July 1, 1999 5:15 PM PDT

Congress passes landmark Y2K bill

Congress today passed legislation that looks to limit lawsuits arising from the Year 2000 computer bug, based on an agreement reached Tuesday by lawmakers and the White House.

The measure, aimed at evading a legal firestorm sparked by the Y2K glitch, sailed through the House by a vote of 404 to 24. Later, the Senate endorsed the Y2K Act with a vote of 81 to 18.

Back to Year 2000 Index Page Clinton's signature is likely, the White House has previously said, although there have been signs of second thoughts about this week's compromise agreement. Republican Senate staffers told CNET News.com the agreement still stands and negotiations have ended.

Signing the measure into law would bring to an end a lengthy stalemate over how to limit what some consider a potential flood of litigation arising from Y2K problems--which by some estimates could cost $1 trillion and cripple the economy. Republicans pressed by high tech and business interests have supported the bill, but the Democrats backed by trial lawyers and consumer protection groups have argued it lets business off the hook.

The Clinton administration has sought to "triangulate" the two positions, to balance the competing interests, but ultimately came down on the side of passage. But in trying to ensure that White House supporters which oppose the Y2K Act don't feel betrayed, the administration yesterday said it would have opposed many of the steps taken by the bill to alter liability had this been "the normal course of business," according to a letter sent from the White House to House Minority leader Richard Gephardt.

The administration also complained that the agreed-upon changes were translated into legislative language "extremely narrowly," threatening the effectiveness of the negotiated protections. "Nonetheless, we have concluded that, with these changes, the legislation is significantly improved," the letter said.

The Y2K Act aims to put a check on lawsuits by providing disputing parties with a 90-day "cooling-off" period to mitigate their grievances out of court. The measure would also set some caps on punitive damages for small businesses and protect government entities including municipalities, school, fire, water, and sanitation districts from punitive damages. The bill further aims to protect those not directly involved in a Year 2000 bug failure.

Under the compromise hammered out this week, the measure would make it harder to file year 2000-related class-action lawsuits. In addition, the two sides agreed to increase the monetary threshold for class-action lawsuits from $1 million to $10 million before a case can be moved to federal court.

The final compromise also adds some consumer protection language that says in most cases a defendant is liable only for that proportion of the damage he causes. The measure ensures, for example, that consumers can get full benefits in cases of bad faith.

The Year 2000 problem, also known as the millennium bug, stems from an old programming shortcut that used only the last two digits of the year. Many computers now must be modified, or they may mistake the year 2000 for the year 1900 and may not be able to function at all.

 

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