Congress asked to create special Y2K courtroom
Dayton Business Journal - by Sougata Mukherjee Washington Bureau Chief
WASHINGTON -- The Y2K computer problem could soon be an issue for the courtroom, not the board room.
The U.S. Chamber of Commerce, fearing a flood of litigation related to Year 2000 computer problems, wants Congress to set up a special court to handle all Y2K disputes.
New judges would be appointed to this court, with authority similar to that held by district judges who handle bankruptcy cases.
"We are concerned that Y2K-related litigation could virtually shut down a part of our economy," said Larry Kraus, president of the U.S. Chamber Institute for Legal Reform in Washington. "This Y2K court could sunset itself in five years after the turn of the century."
Some legal scholars and technology experts estimate Y2K litigation will cost billions of dollars because almost any company that buys, sells, leases and rents products and services could end up being a plaintiff or a defendant if computers fail on New Year's Day in 2000.
One trade group recently estimated Y2K litigation costs could soar to as much as $1 trillion.
The chamber's effort comes at a time when lawmakers are looking for ways to calm individuals and companies about the millennium bug scare, created by the possibility that computers will read the 2000 date as 1900.
In October, President Clinton signed a bill aimed at heading off some of that litigation.
The Year 2000 Information and Readiness Disclosure Act encourages companies to tell their customers and vendors about their potential Y2K problems.
Kraus said, however, the bill is not enough.
"When computers start going down, it will not be a question of readiness, it will be a question of who is to blame and how to recuperate losses," Kraus said.
To persuade other major business groups to buy into the concept, chamber officials have discussed the proposal with the National Association of Manufacturers.
But the association, which represents more than 14,000 large companies and 10,000 small businesses, is not yet ready to endorse a specialized Y2K court system. Instead, the group wants Congress to set up a structure to resolve altercations outside the courts.
Under its proposal, companies would be offered the option to settle their Y2K disputes in a pre-trial format administered by an arbitrator. In most cases, the settlement would be for actual damages.
But several other trade associations oppose both the chamber and manufacturers association initiatives.
"There's no telling what kind of lawsuits will land up in a Y2K court or in front of an arbitration panel," said Mark Pearl, general counsel at the Information Technology Association of America.
"Companies could tie unrelated problems to Y2K and figure they have a better chance of winning it in a specialized court," he said. "This system will not work."
Also, with little more than a year left before the century turns, Pearl said the government does not have time to put a new legal infrastructure in place.
"It takes the government years to nominate and approve judges," Pearl said. "And we are talking about a whole new system here. It is impossible to go over this bureaucratic hurdle in such a short time."
Some members of Congress may say otherwise, however. Sen. Robert Bennett and Sen. Orrin Hatch, both Republicans from Utah, want the House and Senate to consider additional legislative action early next year to prevent a massive Y2K load on the court system. But Pearl said this Y2K litigation fear could be much ado about nothing.
According to the Federation of Insurance and Corporate Counsel, only 28 lawsuits have been filed in state courts relating to the Year 2000 problem.
Most of these suits have class action status, and in most cases, the plaintiffs are asking for free software upgrades. The chamber's Kraus argued the legal climate will change dramatically in the next few months.
"Just wait till we hit 2000 and then tell me companies are only looking for free upgrades," he said. "It just won't happen."
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