the proportional 
damages.
  The McCain bill automatically makes available, with a few small 
exceptions, those proportional damages to businesses without any 
fundamental mitigation requirement; that is the essence of this bill. 
On the other hand, the proposal I submit with Senator Daschle, Senator 
Reid, Senator Robb, Senator Akaka, Senator Mikulski, and others, is a 
proposal that embraces 90 days for a cure period, just as the McCain 
bill does. It embraces a responsibility to mitigate, just as the McCain 
bill does. It preserves contract law, just as the McCain bill does. But 
it also requires a good citizenship standard, an effort by companies to 
determine the potential--not the reality--the potential, not to find to 
a certainty, but to declare the potential that they may have a Y2K 
problem, and then in good faith to make available to the people with 
whom they have dealt the information about that potential.
  It is hard to believe the Senate would not be willing to embrace the 
notion that companies ought to embrace the full measure of the purpose 
of this bill, which is mitigation, by making that good effort in order 
to determine what their liability may be.
  Our bill encourages remediation. It requires notice and opportunity 
to cure. It imposes additional duty on plaintiffs when the defendant 
does act responsibly. It requires the plaintiff to undertake certain 
mitigation efforts which is fairly unprecedented. It discourages 
frivolous lawsuits by encouraging alternative dispute resolution. It 
increases the pleading requirements. None of these, incidentally, are 
things the lawyers have asked for and none of them are things the 
lawyers like.
  It asserts an increased materiality requirement so that the complaint 
has to identify with specificity the basis of the complaint which they 
make. We discourage frivolous class action lawsuits with a minimum 
injury requirement for any class action and a materiality requirement.
  We protect business with contract preservation, with strict 
limitations on damages awarded for economic loss, and also, unlike the 
McCain bill, we embrace the notion that individual consumers should not 
be cut out from their capacity to redress their problems.
  In the end, I believe the real issue is: Do we want to accomplish 
what we have set out to do, which means, will the President of the 
United States sign the bill? The President has made it clear the McCain 
bill will not be signed into law without the kinds of changes Senator 
Edwards and I and others have articulated.
  So we can go through the Pyrrhic exercise or we can try to fully 
legislate. I think it is clear that we are offering an alternative that 
is fair, sensible, protects consumers, and at the same time protects 
businesses in this country.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. HATCH. Mr. President, I rise today to support what will be 
offered as the bipartisan amendment to S. 96, the Y2K Act. I also rise 
to oppose Senator John Kerry's alternative to the Y2K Act.
  The Y2K Act has gone through significant and myriad changes. In the 
spirit of constructive compromise, Senators of both parties have come 
together to work out their differences to produce S. 1138, the 
bipartisan Dodd-McCain - Hatch - Feinstein - Wyden - Gorton-Lieberman-
Bennett amendment. Why? Because these and other Senators realize the 
importance of resolving a potential Y2K litigation crisis. These and 
other Senators have placed the vitality of the nation over any 
exaggerated loyalty to one political party.
  Y2K-related lawsuits pose the greatest danger to industry's efforts 
to fix the problem. All of us are aware that the computer industry is 
feverishly working to correct--or remediate, in industry language--Y2K 
so as to minimize any disruptions that occur early next year.
  What we also know is that every dollar that industry has to spend to 
defend against especially frivolous lawsuits is a dollar that will not 
get spent on fixing the problem and delivering solutions to technology 
consumers. Also, how industry spends its precious time and money 
between now and the end of the year--either litigating or mitigating--
will largely determine how severe Y2K-related damage, disruption, and 
hardship will be.
  Many fear that if Congress does not act, the American high tech 
industry, a leader in the world and a significant source of our 
exports, will be severely damaged. This is particularly true for the 
economies of cutting-edge high tech states--such as my home state of 
Utah--whose private sector is a leader in the information revolution. 
Why retard the industry that has led the recent boom of the American 
economy? Why kill the goose that lays the golden egg?
  Let me restate what I have said on numerous occasions. The potential 
financial magnitude of the Y2K litigation problem is enormous. To 
understand this enormity, we should consider the estimate of Capers 
Jones, Chairman of Software Productivity Research, a provider of 
software measurement, assessment and estimation products and services. 
Mr. Jones suggests that ``for every dollar not spent on repairing the 
Year 2000 problem, the anticipated costs of litigation and potential 
damages will probably amount to in excess of ten dollars.'' The Gartner 
Group estimates that worldwide remediation costs will range between 
$300 billion to $600 billion. Assuming Mr. Jones is only partially 
accurate in his prediction--the litigation costs to society will prove 
staggering. Even if we accept The Giga Information Group's more 
conservative estimate that litigation will cost just two dollars to 
three dollars for every dollar spent fixing Y2K problems, overall 
litigation costs may total $1 trillion.
  Even then, according to Y2K legal expert Jeff Jinnett, ``this cost 
would greatly exceed the combined estimated legal costs associated with 
Superfund environmental litigation . . . U.S. tort litigation. . .and 
asbestos litigation.'' Perhaps the best illustration of the sheer 
dimension of the litigation monster that Y2K may create is Mr Jinnett's 
suggestion that a $1 trillion estimate for Y2K-related litigation costs 
``would exceed even the estimated total annual direct and indirect 
costs of all civil litigation in the United States,'' which he says is 
$300 billion per year.
  These figures should give all of us pause. At this level of cost, 
Y2K-related litigation may well overwhelm the capacity of the already 
crowded court system to deal with it.
  Looking at a rash of lawsuits--there already have been 66 Y2K 
lawsuits filed nationwide and the number is growing--we must ask 
ourselves, what kind of signals are we sending to computer companies 
currently engaged in or contemplating massive Y2K remediation? What I 
fear industry will conclude is that remediation is a losing proposition 
and that doing nothing is no worse an option for them than correcting 
the problem. This is exactly the wrong message we want to be sending to 
the computer industry at this critical time.
  I believe Congress should give companies an incentive to fix Y2K 
problems right away, knowing that if they don't make a good-faith 
effort to do so, they will shortly face costly litigation. The natural 
economic incentive of industry is to satisfy their customers and, thus, 
prosper in the competitive environment of the free market.
  This acts as a strong motivation for industry to fix a Y2K problem 
before

[[Page 12086]]

any dispute becomes a legal one. This will be true, however, only as 
long as businesses are given an opportunity to do so and are not 
forced, at the outset, to divert precious resources from the urgent 
tasks of the repair shop to the often unnecessary distractions of the 
court room. A business and legal environment which encourages problem-
solving while preserving the eventual opportunity to litigate may best 
insure that consumers and other innocent users of Y2K defective 
products are protected.
  The bipartisan compromise amendment accomplishes these ends. It is 
significant to note that the Chair and Vice-Chair of the Senate's 
Special Committee on the Year 2000 Technology Problem, my good friends 
and respected colleagues Robert Bennett and Christopher Dodd, endorse 
the bipartisan amendment. Both these Senators have developed great 
expertise in Y2K and related matters during their leadership of the 
special committee. They were instrumental in crafting the compromise 
amendment.
  The Kerry proposal, on the other hand, is partisan. As I understand 
it, it was in part drafted with the White House. It has not been 
endorsed by one Republican. While I firmly believe that Senator Kerry 
and other Democrat Senators who crafted the amendment sincerely believe 
that they are doing good, their amendment clearly eviscerates the 
protections established by S. 96. It reduces the incentives created in 
the bill for reducing litigation and resolving Y2K problems outside the 
court room. Let me explain.
  The Kerry Amendment significantly weakens the class action section of 
S. 96. Class actions are a significant source of abuse. I have seen 
this as Chairman of the Judiciary Committee. Both plantiffs and 
defendants' attorneys have all too often been successful in rigging the 
system. Far too often, sweetheart deals are entered into whereby the 
plaintiff's attorneys negotiate huge fees, the defendants buy 
litigation peace through a nation-wide class action settlement that 
acts as res judiciata and bars all, even meritorious, future 
litigation, and class members are given mere trifles, such as coupons 
for products that hardly can be considered just compensation.
  Far too often, Federal jurisdiction is defeated by joining just one 
nondiverse class plaintiff--even if the overwhelming number of parties 
are from differing states. This wrecks the clear purpose of Federal 
Rule of Civil Procedure 23--to provide for a Federal forum for class 
actions where the litigation problem is national in scope. A federal 
forum ameliorates myriad state judicial decisions that are conflicting 
in scope and onerous to enforce. Now, I am a great proponent of 
federalism and the right of our states to act as what Justice Brandeis 
termed national laboratories of change. But it is axiomatic that a 
national problem needs an uniform solution. That is the justification 
for Congress' Commerce Clause power and its consequent promulgation of 
Rule 23. That is the justification for the Y2K Act itself, in which the 
Y2K defect is clearly a national problem in need of a Federal answer.
  Because of the short 2 or 3 year timespan for litigation, all of 
these problems are magnified in the Y2K context. There already have 
been filed 31 Y2K class action lawsuits with all the attendant problems 
associated with class action abuse. Before all is said and done, I 
expect many more to be filed. S. 96 deals with the problems generated 
by class actions in two ways: first, a certification requirement to 
demonstrate a common material defect is mandated. This assures that 
class action joinder is available only if common questions of law and 
fact exist. Second, minimal diversity is allowed. Thus, a substantial 
number of parties must be from different states and joinder of one or 
two nondiverse parties cannot defeat Federal jurisdiction. Moreover, to 
assure that Federal courts are not saturated with class actions 
independently filed or removed from state court, the amount in 
controversy must be over one million dollars.
  To its credit, the Kerry Amendment adopts the common material defects 
showing requirement. But it is silent as to the need for minimal 
diversity to assure that the Federal courts will have jurisdiction over 
what is after all a national problem. To be sure, I am aware that the 
Judicial Conference opposes this provision fearing a substantial 
increase in Federal class actions. But I am also aware of their 
tendency to overreact. They made no study of the issue. Their concerns 
were mere ipse dixits, statements made as true with no foundation as to 
their truth.
  To the contrary, the nonpartisan Congressional Budget Office has made 
a study of both S. 96, the bill reported out of Commerce, and S. 461, 
the Hatch-Feinstein Y2K measure, the bill reported out of the Judiciary 
Committee. Both bills have nearly identical provisions.
  Concerning the class action provisions of S. 461, CBO first 
recognized that because of the incentives found in the bill it expects 
``that parties to lawsuits would be encouraged to reach a settlement. 
Thus, we anticipate that many lawsuits would not result in trial, which 
can be [time-consuming] and expensive.'' CBO went on and noted that 
``some class action lawsuits could be shifted from state to federal 
court under S. 461 because the bill would ease restrictions for filing 
such actions in Federal court.'' What is important, however, is their 
ultimate conclusion: ``On balance, CBO estimates that the savings from 
eliminating trials for many lawsuits would more than offset any 
increased costs that might be incurred from trying additional class 
action lawsuits in federal court.'' (My emphasis). In other words, in 
the only study done of the class action issue, it is concluded that the 
Y2K Act's class action provision would not result in the flooding of 
the federal courts with unneeded and expensive litigation.
  A provision of S. 96 that the Kerry Amendment actually strikes is the 
punitive damages limitation provision. Now both S. 96 and S. 461 
contained caps on punitive damage awards. The caps applied to all 
prevailing parties and limited punitive damages to the greater of three 
times compensatory damages or $250,000, or the lesser of that amount if 
a small business was the defendant. The reason for these caps are 
clear. Runaway punitive damages have hindered economic growth and 
productivity nationwide. Businesses are often forced to settle spurious 
suits when faced with millions in punitive damages. Thus, prices for 
goods and services are unnecessarily raised with consumers suffering 
the most. Because of the concentrated time period, this problem will be 
magnified for Y2K actions.
  The bipartisan Dodd-McCain-Hatch-Feinstein amendment modifies the 
punitive damage provision. In the spirit of compromise, the caps were 
limited to small business and individuals with a net worth of less than 
$500,000. There were two reasons for this change. The first is that 
small businesses and most individuals would be ruined by immense 
punitive dmamages. The other reason is that punitive damages in this 
situation do not serve the intended deterrent effect. In fact, 
insolvency and bankruptcy creates a counterincentive to remediate Y2K 
glitches. Why would a small business voluntarily notify customers of 
potential Y2K defects if the business could face ruin for its good 
citizenship?
  But Senator Kerry even opposes this watered down provision. The 
reason for Senator Kerry's opposition for even this moderate provsion 
is that even caps for small business would allegedly reduce the 
deterrent effect of those damages. Surely, however, the prospect of 
treble damages provides adequate incentives for companies that need 
monetary threats to make efforts at compliance. The current, unlimited 
punitive regime simply encourages suits by lawyers who hope to hit the 
lottery, while driving up the settlement value of insubstantial claims.
  Let me turn to the proportionate liability section of S. 96. It is 
good to see that Senator Kerry has moved closer to our position. Prior 
drafts of his amendment completely weakened this provision. Senator 
Kerry's latest attempt in most respects is verbatim the same as the 
bipartisan amendment.

[[Page 12087]]

  The system of modified proportionate liability in S. 96 makes sense 
as a matter of both equity and of litigation management. Based on the 
already existing proportionate liability provision of the Federal 
Private Securities Litigation Reform Act of 1995, it ensures that 
defendants will not be forced to pay for injuries that are not their 
fault. It discourages specious lawsuits because plaintiffs' lawyers 
will not be able to take advantage of the archaic joint and several 
liability doctrine whereby a deep-pocket defendant will inevitably have 
to pay the entire judgment so long as a jury can be persuaded to find 
it is even one percent responsible. And the proportionate lability 
section will avoid coercive settlements prevalent in a joint and 
several liability scheme.
  The Kerry provision essentially adopts the proposal in S. 96, which 
recognizes that it is unfair to assume that defendants should be forced 
to pay for damages that are not their fault. But the Kerry draft also 
eliminates proportionate liability if the defendant fails to inform the 
plaintiff of a potential Y2K problem before December 31, 1999. This is 
true even if the defendant business demonstrates that it was innocent, 
or had no knowledge of the defect. Suppose a retailer, having no reason 
to believe the manufactured product sold was defective, could not and 
did not notify the purchaser of the Y2K defect. In that case the 
retailer would be subject to joint and several liability under Kerry. 
The result is that deep-pocketed defendants who are subject to strike 
suits will have to assume that they face limitless liability, and, 
therefore, will have no choice but to pay a coercive settlement, even 
if the defendant was innocent of any knowledge of the defect.
  The Kerry Amendment duty to mitigate requirement has been so limited 
that it will not encourage remediation. The amendment provides that 
plaintiffs cannot recover damages for injuries that they could have 
reasonably avoided in light of information provided to the plaintiff by 
the defendant. It does not impose such a limit if the plaintiff 
obtained the relevant information from third parties or other sources. 
The provision in the Kerry Amendment is much more narrow than the 
general common law of the duty to mitigate. If the plaintiff in fact 
obtained information from any source that would have allowed it to 
avoid injury, it makes no sense to allow the plaintiff to ignore that 
information, to suffer the injury, and then to force someone else to 
pay its damages.
  There is another significant problem with the Kerry Amendment. The 
amendment eliminates all intentional torts--except where the tort 
involves fraud or misrepresentation about the product--from the scope 
of S. 96's codification of the Economic Loss Rule, regardless of the 
relationship between the parties. This exemption would significantly 
narrow existing law in many states and undermine the purpose of the 
Rule in cases involving two contracting parties.
  Breach of contract, intentional or otherwise, does not generally give 
rise to a tort claim; it is simply breach of contract. The Economic 
Loss Rule thus prevents tort remedies--such as lost profits and other 
economic losses--where the parties were in privity and could have 
negotiated consequential damages and other economic losses. The rapidly 
emerging trend, therefore, among the States is to apply the Economic 
Loss Rule to bar fraud claims where those claims merely restate claims 
for breach of contract. The Rule does not, however, bar fraud claims 
arising independent of a contract. Additionally, the Kerry Amendment 
would significantly override State law and allow recovery of economic 
loss in cases of intentional torts even where such recovery would be 
prohibited by State law. This seems to create a new cause of action for 
recovery of economic loss in cases of intentional torts and is 
unacceptable. The Kerry Amendment also would apply the Economic Loss 
Rule to only actual defects and not anticipated failures. Thus many 
lawsuits based on anticipated failures would not fall under the 
Economic Loss Rule.
  Finally, the Kerry Amendment carve-out for noncommercial suits will 
permit a huge range of abusive actions. Carving out noncommercial 
suits--including class actions--will permit a huge range of abusive 
actions. Abusive class actions on behalf of consumers are one of the 
greatest dangers in the Y2K area because such suits are easily created 
and controlled by plaintiffs' lawyers. While the Kerry Amendment does 
apply the minimum injury certification requirement to individual class 
actions, it does not apply to the proportionate liability and other 
substantive provisions in such cases. Besides, why should not consumers 
get the benefit of the bill's terms, which will speed remediation and 
negate the need for costly lawsuits, as CBO opined.
  It is clear that the Kerry Amendment has serious flaws. I sincerely 
believe that Senator Kerry and the sponsors of his amendment are well-
meaning. Their goals are in harmony with ours. But they are mistaken if 
they believe that their proposal would solve the Y2K problem. That is 
why I ask all Senators to support S. 96, as modified by S. 1138, the 
Dodd-McCain-Hatch-Feinstein amendment.
  Mr. LOTT. Mr. President, as the Senate considers S. 96, the Y2K Act, 
I rise to first praise the bipartisan work of Senator McCain and 
Senator Wyden. They have worked tirelessly to construct an effective, 
fair bill that will address the important issue of liability as it 
relates to the Year 2000--or Y2K. There are enough challenges for 
America's industry and governments to ensure that they are Y2K 
compliant. We all know how vexing computer problems can be.
  This bill is constructive, positive legislation. It allows companies 
in the information technology industry to focus their limited resources 
on solving Y2K related problems in computer software by preventing 
frivolous litigation. Litigation which would divert those limited 
resources away from solving Y2K programming deficiencies.
  With only 205 days left until the globe turns the page on the 
calendar to a new century and a new millennium, the Y2K problem is a 
crucial matter and must be fixed.
  Lawsuits are already being filed regarding the Y2K problem, and 
Congress must act now to ensure that frivolous suits are prevented. Our 
legal system allows those who have indeed suffered because of the fault 
of another party to have their grievances adjudicated in court. This 
bill protects that process. This bill allows plaintiffs to bring suit 
for Y2K related problems if these problems are not addressed. This 
bill, however, prevents and places limits on opportunistic and 
unwarranted suits.
  Senator McCain and Senator Wyden have worked closely together to 
address this relevant matter, and I congratulate them for their 
efforts. Their approach has gained support from a substantial number of 
our colleagues--from both sides of the aisle.
  I would also like to recognize the efforts of Senator Hatch and the 
Judiciary Committee. They too have brought additional attention and 
clarity to the issue of Y2K liability problems. Senator Bennett and the 
Special Committee on the Year 2000 Technology Problem have also been 
invaluable in educating the Senate. Although his task force does not 
have legislative authority, he has explored all facets of the public 
policy dilemma. The Special Committee has continued to investigate this 
matter and provide education on preparations for the new century.
  Yes, there were three separate efforts from three different vantage 
points to ensure that the Senate gets to a solution rapidly. The 
participating Senators have brought expertise and legitimate concerns 
from their various roles and responsibilities within the Senate. All of 
our colleagues will benefit from their collective efforts.
  I am delighted that, without further delay, the full Senate can now 
begin consideration of S. 96--the result of the diligent efforts of 
many. I am proud to be a cosponsor and urge all Senators to support a 
solution that ensures America's continued prosperity.
  Mr. McCAIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona.

[[Page 12088]]


  Mr. McCAIN. I remind my colleagues of a letter that has already been 
made a part of the Record from the Year 2000 Coalition, which has more 
organizations and groups in it probably than I have ever seen--the 
entire high-tech community--addressed to Senator Kerry:
  ``We urge you to support S. 96 and to not introduce an amendment to 
it.''
  ``[T]he Coalition does not support the amendment . . . that is being 
circulated in your name.''
  Have no doubt about where the high-tech community is on this 
amendment.
  I ask unanimous consent for 2 minutes for the Senator from 
Connecticut.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. DODD. I thank my colleague.
  Let me just again state to my colleagues, this is a 3-year bill. We 
are not changing tort law for all time. We are not even changing tort 
law. This is narrow in scope. It affects just Y2K issues for a limited 
duration to try to resolve the Y2K issues.
  Let me say to my friend from Massachusetts, again, I respect what his 
intentions may be, but the adoption of the Kerry amendment expands, 
rather than contracts, the area of law we are trying to deal with here.
  My colleague from Oregon has stated it well. You cannot, because you 
do not like the contract, all of a sudden decide you want to get into 
torts. I appreciate a plaintiff's lawyer wanting to do that, but we 
ought to be trying to fix these problems, not litigate these problems. 
That is what the McCain bill is designed to do.
  My fervent hope is my colleagues will understand the fundamental 
difference and support the underlying legislation and not allow this 
bill to be destroyed, in effect, by adopting a measure here that would 
create more litigation, more problems, make it far more difficult for 
Americans who are going to be afflicted by this problem with the Y2K 
issue. With all due respect to its authors, I urge the rejection of the 
amendment and the support of the underlying McCain bill.
  The PRESIDING OFFICER (Mr. Smith of Oregon). All time has expired. 
The question is on agreeing to the motion to table amendment No. 610. 
The yeas and nays have been ordered.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Idaho (Mr. Crapo) and 
the Senator from Colorado (Mr. Campbell) are necessarily absent.
  The result was announced--yeas 57, nays 41, as follows:

                      [Rollcall Vote No. 159 Leg.]

                                YEAS--57

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

                                NAYS--41

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

                             NOT VOTING--2

     Campbell
     Crapo
       
  The motion was agreed to.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. Mr. President, I ask unanimous consent that Senator Leahy 
now be recognized to offer an amendment with debate limited to 30 
minutes equally divided, and following that debate the Senate proceed 
to vote in relation to the Leahy amendment with no amendments in order 
prior to the vote.
  Before I finish this unanimous consent request, for the benefit of my 
colleagues, I do not intend to use the full 15 minutes on this side. I 
think my colleagues can anticipate a time for a pretty rapid vote by 
the time Senator Leahy is finished.
  Finally, I ask my colleagues who have amendments on the list of 12 
amendments to agree to time agreements, so perhaps we could dispense 
with this bill tomorrow at an early moment.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The PRESIDING OFFICER. The Senator from Vermont is recognized.
  Mr. LEAHY. Mr. President, I ask my time not begin until the Senate is 
in order.
  The PRESIDING OFFICER. The Senate will be in order.
  The Senator from Vermont is recognized.


                 Amendment No. 611 To Amendment No. 608

 (Purpose: To exclude consumers from the Act's restrictions on seeking 
         redress for the harm caused by Y2K computer failures)

  Mr. LEAHY. Mr. President, I call up amendment No. 611.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Vermont (Mr. Leahy) proposes an amendment 
     numbered 611 to amendment No. 608.

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

       At the appropriate place, insert the following:

     SEC.   . EXCLUSION FOR CONSUMERS.

       (a) Consumer Actions.--This Act does not apply to any Y2K 
     action brought by a consumer.
       (b) Definitions.--In this section:
       (1) Consumer.--The term ``consumer'' means an individual 
     who acquires a consumer product for purposes other than 
     resale.
       (2) Consumer product.--The term ``consumer product'' means 
     any personal property or service which is normally used for 
     personal, family, or household purposes.

  Mr. LEAHY. Mr. President, this bill as presently drafted would 
preempt the consumer protection laws of each of the 50 states and 
restrict the legal rights of consumers who are harmed by Y2K computer 
failures.
  Why is this bill creating new protections for large corporations 
while taking away existing protections for the ordinary citizen?
  We all know that individual consumers do not have the same knowledge 
or bargaining power in the marketplace as businesses with more 
resources. Many consumers may not be aware of potential Y2K problems in 
the products that they buy for personal, family or household purposes.
  Consumers just go to the local store downtown or in the neighborhood 
mall to buy a home computer or the latest software package. They expect 
their new purchase to work. But what if it does not work because of a 
Y2K problem?
  Then the average consumer should be able to use his or her home 
state's consumer protection laws to get a refund, replacement part or 
other justice.
  The liability limits in S. 96 would protect companies whose acts or 
omissions result in harm to consumers' products or services--even if 
those companies manufactured or sold products that they knew would fail 
when the date changes to the Year 2000.
  Is that fair?
  Let me give you a real life example of how an ordinary person might 
be harmed by this bill. In 1999, Joe Consumer buys a computer program 
and on the package is the claim: ``This software is guaranteed to serve 
you well for years to come.'' But in the fine print in the shrink wrap 
that comes with the software is a disclaimer of all warranties, either 
express or implied.
  Joe Consumer's software package, that he brought in 1999, is not Y2K 
compliant. He calls and writes the software company to get it fixed but 
all he gets in response is a form letter telling him to buy the latest 
upgrade.
  Under this bill, Joe Consumer would have to wait 90 days for his day 
in

[[Page 12089]]

court and might not have a remedy at all.
  Joe Consumer would normally be able to pursue justice based on a 
failure of the implied warranty of marketability of the software 
because it was not Y2K compliant. Or he would normally be able to 
pursue justice under his state consumer protection laws. And he 
normally would be able to pursue justice with other consumers harmed by 
this Y2K defective software on a fairer and more efficient class-action 
basis. But not under S. 96.
  This bill says that the written contract prevails, even if it limits 
or excludes warranties. Enforceable written contracts under this bill 
would include the fine-print, boiler-plate language that is standard in 
the packaging of computer hardware or software.
  A consumer does not have any power to negotiate this fine print, 
boiler-plate, shrink-wrap. This shrink wrap is all one sided in favor 
of the computer manufacturer. In fact, in some cases, computer 
manufacturers even try to take away the right of a consumer to go to 
court in the fine print of their shrink wrap. In addition, this bill 
would override the Uniform Commercial Code and all state laws that 
protect consumers by making certain warranty disclaimers unenforceable. 
The consumer protections in the U.C.C. and state law protect individual 
consumers from having unfair terms imposed on them by manufacturers of 
products with far greater economic power.
  But this bill makes all state consumer protection laws null and void 
against the fine print terms of any computer manufacturer's shrink 
wrap. Maybe we should rename this bill, the ``Y2K Shrink Wrap 
Protection Act.''
  Moreover, S. 96 would severely restrict the use of class actions by 
consumers even when common questions of fact and law predominate in 
their cases and the class action would be a fair and efficient method 
to resolving their dispute. The use of class actions in state courts 
permit consumers to band together to seek justice in ways that an 
individual could not afford to take on alone. These state laws were 
enacted to protect the average consumer.
  But these basic consumer protections would be eliminated under this 
bill's Federal peremption provisions.
  And no new Federal rights for consumers would replace these lost 
state consumer protections under this bill. That is not right.
  My amendment uses the same consumer exclusion language in last year's 
Hatch-Leahy Year 2000 Information and Readiness Disclosure Act. My 
amendment contains the same definition of consumer and consumer product 
that was in that consensus measure, which passed the full Senate by a 
unanimous vote and was signed into law about seven months ago. Our bill 
become law because it was balanced, in sharp contrast to S. 96 as 
currently drafted.
  I would hope the full Senate could agree to this amendment since it 
uses the same language that we agreed to last year on the Y2K 
information sharing law.
  Last year, when we passed Y2K legislation to encourage remediation 
efforts, we clearly let stand existing consumer protections under state 
law. This same policy should apply to the pending legislation, which 
currently proposes to limit a consumer's legal rights even in cases 
involving fraud or other intentional misbehavior by product 
manufacturers or sellers.
  In fact, the precedent for using last year's Year 2000 Information 
and Readiness Disclosure Act as a model for S. 96 have already been 
set. S. 96 includes an exclusion for governments acting in a 
regulatory, supervisory or enforcement capacity. The exact language in 
the bill was lifted from the Y2K information disclosure law of last 
year. I believe this government exception make sense, particularly for 
SEC enforcement actions, and improves the underlying bill.
  Moreover, section 13(d) of S. 96 also explicitly provides that the 
protections for sharing information in our Y2K law shall apply to this 
bill.
  If the protections for businesses from last year's Y2K information 
disclosure law are good enough for this bill, then the exclusion from 
last year's Y2K law for consumers should also be good enough for this 
bill. Last year's Y2K information disclosure law was a balanced measure 
in part because it protected consumers from its provisions. Adding the 
same consumer carve out by adopting my amendment would give balance to 
this one-sided bill.
  Passing this amendment would improve the chances of S. 96 actually 
being signed into law by the President, instead of being vetoed as a 
bill that protects special interests at the expense of the average 
consumer. My amendment is supported by consumer rights associations 
including Consumers Union, Public Citizen, Consumers Federation of 
America, and the United States Public Interest Research Group. I ask 
unanimous consent that a letter from these consumer advocates in 
support of the Leahy amendment be printed in the Record at the end of 
my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. LEAHY. Mr. President, allowing consumers access to their home 
state consumer protection laws is the right thing to do. I urge my 
colleagues to vote for this amendment.

                               Exhibit 1

         Consumers Union, Public Citizen, Consumer Federation of 
           America, U.S. PIRG,
                                                     June 8, 1999.
       Dear Senator: As the full Senate prepares to consider S. 
     96, The McCain-Wyden-Dodd legislation limiting the liability 
     of companies responsible for Y2K computer processing 
     failures, the undersigned consumer groups remain concerned 
     about the negative effects this legislation will have on 
     consumers with legitimate Y2K claims. While we would support 
     legislation to provide incentives to companies to evaluate 
     and address Y2K problems and product defects, we believe that 
     S. 96 will have the opposite consequences.
       Insulating companies from Y2K liability will only serve to 
     protect those who have done the least to address their 
     problems and will render consumers far more vulnerable as a 
     result. We ask that you support the Leahy amendment, which 
     would exempt consumer cases from this legislation. Most 
     experts expect Y2K litigation to be brought primarily by 
     businesses against other businesses. These litigants will 
     have contracts with one another that have been drafted to 
     protect their individual interests. Consumers will not have 
     benefit of these protections in the marketplace.
       In addition, there is federal precedent for a consumer 
     carve-out in Y2K legislation. The language of the Leahy 
     amendment is the same language that appears in the law passed 
     last year, the Y2K Readiness and disclosure Act. Among the 
     provisions of S. 96 that are most harmful to consumers:
       Elimination of Joint and Several Liability. The sweeping 
     change in this longstanding tort concept will likely leave 
     consumers uncompensated for damages if one or more defendants 
     cannot be held liable for the full amount of loss suffered. 
     The two narrow exceptions to this provision will be of little 
     benefit to most plaintiffs, and many could be left without 
     full compensation, even for their economic losses.
       Class Actions Removed to Federal Court. Any class action 
     with aggregated damages of $1 million or more could be 
     removed to federal court, where cases are likely to face a 
     large backlog of cases and thus long delays and additional 
     expense. S. 96 also requires notification by return mail to 
     each potential plaintiff in a class action, a provision that 
     may well make bringing these cases financially and 
     practically impossible--leaving class members without a 
     remedy.
       Caps on Punitive Damages. S. 96 caps punitive damage at 
     $250,000 or three times compensatory damages, whichever is 
     less, for defendants with a net worth less than $500,000 or 
     businesses with fewer than 50 employees, unless plaintiffs 
     can prove the defendant specifically intended to injure them. 
     Caps on punitive damages send the wrong signals to the most 
     irresponsible companies, acting as a disincentive to fix 
     problems before they occur.
       Disclaimer of Implied Warranties. In most states, products 
     are warranted to be fit for the purpose for which they are 
     sold. Under S. 96, warranty disclaimers on the packaging or 
     software--the fine print that consumers rarely read--may keep 
     consumers from recovering for defective products and the 
     losses they cause, unless they are proven to manifestly 
     contradict state law, a difficult standard to meet.
       For these reasons, we ask you to support Senator Leahy's 
     consumer protection/consumer carve-out amendment.

[[Page 12090]]

     
                                  ____
    Examples of How Senate Y2K Liability Bill is Unfair to Consumers

       The examples below demonstrate the ways in which S. 96 
     would make it difficult, if not impossible, for consumers 
     with legitimate claims to get full compensation from 
     responsible parties. This legislation will have a direct 
     effect on consumers and will likely result in many consumers 
     being left without a remedy for Y2K problems.


                 the case of the non-compliant software

       In 1998, Mrs. Betty Barnes purchases a new home computer, 
     paying an extra $500 for special software that will allow her 
     to pay her bills and manage her household finances using the 
     system. One year later, Mrs. Barnes finds that the software 
     is not Y2K compliant and will not work after the Year 2000. 
     She calls the store where she bought the software to get a 
     version of the software that will work. The store tells her a 
     ``patch'' to correct the problem is available but will cost 
     an additional $250. Mrs. Barnes then writes to the software 
     manufacturer asking for a fix for the defective program. The 
     manufacturer writes back within 30 days telling her that she 
     will have to pay $250 for the Y2K compliant version of the 
     program.
       Under the bill, Mrs. Barnes must wait an additional 60 days 
     before she can bring any legal action against the software 
     manufacturer. The manufacturer has met its obligation by 
     responding to the letter even though the company did not 
     agree to fix the problem for a reasonable price. Mrs. Barnes 
     has no right to a free fix or a reasonably priced upgrade 
     under S. 96. She must wait 60 days even if the manufacturer 
     has proposed an unfair solution to the problem. Mrs. Barnes 
     has no bargaining power to force the manufacturer to offer a 
     more fair solution.
       S. 96 does have an exception to the 60-day waiting period: 
     Mrs. Barnes can sue for injunctive relief. She speaks to a 
     lawyer and finds out this will not help her in her case. 
     Injunctive relief is difficult to obtain; it requires proof 
     of (1) irreparable injury if the problem is not dealt with 
     immediately, (2) a strong likelihood of winning on the merits 
     and (3) no adequate remedy at law. Mrs. Barnes is unlikely to 
     be able to prove irreparable injury. Even if she could, her 
     likelihood of prevailing on the merits is diminished by the 
     federal law that makes it harder for plaintiffs in Y2K cases 
     to win. (She could show that she has no adequate remedy at 
     law because she cannot sue at this stage.)
       Mrs. Barnes is forced to wait for two months before she can 
     file suit. During this time, she is unable to use the 
     software for which she paid $500.00--she can't balance her 
     checkbook, she can't pay her insurance or mortgage, she can't 
     do her taxes.
       After the 60-day period expires, Mrs. Barnes lawyer files 
     suit against the software manufacturer. under S. 96, she has 
     to plead her case with specificity, even though she knows 
     little at this point about her case except that her software 
     isn't Y2K compliant and she has been barred from conducting 
     any discovery while the 60 day period ran out. The 
     manufacturer moves to dismiss the case, arguing that S. 96 
     protects them from Mrs. Barnes' suit. The software package 
     has a disclaimer that says, in fine print, ``there are no 
     warranties, express or implied, that apply to the sale of 
     this product.'' Under S. 96, the terms of a contract--
     including a warranty--prevail over any consumer protection 
     statutes in state law unless the language in the contract is 
     deemed to ``manifest and directly'' contradict state law. The 
     software company argues that the state law that disfavors 
     this kind of disclaimer does not ``manifestly and directly'' 
     contradict state law. Since this is an issue of first 
     impression, each side must present legal arguments on this 
     issue, adding much cost and delay to the suit. If Mrs. Barnes 
     loses, she will have no legal recourse, even if the 
     manufacturer knowingly sold her defective software.
       Luckily, Mrs. Barnes survives the motion to dismiss. She 
     and her lawyer now have the chance to conduct discovery. They 
     learn that there are a number of companies involved in 
     manufacturing of her particular software, and they move to 
     add them as defendants. The companies based in the United 
     States claim little or no responsibility for the Y2K failure. 
     They all point to a Japanese software maker as the source of 
     the problem. Mrs. Barnes can't sue the Japanese software 
     maker since it does not do business in the U.S. If the jury 
     finds that the Japanese company is the defendant most at 
     fault, S. 96's limitations on joint and several liability 
     will mean Mrs. Barnes can never recover fully for her 
     damages.
       Without evidence of specific intent to injure nor knowing 
     commission of fraud, as required under S. 96, Mrs. Barnes 
     cannot hold all defendants jointly and severally liable. Mrs. 
     Barnes learns that the U.S. manufacturer recklessly placed 
     this software on the market without bothering to check that 
     is was Y2K compliant. But ``reckless conduct'' isn't enough 
     under S. 96 to allow the court to hold the U.S. manufacturer 
     liable for the entire injury, even though the injury could 
     not have occurred without its participation. Since Mrs. 
     Barnes damages are not equal to 10% of her net worth as 
     required under S. 96, she is not eligible to use that 
     provision to bring the case for an ``uncollectible'' share. 
     Mrs. Barnes can get only that percentage the jury says the 
     U.S. manufacturer is responsible for causing.
       If the Japanese company is judgment-proof, the U.S. 
     manufacturer could be responsible for up to 50% more of its 
     initial share. If the jury finds the U.S. manufacturer was 
     20% liable and the Japanese company was 80% liable, and Mrs. 
     Barnes can't collect from the Japanese company, the U.S. 
     manufacturer is responsible for 50% more than its original 
     share, a total of 30%. Mrs. Barnes can never recover the 
     other 70% damages she is owned.


                 the case of the consumer class action

       S. 96 provisions on class actions will result in 
     meritorious cases being dismissed, leaving consumers with no 
     practical means for collecting damages.
       Assume the same facts as above, but this time Mrs. Barnes 
     learns that a number of other consumers have bought the same 
     software and are having the same problems. Together they file 
     a class action suit in Mrs. Barnes' home state against the 
     manufacturer. They are able to meet the material defect 
     requirement imposed on those filing class actions as well as 
     the heightened pleading standards. The manufacturer, noting 
     that there are plaintiffs from a number of different states, 
     under the rules of S. 96 would be entitled to file a motion 
     to remove the case to federal court. The federal court, 
     required to resolve differences between and among state laws, 
     decides there are not enough common issues of law among the 
     various state laws, and the class action is returned to the 
     state. The class is disbanded there. While individuals are 
     free to bring suit on their own, each case is for such small 
     monetary value, few consumers or lawyers are interested or 
     willing to pursue the case individually. Mrs. Barnes can't 
     find a lawyer to take her case and she is left without a 
     remedy.


                   the case of the chemical disaster

       Mrs. Jacqueline Jensen owns a home several streets away 
     from the Acme Chemical Company. Like 85 million other 
     Americans, she lives and works within 5 miles of the one or 
     more of the nation's 66,000 facilities that handle or store 
     high hazard chemicals.
       On January 1, 2000 Acme's safety system fails and hazardous 
     chemicals are released into the air and onto the land in the 
     neighborhoods, forcing Mrs. Jensen and others to evacuate 
     their homes. People are allowed back to their homes after 2 
     days, but Mrs. Jensen's property is contaminated, including 
     her well. Mrs. Jensen retains an attorney and files a tort 
     claim to recover for the damage to her property.
       Acme Chemical claims that a Y2K computer failure was 
     partially at fault for the safety system malfunction. Mrs. 
     Jensen did not know Y2K was a defense, so she and her lawyer 
     did not look up the new statute or file a per-litigation 
     notice before filing suit. Under S. 96, Acme treats the 
     complaint as the notice, even though it does not contain all 
     of the required information because Mrs. Jensen and her 
     lawyer initially had no idea this was a Y2K case and there 
     was a new law to follow in addition to the requirements of 
     filing a civil suit under state law.
       Under S. 96, even when consumers' homes and surrounding 
     properly is contaminated, they cannot file suit right away, 
     even though they aren't waiting for a computer malfunction to 
     be fixed. The waiting period applies to all cases, even those 
     where it is not relevant. Mrs. Jensen must wait 30 days for 
     Acme to respond to her notice/complaint. In 30 days Acme 
     responds by saying it cannot pay for the cleanup and lost 
     value of Mrs. Jensen's home. Nonetheless, Mrs. Jensen still 
     must wait an additional 60 days to refile her lawsuit. S. 96 
     only requires defendants to state what steps, if any, they 
     will take within 60 days for the additional waiting period to 
     commence. All discovery is stayed during this period, so Mrs. 
     Jensen and her attorney have no way to gather additional 
     information about the events surrounding the chemical spill.
       In two months, Mrs. Jensen refiles her suits against Acme 
     and Safety Systems, Inc., the company that installed its 
     computers. Under S. 96, she must plead her case with 
     particularity in the complaint. While she can state her 
     damages as required, she has difficulty specifying the 
     material defect that caused the accident and specific 
     evidence of the defendants' state of mind since she has still 
     not been able to do discovery in the case. The defendants 
     move to dismiss the complaint for failure to meet the 
     pleading requirements. After briefs back and forth debating 
     what the new law requires, the judge does dismiss the case 
     but without prejudice, allowing Mrs. Jensen an opportunity to 
     file an amended complaint (now her third).
       Somehow, Mrs. Jensen finds enough information to survive 
     another motion to dismiss and finally has her day in court. 
     After hearing the case, the jury finds that both defendants 
     acted recklessly and outrageously for not identifying and 
     fixing the Y2K problems at the plant, and awards Mrs. Jensen 
     $300,000 to compensate her for her property damages and the 
     need to replace her water supply. The jury finds that Acme is 
     70 percent responsible and Safety Systems 30% liable. The 
     jury also finds by clear and convincing evidence that Acme's 
     conduct is so outrageous as to warrant punitive damages and 
     assesses a one million-dollar punitive damage award. The jury 
     also finds substantial evidence that Safety Systems knew the 
     system it installed

[[Page 12091]]

     might not work and that it should have fixed the Y2K problem, 
     which is enough for them to be assessed punitive damages 
     under state law, but Mrs. Jensen could not make that showing 
     by clear and convincing evidence as required by S. 96.
       Under S. 96, a consumer who suffers harm limited in amount 
     of punitive damages she can collect. The total amount of Mrs. 
     Jensen's award from the jury is $1.3 million dollars--
     $1,210,000 against Acme ($210,000 compensatory and $1,000,000 
     punitive) and $90,000 against Safety Systems. Acme employes 
     40 people, so the punitive damages awarded against them is 
     reduced by the judge according to the cap under S. 96 to 
     $250,000. The adjusted award is now $550,000 against Acme and 
     Safety Systems.
       Acme cannot pay for all of the damage caused by the 
     accicent to Mrs. Jensen and her neighbors and files for 
     bankruptcy. Safety Systems pays Jensen $90,000, but this is 
     not nearly enough to let her clean up her property and get a 
     new water supply--especially after she pays her legal costs. 
     She tries to collect from Acme, but without success. After 3 
     months, she applies to the court to require Safety Systems to 
     pay the rest of the compensatory damage award. Under state 
     law, they could be required to pay the full amount, but under 
     S. 96, the maximum they would have to pay is 30% of the 
     uncollectible share but no more than 50% over Safety Systems' 
     own contribution. Under this formula, Mrs. Jensen is able to 
     collect an additional $45,000 from Safety Systems, leaving 
     her with a actual unrecoverable damages to her property--i.e. 
     direct economic loss--of $165,000 exclusive of legal fees and 
     costs.
       Although the jury found that Safety Systems acted 
     recklessly, they do not have to pay the full amount of the 
     compensatory award--even if they could afford to do so.
       Under her state's law, Mrs. Jensen would have received 
     $1,300,000, that is, full compensation for her losses from 
     the responsible parties. Because of S. 96, Mrs. Jensen will 
     be left with only $135,000, not nearly enough to compensate 
     for her loss and pay her legal fees and costs.


               the case of the disclosed medical records

       Mrs. Sally Sargent lives in a small town. Her physician is 
     treating her for HIV. She has been seen at the local hospital 
     during bouts of pneumonia, but more recently has been on 
     drugs that have improved her overall health and enabled her 
     to work. Her biggest fear is that her employer will learn of 
     her HIV status, which will surely mean the loss of her job in 
     a rather straight-laced company and that her children will be 
     ostracized at school. She has been assured by the hospital 
     that all of her records will be kept confidential.
       The hospital records department ignored its potential Y2K 
     problem, though they were warned by hospital administrators 
     to check the record system for Y2K bugs. As a result, the 
     hospital's computer records are mistakenly distributed to 
     abroad group of hospital personnel. One of those hospital 
     employees has a child who attends school with Mrs. Sargent's 
     daughter. This mother becomes very agitated, calls the school 
     with the information, and before long the rumor about Mrs. 
     Sargent's medical condition gets around to the whole 
     community. Mrs. Sargent's daughter is ostracized from her 
     classmates, and she herself suffers great emotional distress. 
     When her employer discovers she has HIV, she is fired from 
     her job.
       Under S. 96, her emotional distress and mental suffering 
     claim is not exempted from the bill, as are personal injury 
     cases involving physical injuries. Failing to exempt cases 
     brought for emotional distress and mental suffering, if they 
     happen to occur unaccompanied by physical injury, is grossly 
     unfair to individuals who have suffered real harm. In this 
     case, Mrs. Sargent would have to meet all of the procedural 
     hurdles and substantive legal limitations if she tried to sue 
     the hospital for negligent or intentional infliction of 
     emotional distress and her lost wages and related damages.

  Mr. McCAIN. Mr. President, this amendment, for all intents and 
purposes, will emasculate the bill. It will deny consumers, those least 
able to pay for attorneys, to hire attorneys to solve any Y2K problems, 
the average consumer the ability to resolve a problem quickly, within a 
maximum of 90 days, without litigation.
  It also allows more of the Tom Johnson-type lawsuits: No requirement 
that there be an actual injury, no requirement that there be a real 
problem. This would negate the attempt by S. 96 to limit frivolous 
lawsuits.
  I yield back the remainder of my time.
  Mr. LEAHY. How much time remains?
  The PRESIDING OFFICER. The Senator has 6 minutes 20 seconds.
  Mr. LEAHY. I understand the distinguished Democratic leader desires 
to speak, so I will hold the floor for a moment.
  Mr. McCAIN. Does the Senator want an up-or-down vote?
  Mr. LEAHY. Please.
  So colleagues will understand, in last year's Y2K bill which this 
Senate passed unanimously, which the President signed into law, we had 
basic consumer protections and business protections. In this bill, we 
bring forward business protections but we don't bring forward the 
consumer protections we passed last year.
  Let's be consistent; let's make sure we give consumers at least as 
much protection as we give businesses. That is what I am asking for and 
all I am asking for in the Leahy amendment. I also say if it passes, it 
improves the chance of this actually being signed into law.
  I yield to the distinguished Senator from South Dakota.
  Mr. DASCHLE. I thank the distinguished Senator from Vermont. I 
applaud the Senator for his amendment.


                   12,000th Vote for Senator Stevens

  Mr. DASCHLE. Today, I call the attention of all my colleagues to a 
very important and historic achievement by one of the Senate's most 
remarkable Members. With this vote, Ted Stevens will cast his 12,000th 
vote in his career.
  It is certainly fitting that Senator Stevens represents Alaska in the 
United States Senate. He has lived in that great state and worked for 
its residents since before it was a state. In fact, as Solicitor of the 
Department of the Interior, Ted was instrumental in setting the 
groundwork for Alaska's admission to the Union in 1959.
  In 1964, Ted was elected to the Alaska House of Representatives. Two 
years later, his colleagues elected him House Majority Leader, an honor 
that surprises none of us who have first hand knowledge of Ted's 
legendary tenacity, legislative acumen and dedication to his 
constituents.
  Senator Stevens brought that determination and skill to the Senate in 
1968. I'm sure that every Senator has his or her own anecdote to 
document Ted's dedication and effectiveness as a legislator.
  Ted once declared that his constituents ``sent me here to stand up 
for the state of Alaska.'' No one who served with Ted over the past 
thirty years can doubt his commitment to do just that.
  In fact, some surely wonder at times if he isn't more of an 
ambassador than a Senator.
  Ted has endeavored to ensure that promises made to Alaska under the 
Statehood Act are kept. He helped pass the Native Claims Act in 1971 
and played a pivotal role in bringing the oil pipeline to Alaska in 
1973. He joined with Senator Warren Magnuson in co-authoring the 200 
mile fishing limit that protects all coastal states from encroachment 
by foreign fishing fleets and helps sustain America's fisheries.
  In the late 1970s, when President Carter made the creation of 
wilderness areas in Alaska a national priority, Ted worked with his 
characteristic focus and tenacity to ensure that the Alaska Lands Act 
protected his state's interests as much as possible. After the Exxon 
Valdez accident in 1989, Ted managed legislation that not only financed 
the cleanup of the despoiled coastline, but also required double-
hulling on tankers.
  Senator Stevens has worked tirelessly and effectively for Alaska. But 
his accomplishments are certainly not limited to the 49th state. Ted's 
career documents his far reaching influence on national policy and 
dedication to the institution of the Senate as well.
  Ted has been a leader in the defense area for his entire career, as 
chairman of the Defense Appropriations Subcommittee and now the full 
Appropriations Committee. And he has developed recognized expertise in 
science and technology issues through his long and distinguished 
service on the Commerce Committee as well.
  Ted has a deep affection for the Senate and has labored to preserve 
the character, integrity and prerogatives of the institution. He has 
chaired the Rules Committee and served in the leadership as Majority 
Whip.
  Ted Stevens is recognized for his no-nonsense style, limitless energy 
and ability to get things done--not to mention an impressive collection 
of neckties.
  Everybody in the Senate knows that Ted's word is good, and he has 
earned

[[Page 12092]]

the high esteem of his colleagues through his hard work and devotion to 
his job.
  Mr. President, it is indeed a pleasure to serve with Ted Stevens, and 
to count him as a friend. I congratulate Ted on his achievement, and 
thank him for his numerous contributions to his state, his country and 
the United States Senate.
  Mr. KENNEDY. Mr. President, I congratulate my colleague from Alaska, 
Senator Ted Stevens on reaching his 12,000th vote. He is a remarkable 
colleague and I admire the outstanding leadership that he has shown on 
so many issues. Senator Stevens is a person of great integrity and 
energy and works tirelessly for his state of Alaska. I have worked 
closely with him on many occasions and it is with admiration that we 
celebrate his 12,000th vote.
  His accomplishments as Chair of the Appropriations Committee are too 
numerous to list. Handling the nation's spending is a complex, 
difficult task, yet, Senator Stevens handles this responsibility with 
finesse and great skill.
  Senator Stevens is active on a range of issues that are of great 
importance nationally and to his home state of Alaska. He is a great 
advocate for fishing families, a great protector of Native-Americans, 
and a leader on promoting quality health care and research. His 
leadership on national defense is also remarkable.
  Senator Stevens holds a special place in his heart for children and 
his advocacy on behalf of early education will help us achieve the 
nation's school readiness goals. He was one of the first in the Senate 
to recognize the importance of new brain research documenting the vital 
role of early stimulation during the first three years of life, and he 
is a leading advocate for early education. Working to ensure that every 
child reaches his or her full potential, Senator Stevens has introduced 
legislation that will improve the quality and accessibility of early 
programs for millions of children under the age of 6. He is committed 
to making sure that children receive the educational boost they need to 
start school ready to read and ready to learn. With Senator Stevens 
leadership, I know we will make school readiness a reality for every 
child in this country.
  Senator Stevens also recognizes the importance of the family and the 
central role that parents play in their children's lives. While others 
talk about putting families first, Senator Stevens acts on that 
commitment by including funds on his appropriations bills for this 
purpose. Recently, he introduced an amendment to the Juvenile Justice 
bill that will provide essential funds to strengthen supports for 
parents.
  Put simply, Senator Stevens is a credit to Alaska, the Senate, and 
this country. He is a great Senator and a good friend. We are fortunate 
to be able to celebrate his 12,000th vote with him, and look forward to 
many more votes in the future from this great Senator from Alaska.
  The PRESIDING OFFICER. The majority leader.
  Mr. LOTT. Mr. President, I commend Senator Daschle for his comments 
about Senator Stevens. He is about to cast his 12,000th vote.
  Senator Daschle observed the interesting array of Ted Stevens' tie. 
My favorite one is the Tasmanian devil. When he comes in with that tie 
on, you know an appropriations bill is fixing to be moved through the 
Senate. But he has been a great Member of the Senate. He is a great 
friend. He is a credit to his State of Alaska.
  He has had an unbelievable career, including being a Flying Tiger, 
the 14th Air Force, in World War II. He is a graduate of UCLA and 
Harvard Law School. He has overcome that. He was a solicitor at the 
Interior Department under the Eisenhower administration, and he 
certainly was a powerful advocate for Alaska statehood. He served in 
the Alaska House of Representatives. He was appointed to the Senate in 
1968, and he has been elected five times since.
  My greatest experience with the distinguished Senator from Alaska was 
when he served as the whip of the majority in the Senate, and I was the 
whip for the minority in the House. Unlike what most people think, 
where there is this natural difficulty between the House and the 
Senate, he was never anything but helpful to me personally. He helped 
the two institutions work together. Because of his leadership, we 
addressed a number of important problems for the legislative activities 
and the security of the U.S. Capitol Building.
  His wife Catherine and six children are here, a wonderful assemblage 
of people. Catherine does a great job at keeping Senator Stevens on the 
straight and narrow. She is a wonderful lady. We thank her for the 
sacrifice she makes in allowing Senator Stevens to be here, sometimes 
through late nights, to allow him to accumulate these 12,000 votes.
  On behalf of the Senate, I extend our appreciation and thanks to 
Senator Stevens, a great Senator from Alaska, for what he has done for 
his State and for our Nation.
  (Applause, Senators rising.)
  Mr. STEVENS. Thank you very much. I appreciate it.
  Mr. President, I am humbled and honored by the statements of our two 
leaders in the Senate. It is true I have a deep reverence for this 
body. When I was in the Eisenhower administration, I sat up in the 
gallery many nights during the period when the Senate was considering 
Alaska's statehood. I gained the reverence that I have for the body now 
from those experiences.
  It is truly an honor to serve in this body. Some people, I guess, 
have taken it a little bit for granted. I still pinch myself every once 
in a while to make sure I am allowed the opportunity to be present in 
this body, to be a U.S. Senator.
  I value the friendships I have had on both sides of the aisle more 
deeply than I can say.
  I am very proud to say for other reasons many members of my family 
are here in the gallery tonight. Our daughter, Lily, graduates from 
high school tomorrow. Tonight the National Guard has flown my grandson, 
John Covich, into Washington to give me an award from the USO and the 
National Guard. So this is a double celebration for me.
  Just having the privilege to still be alive and be part of this body 
is more than anyone can know after the accident that I had years ago 
and the feeling I had about life then turned around. It turned around 
primarily because of the friendship and the helping hand I got from 
every Member of the Senate who was here then, and I continue to value 
the friendship of every one of you tonight. Thank you very much.
  (Applause, Senators rising.)
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. Mr. President, I yield the remainder of my time.
  Mr. LEAHY. Mr. President, if there is any time remaining, I yield it 
back. I am pleased to give my friend a chance to cast the 12,000th vote 
on this amendment. He is one of the best friends I have ever had in the 
Senate.
  Mr. McCAIN. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. All time has been yielded back. The question 
is on agreeing to amendment No. 611. The yeas and nays have been 
ordered.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Idaho (Mr. Crapo) and 
the Senator from New Hampshire (Mr. Gregg) are necessarily absent.
  Mr. REID. I announce that the Senator from Delaware (Mr. Biden) is 
necessarily absent.
  The result was announced--yeas 32, nays 65, as follows:

                      [Rollcall Vote No. 160 Leg.]

                                YEAS--32

     Akaka
     Boxer
     Breaux
     Byrd
     Cleland
     Conrad
     Daschle
     Dorgan
     Durbin
     Edwards
     Feingold
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Mikulski
     Murray
     Reed

[[Page 12093]]


     Reid
     Rockefeller
     Sarbanes
     Schumer
     Torricelli
     Wellstone

                                NAYS--65

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

                             NOT VOTING--3

     Biden
     Crapo
     Gregg
  The amendment (No. 611) was rejected.
  Mr. LOTT. Mr. President, I move to reconsider the vote, and I move to 
lay that motion on the table.
  The motion to lay on the table was agreed to.

                          ____________________