New Federal Y2K Act

On July 20, President Clinton signed the "Y2K Act." This column will discuss some of the highlights of the Act. (I wish that "lowlights" was a word. It better foreshadows what's to follow.)

This is from the statement by the President upon signing the Y2K Act:

"I hope that we find that the Y2K Act succeeds in helping to screen out frivolous claims without blocking or unduly burdening legitimate suit. We will be watching to see whether the bill's provisions are misused by parties who did little or nothing to remediate in order to defeat claims brought by those harmed by irresponsible conduct."

Sorry, Mr. President, but the Y2K Act does little to screen out frivolous claims. While it passed with an anti-lawyer fervor, with rhetoric about controlling ambulance chasers temporarily redirected to computers, the Y2KAct will fail to reduce litigation.

The Y2K Act violates one of life's basic rules: If it ain't broke, don't fix it.

While we've been listening to the doom and gloomers predicting that the judicial system will be overwhelmed with trivial Y2K litigation, the reality has been a trickle of litigation and courts aggressively dismissing what they consider to be frivolous litigation.

What the Act will do is create a new laundry list of procedural requirements for legitimately damaged plaintiffs. If the goal were less costly litigation, I would point out that it's time-consuming and expensive to pay a lawyer to jump through procedural hoops. Furthermore, since the procedural hoops in any new statute are undoubtedly fraught with ambiguities, what this type of statute does is increase the cost of litigation, while lawyers battle over these ambiguities and spend obscene amounts of money with legal posturing. (Lawyers call it "motion practice.")

If the Y2K Act was supposed to be a compromise between Republicans and their desire to protect business interests, and Democrats looking out for the trial lawyers and consumers, the winner appears to be nobody.

Who Needed Protection Anyway?

In many ways, the problem with the Y2K Act was the assumption that there were interest groups that deserved protection due to Y2K failures. I start from the opposite side. Companies need to be held accountable for the Y2Kproblems they cause.

Let's examine a hypothetical situation. Let's say that you bought a new car in 1996 and it had a typical three-year/36,000 mile warranty. Of course, this warranty would end in 1999.

Then let's say that you get into your car on January 1, 2000 to go to your local convenience store to buy aspirin for that hangover. Next, when you turn the key, instead of starting, the dashboard lights up with the message, "Buy a new car for the new millennium." (At this point, if you feel compelled to point out that the new millennium really starts in 2001, I would advise you to take a deep breath and lighten up.)

Now, I'm sure that no dashboards will light up with this message, but there's a metaphor here.

Those who've been programming the Y2K problem into our lives have known for years that their systems had a secret turn-off switch built in. They knew, but did not tell the less informed, that come January 1, 2000 (if not sooner), their stuff wouldn't work right.

While the hypothetical car company is nobody's sympathetic character, our Federal government felt the need to try to protect those who we have to thank for Y2K problems. While the car company is clearly guilty of consumer fraud, somehow, those who decided that their systems didn't need to be designed to work after January 1, need protection.

One of the Y2K Act's vaunted provisions is its required pre-litigation notice. Before filing a lawsuit, a plaintiff must notify each defendant by certified mail, return receipt requested, of the evidence of a material defect that caused harm, the type and extent of the harm, the proposed remedy, the reason that the Plaintiff is requesting the remedy, and the contact information of the person with authority to negotiate a settlement.

This sounds great. In fact, it is a very good idea to write a letter like this before suing because you just may find that you can settle it without suit. My criticism is that I just can't see why we had to legislate this. Generally, this type of letter is just part of good lawyering.

The sensationalism of the press aside, it's rare for a lawsuit to drop out the sky without warning. Usually, suits are filed after long periods of less than fruitful discussions.

So, by now, you're probably thinking there's no harm in legislating a good idea (and this is but a single example from the Act). Well, there is.

That little pre-litigation notice letter will now be the subject of untold zillions of hearings as to sufficiency. It will become dogmatic that one of the first rounds of battle in court will be whether the pre-litigation notice met the requirements of the Y2K Act. That's such a waste and is typical of what this new law will bring.

It won't so much reduce litigation as change the issues litigated.

When Should They Have Known?

By now, you know the history of the Y2K problem. You know that it's arising because way back when programmers decided to drop the "19" from years since "every" year starts with "19." So, the question is, when should they have known of their folly?

Let's start with February 1979, when an article by R.W. Bemer in "Interface Age" warned that programmers should not "drop the first two digits for computer processing," because otherwise "the program may fail from ambiguity in the year 2000."

Let's continue with June 1984 when Computerworld Magazine reviews a book called Computers in Crisis. In 1984, we had an entire book on Y2K. Please note that the reviewer stated that "[t]he book over dramatizes the date-digit problem" and that "[s]ixteen years seem sufficient time to solve this problem."

The interesting thing is that the reviewer was right. Sixteen years should have been enough time and, in most cases, I think it will have been enough time. Still, those who've ignored the sixteen year warning, and hurt others because they ignored the problem, should be held fully accountable for their actions. They deserved no special protections from Congress.