Washington Struggles to Work Out Bugs in Y2K Liability

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What happens when the computer society meets the litigious society at some Y2K-breakdown point next year? Horrified by the possible multibillion-dollar answer, the high-tech industry, joined by the wider business community, convinced Congress to pass legislation earlier this year limiting company liability in the event of Y2K disruptions. But faced with a threatened log-off from the White House by way of a presidential veto, congressional negotiators sat down with White House aides in the past few weeks to address the President’s concerns that consumers not be shortchanged by the legal system should they come to court with a legitimate Y2K gripe. On Tuesday, the two sides announced they had reached a compromise. On Wednesday, though, following continuing opposition from many Democrats, the negotiators said some important details still needed to be worked out.

The proposed bill would encourage mediation and give companies a 90-day period to fix a computer glitch before a plaintiff could file suit. There would be a punitive-damages cap for small businesses, and companies would be held liable only for the portion of damage they cause. “Both sides would get something,” says TIME senior writer Adam Cohen. Industry would get some protections, but, he says “the bill would still leave a lot of room for people to go to court.” Some key Democrats, however, want the President to keep insisting that that room be kept as large as possible. Meanwhile the big question remains: How necessary is the legislation? This is one of those rare instances where Washington has actually anticipated a problem. But it’s a problem whose dimensions no one will really know until 2000 rolls around.