[Congressional Record (Bound Edition), Volume 145 (1999), Part 9]
[Senate]
[Pages 12753-12762]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 12753]]

                                Y2K ACT

  The Senate continued with the consideration of the bill.
  Mr. HOLLINGS. I yield 2 minutes to the distinguished Senator from 
North Carolina.
  The PRESIDING OFFICER. The Senator from North Carolina.
  Mr. EDWARDS. Mr. President, I would like to respond very briefly to 
my colleague from Oregon, Senator Wyden.
  First, I point out that based on my study of the issue it appears to 
me that virtually every consumer group which is composed of, among 
others, small businesspeople around this country is opposed to this 
bill.
  Second, and more importantly, Senator Wyden said--I am quoting him--
that the ``bill permits recovery of damages for foreseeable 
consequences.''
  I say with all due respect to my colleagues that is exactly what the 
bill does not permit. That language appears nowhere in this bill. I 
challenge him, since he has made that statement, to find the language 
in the bill that says ``damages for foreseeable consequences.''
  Mr. WYDEN. Will my colleague yield?
  Mr. EDWARDS. I will.
  Mr. WYDEN. I appreciate that. Of course, that is what many contracts 
say. That is the economic loss rule. We say that the rights that apply 
are the rights of contracts, which most small businesses enter into 
when they buy the system. It is the State economic loss rule. State 
contract law with respect to economic loss covers those issues.
  I appreciate him yielding.
  Mr. EDWARDS. My response to that is, first of all, the vast majority 
of the computers are not bought pursuant to a written law in contract, 
because most folks are not able to hire a team of lawyers to draft a 
contract on their behalf. So the contracting is a meaningless concept, 
except as between one big company buying the computer system from 
another big company. Otherwise, contracts don't exist. In the absence 
of a contract, this bill eliminates recovery of economic losses.
  It is that simple. They do not allow for the recovery of damages that 
are the result of foreseeable consequences.
  It is a huge, fundamental problem with this bill. It will not allow 
people to recover anything but the cost of their computer. That is what 
the bill says.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. HOLLINGS. I yield 5 minutes to the distinguished Senator from 
California.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. BOXER. Mr. President, I say thanks to my friends, Senator 
Hollings and Senator McCain. They worked very hard on moving this piece 
of legislation through.
  I really like the premise of this bill. As a matter of fact, when I 
saw there was a bill introduced, and there were several that gave a 90-
day cooling off period where we can fix the Y2K problem, I thought, 
there is a great idea. But the more I got into it, the more I saw the 
consumers being trampled on.
  That is not the way my friend from Oregon sees it. I have the utmost 
respect for him. We just simply disagree. I say: How do you know who is 
right? I harken to what Senator Edwards said. Every consumer group is 
against it. They don't like taking on lost causes that they are going 
to lose.
  This bill is going to pass overwhelmingly. Why would consumer groups 
step up to the plate and say it is wrong? Because in their heart they 
know the bill goes too far.
  I am just going to give you three examples of what happened to this 
bill when it came to the floor. I am going to pick out three amendments 
as examples as to why this bill moved over so far to the anticonsumer.
  Take one of the amendments of Senator Edwards. My friend offered an 
amendment that simply said that if you sell a computer in the year of 
1999, or you sell software, and it is supposed to be Y2K compliant and 
something happens, you should get the protection of the underlying 
bill.
  Why should we protect people who sell a computer to an ordinary 
person, or a small business, or sell software in the year of 1999, I 
say to my friend, as late as November of 1999, and then, whoops, it 
goes wrong, and in the year 2000 you still get the protection of this 
bill? I don't get it. It goes too far.
  Then we have the Boxer amendment supported by a number of my friends.
  What did that say? In the remediation period of that 60 days after 
you have notified the computer company or the software company that you 
have a failed product, they have to fix it, if they have a fix.
  We had 31 votes or something like that. Where are the voices of the 
consumer in this Senate? It is perplexing to me. We showed at that time 
the law of the State of Arizona, a law on Y2K protecting their computer 
people, as well. Guess what. It said in the remediation period, you 
must offer a fix to the people.
  If this is supposed to cure the problem, how are we curing it when we 
vote down the Boxer amendment, which said if there is a fix, fix the 
computer, fix the problem?
  Today, we have the Gregg amendment. If I am correct, it is my 
understanding that the Gregg amendment will be accepted; is that 
correct?
  Mr. HOLLINGS. I don't know. I had not discussed it with the 
distinguished Senator.
  Mrs. BOXER. If it is accepted or we know they will pass because they 
all are passing, what does the Gregg amendment do? Under the Gregg 
amendment, if your small business makes a certain chemical and has to 
live by the rules of the Environmental Protection Agency regarding 
dumping of that chemical, but your computer goes on the fritz--I don't 
mean that in a derogatory way--your computer breaks down, guess what. 
Under the Gregg amendment you don't have to live by the environmental 
laws. Dump that stuff anywhere, because you will get a waiver which 
says the problem was my computer went down and, therefore, I can't live 
within the environmental laws.
  This is amazing.
  I have given the Senator three examples of how every proconsumer 
amendment has been voted down and every amendment that flies in the 
face of good government has moved forward. I am totally shocked and 
chagrined that we could not even pass the simplest amendments.
  I see my friend from Vermont is here. I yield the floor.
  Mr. HOLLINGS. I yield the remainder of my time to the Senator from 
Vermont.
  Mr. LEAHY. Mr. President, earlier I came to the floor to show what 
happens in an actual case today under the law.
  In a case in Warren, MI, a man bought a $100,000 computer system and 
it was not Y2K compliant. He almost lost his business. However, he was 
able to follow the State laws we have today. He was able to use State 
law, enforce it, and save going into bankruptcy, save being out of 
business.
  Under the law before the Senate today, instead, here is what would 
happen. Rather than a straight line of protection for that small 
businessperson, here is the way it goes: dead end, dead end, roadblock, 
roadblock, dead end, dead end, roadblock.
  Now they say they have cured it. What did they do? They took off one 
of the roadblocks.
  Look at this chart. The roads in Kosovo are easier to drive through 
than the roads on this so-called Y2K ``correction'' bill.
  I wish we did what we did last year. We had a good Y2K bill. The 
information-sharing law, S. 96, was done in a truly bipartisan way. It 
passed virtually unanimously. It was signed into law.
  Now we have a bill, instead of making efforts to bring all parties 
together to have a bill the President could sign, we have something we 
know the President will veto, and he will veto it because of these dead 
ends, because of these detours, because of these roadblocks, because 
the court door is slammed, and because it wipes out every single State 
law in this country--all 50.

[[Page 12754]]

  Mr. President, a few months ago, I came to the Senate floor to take a 
look at what this Y2K liability bill will actually do in a real life 
situation. I had a similar chart with me at that time.
  Since then, we have heard some of my colleagues praise the so-called 
compromise on the Y2K liability protection bill. I have adjusted my 
chart to take into account the changes made to S. 96. You can see that 
this new so-called compromise eliminated only one road block on the 
road to justice. The ``compromise'' dropped liability protection for 
officers and directors of corporations that have Y2K computer problems. 
All these other special legal protections are still in S. 96.
  Let's take a closer look at my chart under the modified S. 96. The 
chart still illustrates the many detours, roadblocks and dead ends that 
this bill would impose on a innocent plaintiff in our state-based legal 
system. Let's take a real life example of a Y2K problem and see what 
would happen under the sweeping terms of this new bill.
  A small business owner from Warren, Michigan, Mark Yarsike, testified 
this year before the Commerce and Judiciary Committees about his Y2K 
problems. In 1997, he brought a new computer cash register system for 
his small business, Produce Palace, that was not Y2K compliant. 
Naturally, he assumed his new cash register system would be Y2K 
compliant. But it was not.
  His brand new high-tech cash register system, which cost almost 
$100,000, kept crashing. After more than 200 service calls, it was 
finally discovered that his computer cash register system kept breaking 
down because it could not read credit cards with an expiration date in 
the year 2000. A Y2K computer defect that would be covered under this 
so-called ``compromise'' bill.
  At the top of this chart is how the state-based court system works 
today for Mark Yarsike. His business buys a new computerized cash 
register system and a Y2K defect crashes the system. He then asks the 
cash register company to fix the system. If Congress rejects current 
Y2K liability legislation, a small business owner has two options under 
traditional state law.
  The cash register company agrees to solve the Y2K problem and the 
small business owner has a quick and fair settlement.
  If the company fails to fix the cash register system with the Y2K 
defect, then a small business owner has the option to have his day in 
court and proceed with a fair trial. That is what Mark Yarsike did. He 
was forced to buy a new computer cash register system from another 
company and sued the first company that sold him the non-Y2K compliant 
system. He was able to recoup his losses through a fair settlement.
  Today's court system worked for him.
  Now what happens to that same small business owner who brought a Y2K 
defective computer cash register system under the bill before us. Well, 
the current ``compromise'' bill overrides the 50 state laws and places 
new Federal detours, roadblocks, and dead ends from justice for that 
small business owner. Let's take another look at the chart.
  If Congress enacts this Y2K liability protection legislation that 
overrides state law, the small business owner faces all these special 
legal protections on his road to justice.
  The bill's sweeping legal restrictions include--90 day waiting 
period, preservation of unconscionable contracts' terms, heightened 
pleading requirements, new class action requirements, duty to 
anticipate and avoid Y2K damages, override of implied warranties under 
state law, caps on punitive damages, limits on joint and several 
liability, and bystander liability protection. All these special legal 
protections still apply to small business owners and consumers under 
this so-called ``compromise.''
  All these dead ends on the road to justice may force a small business 
owner, like Mark Yarsike, to file for bankruptcy or lay off employees.
  The bill contains severe limits on recovery by capping punitive 
damages to 3 times the amount of compensatory damages or $250,000, 
whichever is less, for medium-sized and small businesses. The sponsors 
of this ``compromise'' have touted the fact that they struck the looser 
punitive damages cap for larger businesses that was in the bill. I 
agree that this is an improvement, but it comes with another troubling 
compromise.
  The bill now defines small businesses as firms with fewer than 50 
employees, instead of firms with fewer than 25 employees, which was the 
definition in the original bill. As a result, the absolute cap of 
$250,000 on punitive damages now applies to many more businesses 
without any justification. Never before in any product liability tort 
``reform'' bill has a small business been defined so broadly.
  An exception to this punitive damages cap has been added if a 
plaintiff can prove that the defendant intentionally defrauded the 
plaintiff. Of course, the plaintiff must prove this by a higher 
standard of proof than normal--by clear and convincing evidence. Even 
the legal standard to prove an exception is stacked against the 
plaintiff under this bill.
  This exception will prove meaningless in the real world because no 
one will be able to meet this exception for proving the injury was 
specifically intended. How in the world is our small business owner 
going to prove that the cash register company intentionally tried to 
injury him by selling a Y2K defective cash register system? How in the 
world is our small business owner going to prove this specific intent 
by clear and convincing evidence? Get real.
  As a result, the small business owner who is harmed by the Y2K 
defective cash register system may be forced into bankruptcy or lay off 
employees.
  To the credit of the sponsors of this ``compromise,'' they have 
struck the last road block in the original bill--special liability 
protection to directors and officers of companies involved in Y2K 
disputes. I commend them for striking this section. Providing special 
Y2K liability protection to the key company decision makers would 
hinder Y2K remediation efforts. Instead, we want to encourage these key 
decision makers to be overseeing aggressive year 2000 compliance 
measures.
  I hope special legal protections for corporate officers and directors 
does not resurface in the final bill after conference with the House.
  A few of these detours, roadblocks and dead ends in this so-called 
``compromise'' may be justified to prevent frivolous Y2K litigation. 
But certainly not all of them.
  This bill makes seeking justice for the harm caused by a Y2K computer 
problem into a game of chutes and ladders--but there are only chutes 
for plaintiffs and no ladders. The defendant wins every time under the 
rigged rules of this game.
  Unfortunately, this so-called compromise bill still overreaches again 
and again. It is not close to being balanced.
  During Senate consideration of S. 96 last week, some of my colleagues 
and I offered amendments to add some balance to this bill. But the 
majority defeated every one.
  Senator John Kerry offered an alternative, which was endorsed by the 
White House. The President would sign Senator Kerry's bill tomorrow, 
but the majority voted it down.
  I offered a consumer protection amendment to exclude ordinary 
consumers from the bill's legal detours, road blocks and dead ends. My 
amendment would have granted relief from the bill's broad Federal 
preemption for ordinary consumers to access their home state consumer 
protection laws. But the majority voted it down.
  Senator Edwards offered two amendments to add balance to the bill. 
The first clarified the bill's economic loss section to ensure that 
recovery would be permitted only for claims allowed under applicable 
state or Federal law effective on January 1, 1999. The second excluded 
bad actors from the bill's special legal protections if they sold non-
Y2K compliant products in 1999. But again the majority voted down these 
amendments.
  Senator Boxer offered an amendment for computer manufacturers to 
offer free or at-cost fixes to small businesses and consumers who had 
purchased Y2K defective products as a requirement for these same 
computer

[[Page 12755]]

manufacturers to be protected under S. 96. This amendment would have 
added real balance to the bill. But the majority voted it down.
  The prospect of Y2K computer problems requires remedial efforts and 
increased compliance. But as last week's delay in voting on final 
passage of S. 96 made clear, this bill is not about promoting Y2K 
compliance; it is about sweeping liability protection and partisan 
politics.
  I fear that all the special legal protections for Y2K problems in S. 
96 will hinder serious Y2K remediation efforts in 1999. Instead of 
passing protections against future lawsuits, Congress should be 
encouraging Y2K remediation efforts during the last six months of 1999. 
We have to fix as many of these problems ahead of time as we can. 
Ultimately, the best business policy and the best defense against Y2K-
based lawsuits is to be Y2K compliant.
  That is why I hosted a Y2K conference in Vermont to help small 
businesses prepare for 2000. That is why I taped a Y2K public service 
announcement in my home state. That is why I cosponsored Senator Bond 
and Senator Kerry's new law, the ``Small Business Year 2000 Readiness 
Act,'' to create SBA loans for small businesses to eliminate their Y2K 
computer problems now. That is why I introduced, with Senator Dodd as 
the lead cosponsor, the ``Small Business Y2K Compliance Act,'' S. 962, 
to offer new tax incentives for purchasing Y2K compliant hardware and 
software.
  These real measures will avoid future Y2K lawsuits by encouraging Y2K 
compliance now.
  Last year, I joined with Senator Hatch to pass into law a consensus 
bill known as ``The Year 2000 Information and Readiness Disclosure 
Act.'' We worked on a bipartisan basis with Senator Bennett, Senator 
Dodd, the Administration, industry representatives and others to reach 
agreement on a bill to facilitate information sharing to encourage Y2K 
compliance.
  The new law, enacted less than nine months ago, is working to 
encourage companies to work together and share Y2K solutions and test 
results. It promotes company-to-company information sharing while not 
limiting rights of consumers. That is the model we should use to enact 
balanced and narrow legislation to deter frivolous Y2K litigation while 
encouraging responsible Y2K compliance.
  Unlike last year's Y2K information sharing law, S. 96 is not narrow 
or balanced. Instead it is a wish list for special interests that are 
or might become involved in Y2K litigation.
  This bill sends the wrong signal to the business community about its 
Y2K remediaton efforts. It is telling them; ``Don't worry, be happy.'' 
That will only make Y2K computer problems worse next year, instead of 
fixing them this year.
  The coming of the millennium should not be an excuse for cutting off 
the rights of those who will be harmed, turning our States' civil 
justice system upside down, or immunizing those who recklessly 
disregard the coming problem to the detriment of American consumers.
  I remain open to continuing to work with interested members of the 
Senate on bipartisan, consensus legislation that would protect 
consumers, deter frivolous Y2K lawsuits and encourage responsible Y2K 
compliance. S. 96 is not that bill.
  The President will veto S. 96 in its present form, as he should. Then 
perhaps we can sit down with all interested parties and craft a truly 
balanced bill.
  Those of us in Congress who have been active on technology-related 
issues have struggled mightily, and successfully, to act in a 
bipartisan way. It would be unfortunate, and it would be harmful to the 
technology industry, technology users and to all consumers, if that 
pattern is broken over this bill.
  Mr. McCAIN. I yield 8 minutes to the Senator from Alabama, Senator 
Sessions.
  Mr. SESSIONS. Mr. President, I am pleased to have the opportunity to 
comment on this extremely important bill. I congratulate Senator McCain 
for his leadership. I am confident it will pass with a strong vote.
  This morning we completed our second day of a joint economic 
committee on the high-tech national summit. We have heard some of the 
leading practitioners of computer business in America, including Alan 
Greenspan and the president of MIT, and we have discussed the 
tremendous role computers and high-tech equipment have played in the 
economic growth of this country.
  Most people may not know that for a number of years the average wage 
of Americans has been increasing twice as fast as the cost of living. 
That is exactly what we want in America. We want productivity. That 
occurs because of an increase in the productivity of our workforce.
  Mr. Greenspan, who everybody recognizes is such a knowledgeable 
person about our economy, attributes that primarily to the increased 
productivity that has come from being on line with our computer 
systems.
  Experts, including Bill Gates of Microsoft, talked about the leading 
exports from the United States being computer related.
  This is good for America. We are buying more than we take in. We are 
selling less than we buy. We need to change that. We need to increase 
our exports. The one industry that is strong in that record is the 
computer industry.
  Craig Barrett of Intel testified yesterday. I asked him about the Y2K 
bill. He said it was critical for their industry to maintain economic 
growth.
  Some say they can pay, and we can sue and sue. I know one Senator 
mentioned a case, and I believe it was the same case, in which a man 
testified before the Senate Judiciary Committee. He had filed a lawsuit 
over the computers in his company. He eventually won. I asked him how 
long it took. The litigation took 2 years.
  With regard to asbestos, we have 200,000 lawsuits completed, 200,000 
pending, with another 200,000 expected. They are filed all over this 
country. Do we want hundreds of thousands, perhaps even a million or 
more, lawsuits filed in every court in America, with every single case 
clogging those courts, distracting the computer companies from fixing 
the problem, trying to defend against the litigation with punitive 
damages and other unexpected costs that somebody might claim in a 
lawsuit?
  We need to act. It is the responsibility of Congress to set the 
standards for lawsuits. We have every right to do that. That is what 
the legislative branch does.
  We have an industry that deals throughout the United States. It deals 
throughout the world. We need to make sure it fixes the problem--and 
focuses on fixing the problem, not on draining its resources.
  With regard to asbestos, 70 percent of the asbestos companies are now 
in bankruptcy, and of the money they paid out through this litigation 
onslaught, only 40 percent actually got to the victims.
  What I think this bill is intended to do, with strong bipartisan 
support, is to make sure the moneys these companies spend are spent on 
fixing the problem. The idea that somehow joint and several liability 
is horrible is not so. Many States already have joint and several 
liability in every aspect of their legal system. We are simply saying 
for this one problem we will have joint and several liability. Frankly, 
I think that is the better way to go. Why should a company that is not 
responsible but for 10 percent of the problem pay the whole cost of the 
problem? What is just about that? I don't think that is a good 
argument.
  We have a potential crisis in our country. We have the potential, 
make no mistake about it, to significantly damage our highest and most 
productive industry, the industry that has led to our economic growth 
and increased wages for American workers. We are endangering that 
community. If anyone thinks hundreds of thousands of lawsuits filed 
against all our computer companies in every county in America will not 
drain them of creativity, will not drain them of research and 
development, will not reduce their ability to be competitive in the 
world, I suggest that person is clearly wrong.

[[Page 12756]]

  I thank Senator Wyden and Senator Dodd, on that side, and Senators 
McCain and Hatch, who have worked on this bill. They have done a good 
job, and I am pleased to support it.
  I yield the floor.
  Mr. KYL. Mr. President, I support S. 96, the Y2K Act of 1999. The 
subject of Y2K liability is an important and timely issue for the 
Senate to address. As you know, I serve on the Senate Special Committee 
on the Year 2000 Technology Problem. Earlier this year, the Committee 
held a hearing examining Y2K litigation and its potential effect on the 
courts. A study by the Gartner Group estimated that the cost of Y2K-
related litigation could reach $1 trillion.
  The issue of liability is especially important to me. Last Congress, 
I sponsored the Year 2000 Information and Readiness Disclosure Act, 
which became law. That legislation encouraged companies to disclose and 
exchange information about computer processing problems, solutions, 
test practices, and test results that have to do with preparing for the 
year 2000. The goal of the bill was to encourage information sharing, 
which would in turn lead to remediation, which would in turn lead to 
greater Y2K compliance. Unfortunately, many companies still fear 
liability, and it is that fear of lawsuits that is inhibiting them from 
getting done what is needed--which is remediation. The goal of S. 96, 
like that of the Year 2000 Information and Readiness and Disclosure 
Act, is to ease the fear of lawsuits so businesses can focus on 
remediation rather than litigation.
  S. 96 is the second major Y2K bill passed by the Congress. Earlier 
this year, the Senate passed (by a vote of 99 to 0) the Small Business 
Y2K Readiness Act, which became law on April 2. The bill directed the 
Small Business Administration to establish a loan guarantee program to 
guarantee loans of up to $1 million for small businesses to fix their 
computers or tackle other Y2K-related problems.
  S. 96 enjoys bipartisan support and the backing of a broad coalition 
of business groups--large and small--including the U.S. Chamber of 
Commerce, the Information Technology Association of America, the 
National Retail Federation, the National Association of Independent 
Business, the Semiconductor Industry Association, to name a few. The 
bill provides incentives for fixing Y2K problems before failures occur 
and it encourages the prompt resolution of Y2K problems if they do 
occur.
  Finally, I commend my colleague from Arizona, John McCain, for his 
tireless efforts in navigating this bill through the Commerce Committee 
and for his repeated attempts to secure its passage on the Senate 
floor. S. 96 will provide much needed protection against a potential 
flood of lawsuits against the nation's business community and I look 
forward to its prompt signature by the President.
  Mr. THOMPSON. Mr. President, I rise in opposition to S. 96, the Year 
2000 liability legislation. The problems caused by faulty computer 
software on January 1, 2000 may be severe, and some legislation 
addressing that problem may be warranted. Although I had concerns about 
S. 96 as it was originally offered, I supported invoking cloture on the 
bill because I wanted to see the compromise process continue so as to 
possibly improve the legislation. But even the modified bill would 
cause the litigation nightmare that it ostensibly seeks to avoid.
  Were this bill to become law, both State and Federal courts would be 
required to resolve disputes resulting from Year 2000 failures not 
under familiar legal standards developed over 200 years, but by 
applying new legal terms and definitions, or terms never before applied 
to this context. As a result, vast amounts of litigation will be 
required to establish the meaning of those terms, and various State and 
Federal courts are certain to adopt different views of the same 
language.
  For instance, the bill applies to injuries that result ``directly or 
indirectly from an actual or potential Y2K failure.'' Because it would 
be in the interest of defendants to apply the liability shields 
contained in this bill as widely as possible, many types of cases 
certainly will be characterized as ``result[ing] directly or indirectly 
from an actual or potential Y2K failure.'' Pre-trial motions, trial 
court rulings, appellate court decisions, and ultimately, appellate 
court rulings to resolve conflicting appellate court rulings will be 
necessary before the scope of cases actually covered by the bill is 
finally determined. Courts will consume years determining the meaning 
of other operative terms, such as ``material defect,'' or deciding 
precisely what factors are relevant in assessing ``the nature of the 
conduct.''
  Although punitive damages have been a staple of the common law, this 
bill would impose a punitive damages regime never before adopted in any 
jurisdiction. While some States have adopted caps on punitive damages 
for noneconomic damages in personal injury cases, this bill represents 
the first time that a law would cap punitive damages with respect to 
property damage. No one has offered a compelling reason for this 
course. And no one can predict what the consequence will be of a 
blanket Federal rule on this subject in the absence of any State 
experiences with this approach.
  The bill's effects on the procedures for resolving cases are equally 
serious. It would permit a defendant to respond to a complaint by 
indicating a willingness to engage in alternative dispute resolution. 
But the bill makes no provision for the actual availability of 
alternative dispute resolution in federal courts that lack them, nor 
does it ensure the use of State ADR procedures. And federal law would 
control the pleading requirements even of State law causes of action 
brought in state courts.
  Additionally, I am concerned about the effect this bill would have on 
small businesses. Unless a small business is in the computer business, 
its exclusive role in Year 2000 litigation will be as a plaintiff, not 
a defendant. But this bill provides benefits only to defendants, 
benefits that would be of no use to most small businesses. At the same 
time, it denies otherwise available legal rights to small business 
plaintiffs. Apart from restricting their right to recover punitive 
damages, small businesses who currently could bring an action against a 
landlord who fails to provide working elevators so that customers and 
employees can reach their offices would not be able under this bill to 
sue the landlord if he for failed to take action now to make sure that 
those elevators will work on January 1, 2000. The landlord's relief 
from liability will both increase the chances that a small business' 
elevator will not work and decrease the recovery that the small 
business can obtain if in fact the elevator does not work.
  Similarly, a small business that bought a computer that did not work 
now has the right to obtain consequential damages from that failure. If 
the business had to shut down because of the failure, the business 
owner could recover the lost profits for the period that the defective 
computer caused the shutdown. But under this legislation, all that the 
business owner who files a tort and contract lawsuit could obtain is 
recovery for damage to the computer itself. No compensation would be 
permitted for real injuries that the owner faces. There is no reason to 
impose this hardship on a small business that bought a product that it 
had every reason to believe would work. There is no reason to increase 
the protection of the company that did not take the appropriate steps 
to ensure Y2K compliance as against the workers who will be laid off 
because the small business cannot continue to operate.
  Even though the bill does preempt state law in a number of areas, 
federal action might be appropriate to address a unique event such as 
the Year 2000 problem. There could in fact be a large volume of 
litigation that could overwhelm courts. But this bill is not an 
effective means of addressing that possible calamity. Reducing in 
advance the exposure of people who made non-Y2K compliant products will 
reduce neither the scope of the computer malfunctions nor the number of 
lawsuits. Restrictions only on the ability of plaintiffs, such as 
individuals and small businesses, to recover damages,

[[Page 12757]]

no matter how meritorious their cases, is not warranted. S. 96 will 
create many new issues to litigate, increase the likelihood that the 
Year 2000 problem will be great rather than small, and harm the ability 
of innocent persons to recover that which their states legally entitle 
them to retain. These are not desirable objectives, and for these 
reasons I oppose this bill.
  Mr. KERREY. Mr. President, the debate surrounding Y2K Liability is a 
very important one. The estimated cost associated with Y2K issues vary 
greatly, ranging from $600 billion to $1.6 trillion worldwide. The 
amount of litigation that will result from Y2K-related failures is 
uncertain, but at least one study has guestimated the costs for Y2K 
related litigation and damages to be at $300 billion.
  With that in mind, several bills have been drafted which encourage 
companies to prevent Y2K failures and to remedy problems quickly if 
they occur, and to deter frivolous lawsuits. It has essentially boiled 
down to 2 bills: the McCain-Wyden-Dodd bill, and the Kerry bill. Many 
of the provisions within the bills are the same; however, there are a 
couple of issues that warrant discussion.
  I have studied these bills closely. And for me, what it all comes 
down to is two simple questions: Which bill provides more of an 
incentive for computer companies to identify and remedy potential Y2K 
problems? And, second, what effect will this legislation have on 
consumers?
  First. Which bill provides more of an incentive for computer 
companies to identify and remedy potential Y2K problems? To answer that 
question, one needs to understand what the backers of this bill are so 
concerned about. The people that are pushing for this bill, namely, 
some of the computer companies and big business, are not afraid of me. 
They are not afraid of what Congress might do to them. What they are 
concerned about, and what they are afraid of, is 12 men and women on a 
jury. They are afraid of what a jury might do to them if they are sued 
and their case ends up in court before a jury.
  Let me be clear: I do think this Y2K liability is a special situation 
and believe that we should provide computer companies with some type of 
certainty and protection from these lawsuits. That is why I want to 
pass one of these bills. However, I think we need to be careful that 
the protections we provide aren't so great that companies no longer 
have an incentive to fix their Y2K problems.
  So, when I hear people asking to ``cap'' the amount of punitive 
damages that can be imposed against them, I can't help but to wonder, 
``Why do you need to worry about that? The only time punitive damages 
are awarded is if the person has done something flagrantly wrong.''
  Similarly, proportionate liability, which provides assurances to the 
defendant on how much money he would have to pay the plaintiff, is fair 
and reasonable for most defendants, but not all defendants. Under the 
Kerry bill, only good corporate citizens will have the benefit of 
proportionate liability. Under the McCain bill, all corporate citizens, 
no matter whether they act in good faith or bad faith, will be rewarded 
with proportionate liability.
  Computer companies must have an incentive to identify and remedy 
potential Y2K problems. If we pass the McCain bill, which both caps 
punitive damages, and rewards all corporate citizens, both good and 
bad, with proportionate liability, I believe that would provide a 
disincentive to remedy potential Y2K problems.
  Therefore, the answer to the first question is clear: the Kerry bill 
provides more incentive for computer companies to identify and remedy 
potential Y2K problems.
  Second. The second question I had to answer is what effect will this 
legislation have on consumers? To answer that question, we need to look 
at one provision in particular: the economic loss provision. The 
economic loss provision has to do with whether a small business owner 
or the consumer is allowed to recover for lost profits, lost overhead, 
and out-of-pocket costs.
  The McCain bill bars the recovery of economic losses for businesses 
in all Y2K contexts. The economic loss rule that I support, and the 
rule followed in most jurisdictions, says that if the parties have 
agreed by contract about the allocation of loss, then that agreement 
should govern. If there is no contract, then state law would apply.
  What does this mean? It means that under the McCain bill, consumers 
and small businesses are going to be at a disadvantage. To illustrate, 
let's look at a very practical example that would apply to many small 
businesses in Nebraska. A businessman wants to open a flower shop. He 
goes into a computer store and talks to a computer salesman. That 
salesman tells the businessman that the computer is Y2K compliant and 
that come January 1, 2000, the computer will be fine. The businessman 
buys the computer for $5,000. The flower shop opens and is doing great. 
On January 1, 2000, the computer crashes and can not be fixed for four 
weeks. The businessman relies on his computer for almost everything, 
including as a cash register, a client database, and record keeping. As 
a result of the computer crash, his business is severely affected--he 
pays bills late, he can't meet payroll, and he loses customers, costing 
him a total of $75,000. Under the McCain bill, the only damages the 
businessman can recover are the cost of the computer, $5,000. The 
economic loss rule I support, the Edwards amendment, would allow the 
businessman to make a case as to why he should be able to recover at 
least some of his lost profit. Thus, to answer to the second question, 
the McCain bill would unfairly place small businesses and consumers at 
a disadvantage to computer companies.
  Because of these reasons, I will cast a vote against the McCain Y2K 
Liability bill. I want to reiterate that I support the goals of this 
legislation--I want computer companies to have an incentive to identify 
and remedy potential Y2K problems, and I don't want there to be an 
onslaught of frivolous lawsuits beginning on January 2, 2000. 
Unfortunately, I do not believe the McCain bill in its current form is 
the proper way to address these issues.
  If these issues are properly addressed in conference, I will support 
the conference report. Until that happens, although the McCain bill may 
achieve its goal of eliminating frivolous lawsuits, I believe this 
comes at too high a price to our small businesses and consumers.
  Mr. ROCKEFELLER. Mr. President, the overriding point to be made today 
is that the vast majority of the Senate, Democrats and Republicans, and 
the White House, agree on the need for legislation to encourage Y2K 
readiness and to prevent frivolous litigation.
  We all agree that there is likely to be a surge in Y2K related 
complaints and lawsuits and that everyone will benefit if many of those 
cases can be dealt with outside the courtroom. We agree on the need to 
encourage consumers and businesses to use remediation to fix Y2K 
problems and to use negotiation to settle disputes.
  Where we differ is on the details of how to get there. And let me 
assure you from my 11 years of experience as a proponent of product 
liability reform--the details matter.
  And the details should matter. In liability reforms, and especially 
tort reforms, what's at stake is the basic balance between plaintiffs 
and defendants, consumers and business, injured and responsible 
parties. Our state courts and legislatures have struggled for several 
hundred years to get that balance right. If we're going to change their 
work then we have a responsibility to work hard at getting the details 
right, too.
  Senators Kerry and Daschle deserve a great deal of credit for wading 
into the middle of the Y2K liability reform issue. I've been in their 
shoes before, and I know how hard it is to try to find the middle 
ground. It is no easy feat to craft a bill that protects consumers, 
gives business the predictability and relief from frivolous suits they 
deserve, wins the support of the majority in Congress, and would secure 
a presidential signature.
  Senators Kerry and Daschle came up with a bill that gives the high-
tech community about 80 percent of what

[[Page 12758]]

they want, that meets every one of the objections outlined by the White 
House, and that won 41 votes in the Senate last week. I voted for that 
bill.
  Forty-one votes, including the votes of many Senators who hold strong 
reservations about federalizing any part of our tort liability system 
at all. Forty-one votes shows us in plain terms that there is obvious 
overlap on the core issues and principals of this bill, and on a good 
many of the details.
  What is so regrettable is that even after our negotiating a bill that 
gives most stakeholders most of what they say they need, my Republican 
colleagues and much of the business community would rather have an 
issue than a bill. A negotiated compromise that gives them 80 percent 
of what they want but also keep the courts open to legitimate claims 
apparently isn't enough.
  So rather than achieve a major portion of their goals for the year 
2000, they've decided to put all of us through an exercise that will 
result in nothing. Believe me, I've been down this road before. I know 
these issues, I know these stakeholders, I know the vote counts, and I 
know this White House on liability reforms. And I know what the outcome 
will be if we continue down this dead-end path.
  What baffles me is to see the business community, once again, choose 
nothing. Haven't we learned from years of legislating on liability 
reforms that purists come away emptyhanded?
  The bottom line is that the bill before us today is simply too far 
afield of what's doable. And the best way to get back on course for 
enacting a Y2K law is to vote against this bill and sit down at the 
negotiating table.
  Unlike the never-ending products liability debate the opportunity to 
deal with Y2K suits won't last long. We can't afford to get it wrong. 
And we don't have time to pass a bill that we know will be vetoed and 
then come back to the drawing board.
  I urge my colleagues not to squander this opportunity.
  Mr. WYDEN. Mr. President, I rise today to ask my colleague, the 
Senator from Oklahoma, Senator Inhofe, a few questions regarding his 
amendment Thursday to the Y2K Bill.
  Mr. INHOFE. I thank my colleague from Oregon, Senator Wyden, and I am 
pleased to answer any questions he might have.
  Mr. WYDEN. The Senator's amendment refers to temporary non-compliance 
with ``federally enforceable requirements'' because of factors related 
to a Y2K failure beyond the control of the party charged with 
compliance. Could the Senator provide an example of such a federally 
enforceable requirement so that this Body can understand the practical 
scope of the Senator's amendment, especially what would and would not 
be an imminent threat to health, safety or the environment that would 
bar the use of the defense?
  Mr. INHOFE. I would be pleased to. An example of a use of the defense 
that this amendment would provide would be a federally enforceable 
reporting requirement on an energy facility. Suppose a plant operator 
is vigilant at the controls of a conventional power plant. At the 
stroke of midnight New Year's the plant is operating smoothly, and 
power is being transmitted to homes, hospitals, and nursing homes right 
on schedule. Further, the operator can see clearly that the 
environmental machinery that cleans emissions such as sulfur dioxide 
(an acid rain precursor) or nitrogen oxides (a contributor to smog) is 
operating normally in every respect save one. The computer read-out 
from the continuous emissions monitor at the top of the smoke stack 
does not seem to be transmitting or storing the emission data verifying 
that equipment is otherwise in normal function. Repairing the bug in 
the monitor transmitter may take a few days over the holiday weekend.
  Without my amendment the plant operator faces a terrible choice. Does 
he shut down the whole plant and let the people in the nursing homes 
freeze in the dark, or does he run the risk of severe sanctions for 
disregarding a requirement that he provide government agencies an 
unbroken chain of emission monitor print-outs? Mind you, he knows the 
pollution is being controlled as usual because he or she has hands on 
the equipment. With my amendment, the plant could keep operating, 
nobody's lights would have to go out unless--and this is key--doing so 
does not threaten public health, safety, or the environment. This is 
not a holiday from environmental quality laws.
  Mr. WYDEN. Could the Senator also provide an example of when the 
defense would not apply?
  Mr. INHOFE. Certainly, suppose the power plant were nuclear and--this 
time--a temperature gauge is broken and the operator does not really 
know whether the plant is operating in safe mode or not. In such a 
case, the operator could not, under my amendment, ``drive in the dark 
with no lights on.'' Clearly operating in such a fashion that could 
pose a risk to health, safety, or the environment would receive no 
protection under my amendment, and no sympathy from me.
  Mr. WYDEN. What does the phrase ``federally enforceable 
requirements'' mean? Is it broader than federal requirements?
  Mr. INHOFE. It is broader only in the following respect. Many federal 
standards are actually implemented in collaboration with states. For 
example, it could technically be a state-issued monitoring and data 
recordation and reporting program that is enforceable federally.
  Mr. WYDEN. I thank the Senator from Oklahoma for clarifying his 
amendment and I thank him for his work on this issue.
  Mr. INHOFE. I appreciate the Senator from Oregon's interest in my 
amendment and I thank him for his support and assistance in getting my 
amendment accepted.
  Mr. BYRD. Mr. President, in little more that six months time, each 
and every American is going to be impacted by one of the simplest, yet 
most complex technological problems we have ever faced. The so-called 
Y2K computer problem--simple to understand, but enormously complex in 
terms of its solution--has the potential to adversely affect every 
facet of our lives. Yet, while no one can say with absolute certainty 
what consequences will flow from the new year, there is one thing our 
litigious nation can be sure of: Come January 1st, many Americans will 
seek redress in our nation's courtrooms.
  At the very time when businesses will need to focus their attention 
on mending computer problems and helping others deal with service 
disruptions, too many companies will, unfortunately, find themselves 
distracted from that important task by the threat of legal action. 
Equally troubling is the possibility of hundreds of thousands of law 
suits being brought in a matter of weeks or months; a situation which 
could simply overwhelm our judicial system.
  Consequently, I am concerned that, unless we act now, our legal 
system may not be able to adequately address the ramifications of the 
new year in an efficient, fair, and effective manner. But beyond the 
courthouse doors, I am also deeply concerned about the potential long-
term effect on our nation's computer industry.
  Mr. President, a generation ago, the United States was the world's 
preeminent producer of manufactured goods. At one time, we were 
unrivaled in our construction of automobiles, aircraft, consumer 
electronics, communications equipment including satellite technology, 
and steel, to name but a few. For various reasons, though, we have lost 
our dominant position in each of these important areas. No longer do 
foreign companies immediately look to the U.S. when seeking to purchase 
an airplane or a roll of steel. And no longer do consumers around the 
world automatically purchase an American-made television, an American-
made radio or an American-made camera. Those days are gone.
  Yet, despite that circumstance, unsettling as it may be, the fact 
remains that the United States is predominate in the world of computers 
and computer technology. Companies such as IBM, Microsoft, Intel, and 
Compaq, are household names around the world, and for good reason. 
They, among many others, are American success stories that have 
produced enormous benefits

[[Page 12759]]

to our nation's economy and provided our workers with good, high-paying 
jobs.
  Like many of my colleagues, I am troubled by the fact that some small 
businesses may suffer as a result of a Y2K failure. But it also 
troubles me to think that we may be on the verge of litigating our 
computer industry into submission. Where are we if, in our zeal to 
place blame, we cripple these corporate entities, some of which may be 
big and rich, but most of which are small? And how do we preserve what 
may be our last industrial stronghold if we are willing to treat the 
overwhelming majority of these companies, which have worked diligently 
and in good faith, the same way we treat those few unscrupulous firms 
that do not wish to accept their responsibilities? I believe that the 
protections afforded small business in the bill, while not as I would 
have written them, are adequate.
  We must acknowledge that what is at stake here is of enormous long-
term importance to the economic well-being of every American. Each of 
us has a duty to ensure that our technological and industrial base 
flourishes, not just in the coming months, but for decades. In weighing 
those factors, I sincerely hope that my colleagues will come to the 
same conclusion as I and support this legislation for the good of our 
economy, our workers, and our nation.
  Mr. KOHL. Mr. President, we should act both to deter frivolous 
litigation over Y2K defects and to encourage Y2K fixes, but this bill 
will create as many problems as it solves. Instead of merely 
establishing incentives to address Y2K defects, several provisions in 
this bill could, perversely, discourage companies from acting 
responsibly and reward those who silently --and inexcusably--wait for 
defects to happen rather than cure them before disaster strikes. In 
short, I will oppose this measure because it fails to strike the right 
balance.
  To be sure, the bill has improved from earlier versions, and some 
sections--like class action reform to curtail frivolous lawsuits and a 
90-day waiting period to promote remediation instead of litigation--are 
steps in the right direction. Still, provisions like limits on punitive 
damages and a one-sided duty on consumers to anticipate all Y2K defects 
give businesses an excuse to continue doing nothing because even the 
bad actors end up with a lower risk for liability. And provisions like 
the elimination of ``joint and several'' liability, which I have 
supported in other contexts, seem out of place here where remediation 
is the heart of the matter. In other words, if a company isn't fixing a 
defect when it could be 100 percent liable, why should limiting its 
liability to a fraction of that be anything but a disincentive to take 
corrective steps?
  While this issue has become a political football here in Washington, 
it doesn't play the same way in Wisconsin, where we know how to play 
football. Our home State businesses are concerned about the potential 
for wasteful litigation, and they want to see fixes rather than 
breakdowns. Like me, they do want Y2K liability reform. That is why I 
supported the Kerry/Robb substitute. But the Wisconsin businesses 
who've contacted me don't have very strong feelings about any of the 
provisions unique to the McCain/Wyden bill. And it is not surprising 
because, unlike as with product liability reform, here they are more 
likely to be plaintiffs than defendants, making them weary of measures 
that discourage remedial action.
  I continue to believe that we should generally reform litigation. But 
if we are going to start doing it piecemeal, the place to start is 
probably in the product liability context, where 90-year-old products, 
still in use, are being judged by today's standards. The place not to 
start with sweeping reform is here--especially when it would benefit a 
software manufacturer who produces a product in 1998 that becomes 
dysfunctional just two years later and did nothing at all to try to 
prevent the defect from happening.
  That said, there are moderate steps we have taken, and can take, to 
help address the Y2K issue. For example, last year I cosponsored and 
Congress passed the Year 2000 Information Disclosure Act. This law 
encourages the disclosure and exchange of information about computer 
processing problems by raising the standard regarding when companies 
can be liable for releasing false information. I also cosponsored the 
Small Business Year 2000 Readiness Act, which was signed into law 
earlier this year. It expands the Small Business Administration's 
lending program to provide companies with assistance as they work to 
become Y2K compliant. The Kerry/Robb substitute is a reasonable measure 
that can make a difference and, indeed, that the President can sign.
  When all is said and done, I suspect we will enact a law this year 
and before the Year 2000, and that it will look a lot more like the 
Kerry/Robb substitute than the unbalanced bill before the Senate today. 
That would be fair to the high tech world and it would be in the best 
interests of consumers and small businesses in Wisconsin.
  Mr. BURNS. Mr. President, today I rise to highlight the hypocrisy 
that I have heard during this debate on S. 96, the Y2K legislation 
admirably led by my friend, Senator John McCain. I have heard a number 
of Senators up here saying they would not do anything to hurt the high-
tech industry. Those same Senators then turn around and offer an 
amendment or voice their support for an amendment that no one in the 
high-tech industry supports, but there is one group who supports their 
amendments, the American Trial Lawyers.
  As Chairman of the Senate Subcommittee on Communications, I work with 
leaders from the high-tech industry on a daily basis. I sit back in 
amazement when I watch the economic success of our nation, which is 
largely driven by the high-tech industry. In fact, yesterday, June 14, 
Alan Greenspan testified in front of Chairman Mack's Joint Economic 
Committee and placed strong emphasis on the fact that the high-tech 
industry is driving our current economic boom. It is creating an 
economy like we have never seen before. I am working toward the goal of 
bringing high-tech jobs to Montana, my home state. I believe in my 
heart that the day will come when the high-tech economy delivers more 
good paying jobs to my fellow Montanans. I do not want anything to get 
in the way of this possibility. Let me give you a few amazing 
statistics that outline the success and tremendous growth opportunities 
in this industry. In 1998, there was anywhere from $32 billion to $50 
billion in electronic commerce done worldwide depending on which 
research firm you listen to. The Gartner Group projects that in 2003 
there will be $3.2 trillion in electronic commerce done worldwide. 
Think about that, $32 billion in 1998 and over $3.2 trillion in 2003 or 
100 times as much electronic commerce in five years. Friends, we have 
never seen growth like this in an economic sector in American history. 
Further, in 2010, 20 percent of worldwide commerce will be done online. 
I ask myself, ``What can the Government do to make sure these numbers 
become a reality?''
  We need to stay out of the way. What can the Government do that could 
stop this unprecedented growth? I can tell you what we could do to stop 
the growth of the industry, we could listen to our colleagues who are 
up here carrying the water of the trial lawyers.
  Let me show you exactly why the American trial lawyers do not want to 
see this legislation pass. The Gartner Group estimates that the cost of 
dealing with the Y2K bug worldwide will run in excess of $600 billion. 
Yet, we continuously hear that class action lawsuits and other suits 
are being filed or are being written for later filing that may reach 
past the $1 trillion mark. Do you know any industry in the world that 
is so resilient that it can easily take a $1 trillion hit without being 
slowed down in its growth? I don't. As a matter of fact, as big as the 
Y2K problem is, the biggest problem our high-tech industry faces is 
from the trial lawyers. We cannot stand by and let this happen.
  I want the American people to see why many Senators are carrying 
Amendments that are supported by the American trial lawyers. In the 
1998

[[Page 12760]]

election cycle, nearly 90 percent of the roughly $2.4 million given to 
federal candidates by the American Trial Lawyers Association was given 
to Democrats. Every single one of the Amendments offered here on the 
Senate floor that the American Trial Lawyers Association backed has 
been offered by Democrats. It is not hard to see the correlation and 
draw conclusions. President Clinton has threatened to veto S. 96 if 
passed in its current form. Sure enough, if you look back to his 
election in 1996, you find that over 90 percent of the money given by 
the American Trial Lawyers Association was given to President Clinton 
over former Majority Leader Bob Dole.
  The Democrats stand on the Senate floor and say that their proposed 
amendments to S. 96 are proconsumer. I am here to highlight the 
hypocrisy in that statement. Is it proconsumer to slow the growth of 
our Nation's economy because of frivolous legislation? What the 
amendments do and President Clinton's threatened veto stand to do are 
to slow one of the most outstanding eras of economic growth this 
country has ever seen. And they say this is proconsumer? As voices for 
the people, we are elected to do what is best for the citizens of 
America. The high tech industry, which is carrying us into an 
unprecedented era of economic strength, wants to see this bill passed 
so that the $1 trillion plus in threatened lawsuits by the American 
trial lawyers never become a reality.
  The Democrats are again threatening to play politics with a matter of 
grave danger and utmost importance to the American economy. I want to 
say to my colleagues, stand firm. Push this bill through unchanged, and 
send it to President Clinton.
  The growth of the high-tech industry is absolutely critical to the 
continued growth of our Nation's economy. Make President Clinton tell 
the American people that he would rather see the trial lawyers have 
their day and pay rather than see one of the most exciting industries 
in American history continue its rise to the top of our Nation's 
economy. Do not let the American trial lawyers dictate our economy, 
stand in support of Senator McCain's bill, S. 96.
  Mr. DOMENICI. Mr. President, I rise in support of the compromise Y2K 
liability bill before the Senate today.
  I want to commend my colleagues who have worked hard to put the 
Senate in position to pass this important legislation.
  After working for years to enact securities litigation reform, I know 
how tough it is to battle the trial lawyers. In fact, many of the same 
entrepreneurial lawyers who specialize in securities class actions have 
already begun to file Y2K class actions.
  Let there be no doubt that being a trial lawyer is big business. In 
anticipation of the problems associated with Y2K, lawyers have been 
putting on seminars on how to plead, try and negotiate Y2K lawsuits. 
Nearly 80 companies have already been hit by Y2K lawsuits.
  Y2K offers these enterprising lawyers a new litigation gold mine. If 
we do not pass this bill, estimates are that the litigation costs from 
the Y2K problem will be as much as $1.5 trillion. That exceeds the cost 
of the asbestos, breast implant, tobacco and Superfund lawsuits 
combined.
  Our economy is the envy of the world. High technology companies have 
done much to fuel the growth of the stock market in recent years, and 
they have provided millions of Americans high paying and rewarding 
jobs. The average high-tech wage is nearly 75% higher than the average 
private sector wage in the United States. These companies spend nearly 
$40 billion per year in research and development. I would rather see 
high-tech firms continue to spend their resources on their employees 
and on improving their products, rather than spend money on lawyers.
  And there is no doubt that deep-pocketed technology companies will be 
the most attractive potential defendants in abusive Y2K litigation. 
These companies proved to be the most attractive for entrepreneurial 
securities class action lawyers, and I have every reason to believe 
that they will find themselves in the lawyers' cross hairs once again 
if we don't enact this bill.
  Rather than turn our booming high tech economy over to the trial 
lawyers, this bill seeks to place some reasonable restraints on Y2K 
litigation. The focus of this bill is to encourage potential litigants 
to fix their Y2K problems without having to resort to the courts, and 
the lawyers.
  The bill would require a 90-day cooling off period to allow potential 
plaintiffs to offer a way to cure any Y2K defects which arise in their 
products. This is a reasonable alternative to the ``rush to the 
courthouse'' atmosphere which might prevail without this legislation.
  I am also pleased to see that the drafters of this bill have chosen 
to include the proportionate liability provisions from the Private 
Securities Litigation Reform Act of 1995 in this bill. These 
provisions, taken from the bill Senators Dodd, D'Amato and I passed 
into law, are the essence of fairness in tort reform. Who can argue 
with the concept that defendants should only be responsible for the 
portion of damages corresponding to their actual fault in any given 
case? I guess the trial lawyers might argue with that idea, but few 
others would.
  Finally, I want to say a word about punitive damages. I think the 
drafters of this bill have done all they can, and compromised as much 
as possible on the issue of punitive damages. At this point, unless you 
are a small business, there is no limit in this bill on punitive 
damages, if the plaintiff can prove by clear and convincing evidence 
that the applicable standard for punitives has been met.
  In my view, I would have liked to see this bill further cap punitive 
damages. Punitive damages are designed to deter future wrongful 
conduct, but it has been shown that they serve relatively little 
deterrent purpose. This is particularly true in Y2K cases, where the 
problem is one that is fixable the first time it is discovered. Since 
we cannot have another ``millennium problem'' for another thousand 
years, I fail to see how punitive damages should apply in any Y2K case.
  Former Supreme Court Justice Lewis Powell, in describing punitive 
damages generally many years ago, noted that they invited ``punishment 
so arbitrary as to be virtually random.'' Justice Powell wisely has 
commented that because juries can impose virtually limitless punitive 
damages, they act as ``legislator and judge, without the training, 
experience, or guidance of either.'' Justice Powell didn't know about 
the Y2K problem when he wrote these words, but they still ring true in 
this debate here today.
  While many of us would have liked to see this bill go farther in a 
few areas, I believe that some lawsuit reform is better than no reform 
at all. Rather than let the trial lawyers run out the clock, the 
drafters have done a fine job reaching a compromise. This bill is a 
reasoned approach to the problem- one that emphasizes cooperation, not 
litigation and puts our economic growth and our high-tech businesses 
ahead of greedy trial lawyers. I am happy to support it.
  I thank my colleagues for yielding me time, I again commend the 
drafters of this bill, and I yield the floor.
  Mr. ROBB. Mr. President, while most people think of divisions in this 
body as divisions of party, there are other divisions as well. 
Increasingly, I'm becoming concerned about the division between those 
who want to create political issues and those who want to solve 
problems.
  From the start of this debate, I realized that the crushing wave of 
litigation which could accompany the new year threatens to hinder our 
efforts to achieve Y2K readiness and exacerbate the damage done by the 
Y2K bug. The prospect of litigation enormously complicates an already 
complex problem. I have worked with others to try to move all 
interested parties toward enough of a consensus that we could get a 
bill that would be signed into law.
  This effort to develop a consensus bill led to the development of the 
alternative offered by Senator Kerry. That substitute had the benefit 
of both addressing the legitimate needs of the high tech community and 
satisfying

[[Page 12761]]

the concerns expressed by the Administration. Instead we have voted out 
legislation which, if unchanged in conference, is heading toward a 
veto.
  I have said from the outset that I believe we ought to pass a bill to 
address this real--and unique--problem. So today I voted for S. 96, to 
move it to the next stage in the legislative process. But I caution my 
colleagues that if this bill is not modified--if the conferees are not 
willing to address the remaining concerns in the upcoming conference--
then we're still faced with a veto, we'll end up where we began, and 
we'll have wasted valuable time in reaching our goal.
  With regard to the conference, I have heard that the House may simply 
adopt the Senate language, sending this bill directly to the White 
House knowing it would be vetoed. That's pure politics and it's 
counter-productive. From my negotiations with the White House, I know 
that they too want to find consensus, but at this point, the only way 
to find this consensus is to sit down with them in a conference 
setting.
  If a conference does not take place, if this bill is sent to the 
President with the explicit knowledge that it will draw a veto, then 
the reports on Capitol Hill that some would rather have a Y2K issue 
than a Y2K solution will be obvious for one and all to see, because 
there is consensus to be found on this issue, if all parties are 
willing to negotiate in good faith.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. Mr. President, I think we have had a very excellent 
debate. I yield the remainder of my time.
  I yield the floor.
  The PRESIDING OFFICER. The Chair recognizes the Democratic leader.
  Mr. DASCHLE. Mr. President, I appreciate the opportunity to say just 
a couple of words about the pending bill. I will use my leader time, 
because I know we are out of time under the unanimous consent 
agreement.
  Let me begin by saying I do not think there is disagreement at all 
among most of our colleagues about the importance of stopping frivolous 
Y2K lawsuits. We recognize that high technology is now the driving 
engine of our economy and will become an even more important part of 
our economy in the years ahead. We recognize that businesses need to 
focus on fixing the problem, not defending against lawsuits.
  So we want a bill. We hope to have a bill the President will sign. I 
am disappointed we are not there yet. The White House has made it very 
clear the pending bill will be vetoed even with the changes that have 
been made so far. So we have gridlock. We have gridlock in large 
measure because we have not been able to resolve the remaining 
differences on this important legislation.
  I think it is very important we balance the legitimate needs of 
industry to be protected from frivolous attacks and the rights of 
consumers. We differ on very critical legislative details that were the 
focus of a substitute Senator Kerry offered some time ago. We recognize 
that consumers and small businesses will face real problems. We need to 
protect their rights in court. That is one of our fundamental concerns 
about the passage of the current legislation.
  We want a bill. We do not want frivolous lawsuits. But we also want 
to ensure that people have some protection.
  Let me just give one example of what will happen if this bill is 
passed and signed into law. This is just one example.
  The pending bill only allows small businesses to recover economic 
losses for tangible property damage. That is a phrase we are going to 
hear a lot more in the future, ``tangible'' property damage. This does 
not include the loss of business information, such as that contained in 
computer databases. So such losses, including billing records or 
customer lists, property that is critical to a business owner but which 
is not tangible, is not covered under the bill we are passing. 
Amazingly, the pending bill would even protect defendants from 
liability for fraud or misrepresentation.
  If you are a small businessman watching C-SPAN right now, you are on 
Main Street and you are wondering what this bill is all about, under 
this bill, in those cases where you do not have a tangible property 
matter at stake, you have absolutely no protection. If you lose your 
database, if you lose that so-called nontangible property, you have no 
recourse. That is unacceptable.
  I know we are going to get all kinds of debate, and I will probably 
get calls this afternoon: Yes, we do. The fact is, we have had analysis 
after analysis. The bottom line is that there is no protection for 
intangible property. That is not protected.
  Defendants are even protected from liability for economic losses if 
they engaged in fraud or misrepresentation under the current 
legislation.
  Our alternative, by contrast, only protects responsible companies. 
The biggest difference between our approach and theirs is that we 
protect only companies that have acted responsibly. We require 
companies to demonstrate that they have taken steps to clear up the Y2K 
problems.
  For example, the pending bill provides blanket proportional 
liability. The Kerry amendment merely requires companies to have 
identified and warned potential victims of problems to get proportional 
liability.
  The pending bill caps punitive damages for small companies. Punitive 
damages punish egregious conduct. We provide no such protection for 
irresponsible behavior in the alternative we offer.
  The pending bill sets up roadblocks for consumers suffering from real 
Y2K-related problems. Our amendment lets them in the courthouse door to 
at least have the opportunity for redress their damages in a court of 
law.
  This area of law traditionally falls under State jurisdiction. But 
this legislation, the pending bill, preempts State law. We acknowledge 
the need to do so because of unique circumstances, but we also 
recognize the need to be careful.
  The pending bill virtually shifts all Y2K suits into Federal court. 
It makes it harder for consumers to bring a suit. It increases the 
strain on an already backlogged Federal court system. Chief Justice 
Rehnquist and the Judicial Conference oppose such federalization. Our 
bill places limits on class actions but does not federalize them.
  In some ways our bill is very similar. Our version addresses all the 
basic concerns raised by the high-tech industry. Our plan is identical 
to the pending bill in many ways. Both give defendants 60 days to fix a 
Y2K problem. Both allow either party to request alternative dispute 
resolution. Both require anyone seeking damages to have the opportunity 
to offer reasonable proof--including the nature and amount of the 
damages--before a class action suit could proceed.
  But while we recognize the need for a bill, we must carefully write 
it. Evidence is yet unclear as to the extent of this problem. Evidence 
is yet unclear about how much frivolous litigation will result from the 
Y2K bug.
  We should not grant sweeping legal immunity to those who have caused 
but not corrected problems. Those who have not tried to address 
problems deserve no special protection. Yet, this bill provides them 
that protection.
  Our approaches are identical in every important, necessary way. But 
they differ in critical ways for consumers and for our court system.
  Our approach is the only one the President will sign, so it is the 
only one that has hope of becoming law.
  The year 2000 is fast approaching. We cannot waste time debating a 
bill we know will be vetoed only to have to start all over again. It is 
senseless to do that.
  If enough of our colleagues vote against this legislation, it sends a 
message to fix it in conference. If conferees fail to fix it, I will 
make every effort to pass another bill that addresses the problem, that 
the President can sign.
  In fact, I will present again, as clearly as I can, an articulated, 
very understandable version of what the President will sign. I want to 
make it very clear what it is the President will sign and what he will 
not. We owe it to all of our colleagues to reiterate one more time just 
what it is that he finds so offensive about this.

[[Page 12762]]

  Let's go back one more time, because I think it is so incredible an 
issue. If you are affected tangibly, if your property is somehow 
tangibly affected, you have redress, you can be compensated for 
economic losses; but if your database, if your mailing list, or if 
anything else in the computer is adversely affected, is lost, is 
destroyed as a result of an advertent or inadvertent error on the part 
of technology--you lose everything--you have no recourse. You cannot 
recover economic losses that result.
  Is that really what we want to do? Do we want to destroy your 
opportunity for recourse when you have lost your database? When you 
have lost your mailing list? Do we really want that to be the law of 
the land overriding State law? That is exactly what we are voting on.
  The answer is, I will bet you this afternoon a majority of our 
colleagues are going to say: Yes, that is what I am voting on. I will 
support taking away the right of a small businessman to go to court if 
he has lost his database. I will support the right of an errant 
computer salesman or somebody else to take away a small business's 
opportunity to go to court.
  I do not believe we want to do that. That is why the President said 
he will veto this bill. We can do better than that. Nobody can plead 
ignorance. I am saying it this afternoon. I want everybody to 
understand it. Nobody can say, ``I didn't know that's what the bill 
did,'' because I am telling you right now, that is what it does.
  So before you vote, my colleagues, understand, ignorance is not bliss 
here. Ignorance is no excuse. When they come back and say, ``I didn't 
know,'' we can say, ``I told you before the vote.''
  If you want to take away a small businessman's right to go to court 
because he has lost everything, you go ahead and vote for this bill. If 
you want a bill that works, work with us, work with the President; 
let's get one approved by the Senate he can sign.
  I yield the floor.

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